Virtually all the major geographical regions registered record inflows as well as outflows in 2007. However, higher growth rates of FDI inflows to developed countries than to developing countries reduced the share of developing countries in FDI inflows from 29% to 27% (annex table B.1).
Regarding outflows, the share of developing countries also
declined from 16% to 13%. By contrast, the share of
economies in transition (i.e. South-East Europe and
CIS) rose for both inflows and outflows.
Developed countries
FDI inflows into developed countries grew
once again in 2007, for the fourth consecutive year, to
reach $1,248 billion - 33% more than in 2006 (figure
I.6; annex table B.1). Flows to the United Kingdom,
France and the Netherlands were particularly
buoyant.
The United States maintained its position as
the largest FDI recipient country, while the European
Union (EU) as a whole continued to be the largest host
region within the developed country group, attracting
almost two thirds of total FDI inflows to the group
in 2007. The increase in FDI inflows to developed
countries reflected relatively strong economic growth
in those countries in 2007. Continued robust corporate
profits and rising equity prices further stimulated
cross-border M&As, particularly in the first half of
2007.
Outflows from developed countries in 2007
grew even faster than their inflows. They increased
by 56% to the unprecedented level of $1,692 billion,
exceeding inflows by $445 billion. The continued
upswing of outward FDI was mainly driven by greater
financial resources from high corporate profits (figure
I.2).
While the United States maintained its position
as the largest source of FDI in 2007, outflows from
the EU countries nearly doubled, to $1,142 billion.
The various risks prevailing in the world
economy are likely to influence FDI flows to and
from developed countries in 2008.
High and volatile commodity prices and food prices may cause
inflationary pressures, and a further tightening of
financial market conditions cannot be excluded.
The growing probability of a recession in the United
States and uncertainties about its global repercussions
may cause investors to adopt a more cautious attitude
(see section E below). These considerations point to a
dimming of FDI prospects in developed countries.
Developing countries
FDI inflows into developing countries rose
by 21% (figure I.6), to reach a new record level of
$500 billion (chapter II). Those to least developed
countries (LDCs) alone reached $13 billion, a 4%
increase over the previous year.
. In Africa, FDI inflows in 2007 rose to a historic
high of $53 billion. The inflows were supported by
a continuing boom in global commodity markets.
Cross-border M&As in the extraction industries
and related services continued to be a significant
source of FDI, in addition to new inbound M&A
deals in the banking industry. Nigeria, Egypt, South
Africa and Morocco were the largest recipients
(chapter II). These cases may illustrate a trend
towards greater diversification of inflows in some
countries, away from traditional sectors (e.g. oil,
gas and other primary commodities).