Global FDI: promising prospects

Varied progress and varying recovery in different regions and countries dotted the global economic climate last year. And the pattern of FDI flows has been as wide-ranging as the policies that influence the direction of these flows.
In its global outlook report on FDIs, fDi Intelligence - an FDI-focused division of the Financial Times - stressed that even though global FDI levels declined in 2010, the drop was slower than that witnessed in 2009, hinting at a whiff of optimism, albeit a cautious one.
Amongst source regions, Western Europe was the star with companies in the region establishing over 5000 FDI projects overseas, - though it was a marginal decline compared to 2009 - while the US and London were the leading source country and city respectively.
Middle Eastern and African countries, on the other hand, showed a steep decline in 2010 over the last year in the number of projects set up overseas.
On the recipients side, the Asia-Pacific region bagged the greatest number of projects - nearly 4000, marginally higher than that in 2009.
The Middle East and Africa were at the bottom-end of the recipient list as well, and Western Europe, the biggest source region, depicted the greatest decline in projects, even though it attracted the second highest number of projects after Asia-Pacific.
The Americas share of global FDI increased from 11 percent in 2009 to 13 percent in 2010 with the US, Canada being leading destination countries in North America, and Brazil and Mexico in the Latam (short for Latin America) and Caribbean region.
Asia-Pacifics marvelous performance as an FDI destination region was lead by its two giants, India and China, both of which beat the US in terms of FDI-associated job creation, helped by Shanghai and Bangalore, in particular.
China and India ranked first and second among FDI recipients in Asia-Pacific, even though there was no FDI growth in India in 2010 relative to 2009.
But it was Australia which bagged the award for the most astounding growth in FDIs in the region, achieving a 40 percent increase in FDI projects in 2010, making it the third leading destination in Asia-Pacific after the giant two.
Unfortunately, Pakistan was among the laggards in the regions, depicting the greatest fall in FDI inflows among key Asia-Pacific countries - over 40 percent.
As far as the sectors are concerned, the leading sector for global FDI in 2008 and 2009, financial services was overtaken by software and IT and business services, while manufacturing was the leading business activity for FDI flows.
fDi Intelligence foresees strong prospects for FDI growth in India, with the country being amongst the four most prospective favourite destinations for FDI inflows, the rest being Turkey, Mexico and Indonesia.
India is also expected to join the ranks of the leading source countries in 2011.
Going forward, greenfield projects have been predicted to grow over 6 percent in 2011, with nearly 12,800 projects from 12,047 in 2010, expected to bloat further to over 15,000 by 2014.
Amongst the sectors, software, business services and financial services are expected to continue to be leading sources of FDI growth.
Its a pity Pakistan may not enjoy the expected growth in global FDIs, if the past is anything to go by.