G20 News commends the current Secretary-General of the UNCTAD, Mukhisa Kituyi for this excellent report. On January 28, 2014, the Global Investment Trend Monitor was released showing Foreign Direct Investment flows across different regions of the world. The report makes the discovery that FDI has, in some cases, returned to 2005-2007 pre crisis average levels.

The Global Investment Trend Monitor takes into consideration the events leading up to the crisis. However, a brief review of the period is necessary. Also one must read the UNCTAD report from that period. A very prescient Supachai Panitchpakdi, the Secretary-General at the time, said “a “second generation” of globalization is thus emerging. A distinctive characteristic of this phase of globalization is economic multipolarity”. This quote was from the Foreword in the Development and Globalization: Facts and Figures 2008 published April 22, 2008. On page 36 of the 87 page report you can review the FDI up to 2008.

From 2002 to 2007 a real estate bubble was forming which lead to mortgage lending at historic levels, housing prices increased astronomically, a building boom globally, and Banks around the world took risks with 30-50-80 to 1 leverage. The United States was bogged down fighting two wars in the Middle East. Credit Default Swaps were permitted, even though the members of the contract did not know each other, nor who owned what asset and their viability to payback the Default Swap. Lehman Brothers and Bear Sterns were allowed to fail. AIG, Fannie Mae and Freddie Mac and some in the Automobile industry needed to be bailed out. A few European countries had their 10-year and 5-year bond yields being raised  due to unsustainable debt levels. Stock index volatility reached their highest levels with single day moves of triple digits common place. Yes, these were tough times. Monetary policies became accommodative and quantitave easing became the Federal Reserve solution to help the economy, indeed the global economy. Don’t forget about TARP and the European Union measures to separate good bank assets from bad ones.

My own highlights from the report were a few. First, the 2013 total FDI of $1.461 trillion was slightly below the average for 2005-2007. Also 2007 was the peak in FDI at $2.002 trillion, followed by 2008 at $1.819. In 2009 FDI bottomed out and began an upward trend into 2011.

This G20 News article is the first part of a series on Foreign Direct Investment.

Please see the very good analysis by the staff at the UNCTAD and the detailed report here.

FDI, Foreign Direct Investment, Global Investment Trend Monitor, UNCTAD