DEVELOPED COUNTRIES DOMINATE WORLD FDI STOCK

DEVELOPED COUNTRIES DOMINATE WORLD FDI STOCK

(Reissued as received.)

GENEVA, 25 August (UNCTAD) -- Which regions and countries are the world's biggest magnets for foreign direct investment (FDI)?  A world map showing the size of some countries and regions weighted by the amount of FDI they have attracted over time reveals that developed countries dominate the picture.  One exception is that Japan –- an economic giant -– does not figure prominently as a host country.  Among developing economies, China; Hong Kong, China; and Brazil stand out.

The world's FDI stock stood at $7.1 trillion in 2002, up more than tenfold since 1980 (table 1).  Why does the size of FDI stock matter?  That stock is the basis of international production -- it captures the combined value of all foreign affiliates.  Ebbs and flows in the yearly value of FDI, while important, augment the stock of FDI as long as they are positive.  So the stock of FDI matters more than flows -– for the structure of global specialization, for deepening global integration through production networks, and for generating the benefits associated with FDI and international production.  It also matters for new FDI capital flows arising from the reinvestment of earnings and sequential flows to FDI.  More specifically:

-- The developed worldhosts two thirds of world inward FDI stock in 2002 ($4.6 trillion), mainly distributed inthe United States, the United Kingdom and Germany.

-- The inward FDI stock of developing countries ($2.3 trillion) totalls about a third of their gross domestic product (GDP), almost twice the 19 per cent for developed countries.  Back in 1980, the respective ratios were 13 per cent and 5 per cent.

-- Central and Eastern European countries increased their inward FDI stock substantially, from $3 billion in 1990 to $188 billion in 2002.  As a percentage of GDP, the ratio rose from 1 per cent to 21 per cent over the same period.

-- The 49 least developed countries -– the poorest developing countries -– accounted for 2 per cent of the total inward FDI stock of developing countries in 2002.  This share has not changed much in recent years.  The largest host least developed country is Angola, registering FDI stock on a level comparable to thatin the Philippines.

On the outward side, developed countries are the preponderant suppliers of FDI, accounting for almost nine tenths of the world's outward stock in 2002.  The most striking change in the past 20 years is that the European Union has become by far the largest source.  In 1980, the outward stocks of the Union and the United States were almost equal, at around $215 billion.  But by 2002, the European Union's stock (including intra-European Union stock) had reached $3.4 trillion, more than twice that of the United States ($1.5 trillion).  The gap opened in the 1980s and widened in the late 1990s.  Meanwhile, Japan’s stock has been stable relative to the European Union’s, with the country’s outward stock valued at about a tenth of that of the Union.

Outward FDI stocks have changed even more than inward stocks for developing countries, increasing from 3 per cent of GDP in 1980 to 13 per cent in 2002, the result of the emergence of developing-country transnational corporations.  In 1980, the FDI stock originating in developing countries ($65 billion) accounted for 11 per cent of the global outward FDI stock; by 2002 the corresponding share was 12 per cent.

The growth rate of outward stock from developing countries in the 1990s was dramatic.  South, East and South-East Asia together comprise the most important developing region for outward FDI stock, with its stock exceeding Japan’s for the first time in 1997 and becoming almost twice as large as Japan’s by 2002.  Latin America and the Caribbean registered a more than threefold increase in its outward FDI stock between 1980 and 2002.

Table 1.  Inward FDI stock, by group of economies, 1980, 1990, 1995, 2000, 2001 and 2002
(Billions of dollars)
Group of economies	1980	1990	1995	2000	2001	2002
World	699	1 954	3 002	6 147	6 607	7 123
Developed countries	392	1 400	2 041	3 988	4 277	4 595
Developing countries	307	551	921	2 030	2 174	2 340
Africa	32	51	78	145	158	171
Latin America and Caribbean	50	117	202	609	706	762
Developing Asia	216	340	583	1186	1215	1305
Central and Eastern Europe	..	3	40	129	156	188
Memorandum:.
Least developed countries	3	8	16	36	41	46
Source:  UNCTAD.

Table 2.  Outward FDI stock, by group of economies, 1980, 1990, 1995, 2000, 2001 and 2002
(Billions of dollars)
Group of economies	1980	1990	1995	2000	2001	2002
World	564	1763	2901	5992	6319	6866
Developed countries	499	1629	2584	5155	5488	5988
Developing countries	65	133	311	817	807	849
Africa	7	21	33	49	43	44
Latin America and Caribbean	52	63	91	160	168	173
South East Asia	5	41	179	594	577	611
Central and Eastern Europe	..	1	6	19	25	29
Memorandum:.
Least developed countries	..	1	2	3	3	3
Source:  UNCTAD.

This press release was prepared in the context of the World Investment Report 2003.  FDI Policies for Development:  National and International Perspectives, to be released on 4 September 2003 at 17:00 GMT.  For more information, go to:  http://www.unctad.org/wir; or contact the Press Office, tel.:  +41 22 907 58 28, e-mail:  press@unctad.org; or K. Sauvant, +41 22 907 5707, e-mail:  karl.sauvant@unctad.org.

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