CHAPTER I Global Investment Trends

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World Investment Report 2011: Non-Equity Modes of International Production and Development
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UNCTAD’s WIPS and econometric model
projections for FDI flows in the coming years paint
a picture of cautious but increasing optimism,
with global FDI flows set to increase to between
$1.4 and $1.6 trillion in 2011, building upon
the modest recovery experienced in 2010. At
the high end of that range, FDI flows would
be slightly more than the average pre-crisis
level, yet would still be below the 2007 peak of
$2 trillion. World trade, by contrast, is already back
at pre-crisis levels (table I.5).
While the FDI recovery resumes, the worldwide
demand for private productive investment is
increasing as public investment, which rescued
the global economy from a prolonged depression,
declines in one country after another. With
unsustainably high levels of public debt at both
national and sub-national levels in many countries,
and with nervous capital markets, governments
must now rein in their deficits and let private
investment take over the lead role in generating and
supporting a sustained recovery.
The FDI recovery in 2010 was slow not because
of a lack of funds to invest, or because of a lack
of investment opportunities. Responses by TNCs
to UNCTAD's WIPS (UNCTAD, forthcoming a)
indicate increasing willingness to invest, and clear
priority opportunity areas. However, the perception
among TNC managers of a number of risks in
the global investment climate, including financial
instability and the possibility of a rise in investment
protectionism, is acting as a brake on renewed
capital expenditures.
A number of developed countries, where the need
for private investment to take over from dwindling
public investment is greatest, are ranked far
lower on the investment priority list of TNCs than
either the size of their economies or their past FDI
performance would seem to warrant. Policymakers
from those countries would be well advised to
take a lead role among their international peers in
continuing to ensure a favourable and stable global
investment climate.