Putting it to Work in Developing Countries - Nathan Associates

Table 4-1
Sector Distribution of Estimated Inward FDI Stock, 1990 and 2004 (US$ billion)
Developing Countries a
Other/
Primary Manufacturing Services Unspecified Total
$ % $ % $ % $ % $ %
1990 23.7 7.3 144.4 44.6 151.6 46.8 4.1 1.3 323.7 100.0
2004 151.6 7.4 613.6 30.0 1224.4 60.0 52.5 2.6 2,042.1 100.0
CAAG b 14.2% 10.9% 16.1% 21.8% 14.1%
Developed Countries
1990 139.6 9.6 586.4 40.4 716.5 49.3 9.7 0.7 1,452.2 100.0
2004 268.2 3.6 2,406.1 32.7 4,624.7 62.9 53.8 0.7 7,352.8 100.0
CAAG 4.8% 10.6% 14.2% 14.1% 12.3%
South-East Europe and CIS
2004 20.7 25.2 20.4 24.9 34.3 41.7 6.7 8.1 82.2 100.0
World
1990 163.3 9.2 730.8 41.1 868.1 48.9 13.8 0.8 1,775.9 100.0
2004 440.5 4.6 3,040.1 32.1 5,883.3 62.1 113.1 1.2 9,477.1 100.0
CAAG 7.3% 10.7% 14.6% 16.2% 12.7%
a Country groups are those used by UNCTAD. UNCTAD classifies some countries as developing that the World Bank
considers “high income,” such as Singapore and South Korea, and classifies some as developed that the World Bank considers
“low and middle income,” such as Estonia, the Czech Republic and Hungary.
b Compound average annual growth.
c South-East Europe and CIS data are included in the world total for 1990, but are not available by sector and industry
for that year.
SOURCES: Nathan Associates, based on UNCTAD, World Investment Report 2006, Annex Table A.1.2.
central to international manufacturing networks;
and oil attracts the bulk of Africa’s FDI.
INCREASING SHARES OF GLOBAL FDI
STOCK
Just as the sectoral composition of FDI is chang­
ing, so too is the distribution of shares in total
world inward FDI stock. The latest data suggest
that since the beginning of the 1990s, developing
countries as a group have increased their
share of the world’s inward FDI stock in all sectors.
The largest gain has been in primary activi­
ties, with much more modest gains in services
and manufacturing (Table 4-2). In all sectors the
rate of growth of FDI inflows to developing
countries has exceeded that of inflows to devel­
oped ones in the last 15 years. This is so despite
(almost 63 percent), having grown at the
expense of both manufacturing (33 percent) and
natural resources (4 percent).
The buildup of services FDI in the developing
world differs by region. Investment has tended
to flow to the wealthier upper-middle income
economies, though exceptions exist (e.g., water
services in Manila, Jakarta, or Conakry).
Services therefore loom largest in the FDI stock
of Latin America and the Caribbean and in
Europe and Central Asia. In contrast, the major
shares of inward FDI stock in East Asia and the
Pacific and in Africa are in manufacturing and
the primary sector, respectively (Figure 4-1).
Such regional differences are logical: services
become important as GDP rises; China is
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