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World's top 10 FDI hotspots; India 9th!

Last updated on: August 24, 2010 14:56 IST

World's top 10 FDI hotspots; India 9th!

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The UN Conference on Trade and Development study -- World Investment Report 2010 -- ranks India as the 9th most attractive destination for foreign direct investment, up from 13th last year. It received $35 billion in FDI in 2009.

The report paints a brighter picture for global FDI trends and estimates that global inflows would pick up from $1.1 trillion in 2009 to over $1.2 trillion in 2010 and head back towards the pre-crisis level of $1.6-2 trillion in 2012.

Key takeaways regarding global flows are:

(i) The increase in the relative share of developing countries as both destinations and sources, and

(ii) Flows to the services sector gaining over manufacturing.

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Image: The magnificent Taj Mahal in Agra.
Photographs: Reuters
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Net FDI into India is in the $20 billion-plus range from $5 billion earlier. Over recent years, trends in both inward and outward FDI to/by India have risen significantly.

Inward FDI which was in the $5 billion range till FY05 has risen to over $30 billion since FY08. Like-wise, outward investments by Indian companies which were in the $2 billion range in FY05 have risen to the $15 billion range.

This has resulted in net FDI now being over $20 billion as against $3-4 billion earlier.

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World's top 10 FDI hotspots; India 9th!

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1. United States --- $130 billion

Despite the recession that ravaged the American economy, the United States remains the top FDI destination in the world.

The amount of foreign direct investment that flowed into the US in 2009 stood at an astonishing $130 billion, almost the same as the FDI to China and India put together.

However, FDI in the US fell by 60 per cent from a year earlier to $46.1 billion during the first three months of this year, leaving a gap of $2.3 billion.

The United States is the 11th best nation to live in, scoring high on economic dynamism, health and education.

The US has a literacy rate of 99 per cent. The productivity growth per person is a high $46,400. Services account for about 77 per cent of the GDP. Manufacturing contributes about 18.46 per cent of the GDP.

In terms of innovation, it scores a high of 5.77. In ease of doing business, the US ranks 4th: it takes only 6 days to start a new business.

America records a low unemployment rate of 4.3 per cent despite having been battered by the two-year recession that ravaged its economy. The healthy life expectancy is 70 years.

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2. China --- $95 billion

The FDI inflows into China in the first seven months of 2010 have risen to $58.35 billion. In 2009, it received a whopping $95 billion in foreing direct investment.

However, Chances of China overtaking the United States as top foreign direct investment destination are slim in short-term even as it remains the second most attractive country for investors.

The gap between the US and China would remain despite robust momentum in Chinese FDI even though it is closing in on the FDI volumes, says the UNCTAD report.

China's economic growth remains high even as the US continues to be troubled by a high unemployment rate and economic slowdown. According to the organisation report, China in 2009 received $95 billion in foreign funds, which was $34.9 billion less than the investments in the US.

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3. France --- $60 billion

In a world struggling to climb out of the global recession, France is a strong leader in foreign direct investment.

In 2009, France ranked third worldwide in FDI inflow ($60 billion), after the United States ($130 billion) and China ($95 billion).

In 2009, France weathered the global economic crisis with GDP growing more favourably (less than -2.6 per cent) than Germany (-4.9 per cent) and the United Kingdom (-4.9 per cent)

In France, for every $1 spent on R&D companies received 43 per cent back in tax relief. France is fifth in the world in terms of domestic expenditures on R&D, totaling $42.8 billion in 2008.

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4. Hong Kong --- $48 billion

Hong Kong continues to draw huge amounts of foreign direct investment. In 2009, the country got $48 billion in FDI inflows.

Hong Kong has a thriving economy. The largest sector of industry is manufacturing.

Hong Kong has highly developed capitalist economy, and is ranked among the freest economy in the world.

Hong Kong also has a booming financial centre.

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5. The United Kingdom --- $46 billion

The United Kingdom has been struggling to come to terms with the slowdown that has hit its economy. Yet, Britain is still one of the world's top FDI destinations.

In 2009, the UK got $46 billion in FDI. London, the British capital, is Europe's top business city and one of the largest financial centres in the world. It is also home to the headquarters for 150 of the top 500 global companies.

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World's top 10 FDI hotspots; India 9th!

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6. Russia --- $39 billion

Russia received $39 billion in FDI in 2009 making it one of the most destinations for investors.

Although, foreign direct investment into Russia fell 11 per cent in 2009, the country remains one of the hottest spots for FDI.

Its strong economic recovery has led to many foreign companies investing heavily in Russia.

Reports say that Russia could see a boom in FDI in the coming years and could see inflows of up to $70 billion by 2013.

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7. Germany --- $36 billion

Germany, the strongest economy in Europe, received $36 billion in FDI in 2009. And although it remains a top FDI destination globally, investments into the nation have slipped slightly.

Mostly it has been the high labour costs that have dissuaded foreign companies from setting up new manufacturing plants in Germany.

However, Germany's pre-eminent position in manufacturing of engineering equipment remains unmatched and once the economic slowdown has run its course, FDI inflows into the country are likely to return to pre-crisis levels.

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8. Saudi Arabia --- $36 billion

Saudi Arabia attracted foreign direct investments of about $36 billion.

The latest UNCTAD report said that the kingdom was the eighth largest recipient of foreign direct investment in the world in 2009. It attracted $38 billion in 2008.

The kingdom was the best performer in the Middle East last year. Top sources of FDI inflows to Saudi Arabia included from the United States with $5.8 billion, followed by Kuwait with $4.3 billion and the United Arab Emirates with $3.8 billion.

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10. Belgium --- $34 billion

Foreign investments in Belgium are normally in the form of foreign firms establishing subsidiaries in the country. Belgium is a strong economic centre in Europe.

The country received $34 billion in FDI in 2009, putting it among the top 10 foreign direct investment destinations in the world.

The Belgian government actively promotes foreign investment. In recent years, the government has given special encouragement to industries that will create new skills and increase export earnings. Belgium has well developed capital markets to accommodate foreign finance and portfolio investment.


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