Surge in Foreign Direct Investment in 2015

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Trade in Cambodia’s Ports. File Photo: World Bank/Chhor Sokunthea

Flows of Foreign Direct Investment (FDI) reached US$1.7 trillion in 2015: their highest level in nearly decade.

The finding comes in a report published on Wednesday by the UN's trade and development body, UNCTAD.

FDI is the term to describe when an entity in one country invests in a business located in another.

Dianne Penn reports.

Foreign Direct Investment flows jumped 36 per cent in 2015, according to the UN agency.

This was largely due to a wave of cross-border mergers and acquisitions; that is, purchasing or consolidating of companies.

The surge was particularly visible in developed economies, with strong growth reported in the European Union and the United States.

Developing countries also reported a rise, with FDI hitting a new high of US$741 billion.

Asian countries were the largest recipient.

But the report finds it's not all good news as part of the surge was due to what is known as "corporate reconfiguration."

James Zhan, Director of the Division on Investment and Enterprise at the UN Conference on Trade and Development (UNCTAD), explains.

"What do we mean? We mean that some companies may restructure themselves. They move headquarters from one country to another for different reasons: could be the reason of shift of family leadership, could be the reason for getting better tax rate, or for the reason of political risk aversion."

However, he said that global FDI would still show an increase in 2015 even if these figures were discounted.

Dianne Penn, United Nations.

Duration: 1’46″

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