'Unproductive' areas benefit from 2015 investment surge

GMT 09:36 2016 Thursday ,21 January

Arab Today, arab today 'Unproductive' areas benefit from 2015 investment surge

Foreign direct investment last year rose to $1.7 trillion
Geneva - AFP

Global investment jumped 36 percent in 2015, but most of the spending was concentrated in unproductive areas like corporate restructuring as well as mergers and acquisitions, the UN said Wednesday.

Foreign direct investment (FDI) last year rose to $1.7 trillion (1.6 trillion euros) following a 90-percent surge in developed economies, said the United Nations Conference on Trade and Development (UNCTAD) in a new report.

Despite the seemingly promising figure, the report warned that the overall picture in many ways remained bleak, especially in the world's poorer developing regions.

FDI "growth was largely due to cross-border mergers and acquisitions (M&A), with only limited contribution from greenfield investment projects in productive assets," UNCTAD said.

A greenfield investment typically refers to a project that creates a new physical facility which are considered productive, in part because they typically create jobs.

A significant chunk of FDI in 2015 "was related to corporate reconfigurations involving large values... but little movement in actual resources," UNCTAD said.

Wealthier developing economies, notably in Asia, continued to attract interest, with FDI reaching a new high $741 billion, the agency added.

But, in another consequence of the commodities market rout, UNCTAD said "flows faltered in Africa, Latin America and the Caribbean... reflecting the plummeting prices of their principal commodities exports."

Because of huge volatility in global markets and significant slowdowns in key economies like China, UNCTAD projected that FDI will fall in 2016, "barring another wave of M&A deals and corporate reconfigurations."

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