Foreign Direct Investment Figures 2013-15 Indicate Transition Economies Naturally Sit Well Below Developed Continents
Figures from the United Nations Conference on Trade and Development (UNCTAD) have shown the progression of foreign investment across the 2013-2015 period. Segmenting the data into continents including Developing Asia; Europe; North America; Latin America and the Caribbean; Africa as well as Transition Economies, demonstrates a clear change and generally for the better.
The most noticeable trend is that of the transition economies. These economies have seen a dramatic decrease in FDI across the last 3 years. In terms of dollars, their 2013 output of $85 Billion became 56 in 2014 and 35 in 2015 signifying a decrease of 50 million in just 3 years. The ability to acquire assets and financial capital in neighbouring countries is always going to be difficult for these nations as a result of a fragile economy.
The big surprise, however, is the growth seen in North America. America is notorious for being a world superpower in almost everything. But a decrease in foreign spending from 2013-14 of $118 Billion was incredibly concerning. Since that point, the continent has worked hard to improve their economic situation by spending a whopping $429 Billion in 2015 – a dramatic increase of $254 Billion! This type of spending leaves them third on the list understandably behind Developing Asia and Europe.
Similarly, Europe went from spending 323 and 306 Billion dollars to $504 Billion. This dramatic increase is a total of $198 Billion and indicates a strong growth for the continent as a whole – a positive outcome given their recent problems.
Clearly out on topic in the FDI spending are countries in Developing Asia. Incredibly, their 2013 foreign spending was higher than North America’s current personal best of $429 Billion. Asia has become on-par, if not more financially secure than the United States and this has come through their ability to invest overseas.
Africa’s spending has plateaued with minor ups and downs ultimately maintaining an FDI within $50-60 Billion. Clearly, their FDI policy hasn’t changed too much and given the data from the past decade it is unlikely to change much for the better.
So in comparison with other growing, stable economies well above them, countries in economic transition are potentially in need of some form of support.
The benefits of FDI in developing countries can be significant because it provides countries with resilience in trying circumstances. Many countries that have experienced economic recession in the last 20 years have protected themselves from complete disaster thanks to carefully strategised foreign direct investment.
The point may be obvious, but it is something we’ll be looking to analyse further!