Manufacturing accounted for nearly one third of the estimated world inward FDI stock in 2006, but for only a quarter of world FDI inflows in the period 2004-2006 (annex tables A.I.5 and A.I.7). Its share in world inward FDI stock has fallen noticeably since 1990 - in both developed and developing economies - declining by more than 10 percentage points.
In 2007, there was a significant upsurge of cross-border
M&As in manufacturing, with cross-border M&A
deals in that sector rising by over 86%, compared with
increases of 1% and 36% in the primary and services
sectors respectively (annex table B.6).
The services sector accounted for 62% of
estimated world inward FDI stock in 2006, up from
49% in 1990 (annex table A.I.5). Nearly all of the
major service groups have benefited from the shift of
FDI towards services that began more than a quarter
century ago. In the case of some services, such as
trade and financial services, the increase began well
before 1990, when they accounted for 12% and 20%,
respectively, of total inward FDI stock globally.
While trade, financial services and business activities
continue to account for the lion's share of FDI in the
sector, other services, including infrastructure, have
begun to attract increasing shares of FDI since the
1990s. For example, the value of cross-border M&As
worldwide in electricity, gas and water rose from $63
billion (about 6% of total sales) in 2006 to $130 billion
(nearly 8% of the total) in 2007 (annex table B.6).
The slow but steady increase in the share of infrastructure
industries in FDI, including in developing countries,
raises questions as to how FDI can contribute to
development in general and to progress towards
meeting the Millennium Development Goals (MDGs),
in particular, through more and better infrastructure
services for the poor. These issues are examined in
Part Two of this report.
International production
Indicators of international production, such as
sales, value added, assets, employment and exports
of foreign affiliates, enable a better assessment of the
impact of FDI (table I.4). They throw direct light on
host country production activity associated with FDI
worldwide, and the importance of foreign affiliates in
the world economy. Today, an estimated 79,000 TNCs
control some 790,000 foreign affiliates around the
world (annex table A.I.9).
Their production continues to grow. For example, the value added activity (gross
product) of foreign affiliates worldwide accounted for
11% of global GDP in 2007. Sales amounted to $31
trillion, about one fifth of which represented exports,
and the number of employees reached 82 million.
However, the above discussion at the global
level conceals country differences in international
production as measured by various indicators.
This is why, as of 2007, the World Investment Report
(WIR) started to analyse one specific indicator of
international production: employment in foreign
affiliates. This variable was examined to show the
direct impact of FDI on host economies. This year's
WIR considers another variable frequently used to
examine the level of international production: sales
of foreign affiliates.