Putting it to Work in Developing Countries - Nathan Associates

Figure 3-3
FDI Inflows to the Developing World, by Income Level and Region, 2005
3.0%
7.0%
8.0%
6.0%
40.9%
32.0%
24.0%
51.1%
28.0%
Distribution by Region
Distribution by Income
East Asia and the Pacific
Europe and Central Asia
Middle East and
North Africa
South Asia
Upper Middle Income
Lower Middle Income
Latin America and
the Caribbean
Sub-Saharan Africa
Low Income
Notes: Includes only economies classified as low or middle income by the World Bank (2005 per capita GNI of $10,725 or
less). Income groups are defined according to per capita gross national income in 2005: low income, $875 or less; lower
middle income, $876-3,465; upper middle income, $3,466-10,725; high income, $10,726 or more.
SOURCES: UNCTAD, World Investment Report 2006 for data on FDI inflows; World Bank, World Development Report 2007 for
country classifications.
cent of all LDC inflows between 2001 and 2005.
REGIONAL PATTERNS
Still another way to understand the flow of FDI
is to trace its distribution among the six regions
of the developing world, as defined by the
World Bank. 9 In the recent resurgence of FDI,
all six regions experienced increased inflows, and
all but Latin America and the Caribbean
achieved new peaks in FDI (Table 3-3). At present,
East Asia and Pacific is the single largest
FDI host region, regaining the rank it had lost
to Latin America and the Caribbean from 1997
to 2001. South Asia hosts the least amount of
FDI in the developing world (Figure 3-3). A
brief examination of FDI inflows of the past few
years provides insights into factors that influence
FDI receipts in developing economies.
EAST ASIA AND THE PACIFIC—
CHINA’S APPEAL
Powered by China’s high GDP growth, FDI
inflows to the East Asia and Pacific region have
risen steadily since 2000, in the past five years
accounting for about one-third of all FDI flows
to the developing world. China absorbs the
biggest portion of the regional total: 86 percent
during 2001–2005. ASEAN members Malaysia,
30