In terms of individual nations, China was the largest recipient of Foreign Direct Investment (FDI) in the world, the United Nations Conference on Trade and Development (UNCTAD) reported.

Flows to the Asian giant increased by 4%, to $ 163 billion. High-tech industries saw an 11% increase in 2020, and cross-border mergers and acquisitions increased 54%, mainly in the ICT and pharmaceutical industries.

«A positive return to GDP growth (+ 2.3%) and the government’s targeted investment facilitation program helped stabilize investment after the initial shutdown,» says UNCTAD’s Investment Trends Monitor, published on January 24.

In turn, Foreign Direct Investment flows to North America declined 46% to $ 166 billion, and cross-border mergers and acquisitions (M & As) fell 43 percent.

New investment projects announced also fell 29% and project finance deals fell 2%.

The United States recorded a 49% decline in FDI, falling to an estimated $ 134 billion.

The decline was in wholesale trade, financial services and manufacturing. Cross-border sales of mergers and acquisitions of US assets to foreign investors fell 41%, mainly in the primary sector.

Overall, global Foreign Direct Investment collapsed in 2020, falling 42%, from $ 1.5 trillion in 2019 to an estimated $ 859 billion.

Foreign direct investment

Such a low level was last observed in the 1990s and is more than 30% below the investment trough that followed the global financial crisis of 2008-2009.

Despite projections that the world economy will recover in 2021, albeit hesitant and uneven, UNCTAD expects FDI flows to remain weak due to uncertainty about the evolution of the COVID-19 pandemic.
The organization had projected a 5-10% drop in Foreign Direct Investment in 2021 in last year’s Global Investment Report.

«The effects of the pandemic on investment will persist,» said James Zhan, director of UNCTAD’s investment division. «Investors are likely to remain cautious about committing capital to new productive assets abroad.»
According to the report, the decline in FDI was concentrated in developed countries, where flows plummeted by 69% to an estimated $ 229 billion.

The decline was very uneven across developing regions: -37% in Latin America and the Caribbean, -18% in Africa, and -4% in developing countries in Asia. FDI to transition economies fell 77% to $ 13 billion.