June 12, 2019 – Africa led the world in 2018 in gaining the largest increase in foreign direct investments, as compared with 2017. While the additional amount of investments was only $5 billion – amounting to just $46 billion in 2018 over its $41 billion in investments in 2017 – the increase represented a significant 11 percent gain, according to a recently-published report of the United Nations Conference on Trade and Investment.
The UNCTAD was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues.
Africa’s gain is notable when compared with the overall average worldwide decline of 13 percent in foreign direct investments (FDIs) in 2018 over the previous year. Total FDIs around the world declined by $200 billion, from $1.497 trillion in 2017 to $$1.297 trillion in 2018.
Asia now has almost 40 percent of foreign direct investments
Besides Africa, Asia was also a winner in 2018, with a gain of $19 billion in FDIs representing a nearly four percent increase from $493 billion in 2017 to $512 billion in 2018, which now amounts to nearly 40 percent of the world’s total of $1,297 billion. Most Asian countries are part of what the world trade agency calls the ‘developing economies’ sector that includes large and faster-growing economies such as Brazil, China (including Hong Kong), India, Indonesia, Mexico, the Philippines, Russia, Singapore, South Korea, and Vietnam.
Bright spot in dim report: developing economies gained $15 billion
The developing economies sector gained $15 billion in foreign direct investments, from $691 in 2017 to $706 billion in 2018, a two percent gain, but the $706 billion received by developing economies now represents over half of all total investments of $1,297 billion received in 2018.
Europe sustains largest loss: $212 billion – 55 percent decline in 2018
In the developed sector of the world that includes Europe and North America, direct investments from abroad declined from $759 billion in 2017 to $557 billion – a decrease of $202 billion – that represents a large 27 percent loss. The biggest loser was Europe, where foreign direct investments plunged from $384 billion in 2017 to just $172 billion in 2018, a 55 percent decline.
But there were gainers, including the Netherlands, which gained $22 billion, from $58 billion in 2017 to $$70 billion in 2018. Spain more than doubled foreign direct investments from $21 billion in 2017 to $44 billion in 2018.
North America loses a bit – $11 billion in 2018 – but still retains No.1 position
North America, which includes the United States and Canada, also lost foreign investments into its countries, but by not much – just four percent. The decline was $11 billion, from $302 billion in 2017 to $291 billion in 2018.
The U.S. lost $25 billion in FDIs, from $277 billion in 2017 to $252 billion in 2018, but retained in 2018 its No.1 title as the world’s most desirable investment destination by a large margin of more than 80 percent over China’s $139 billion.