Global foreign direct investment rose by 29% in 2005 to $916 billion as investors from emerging markets burst onto the scene as rivals for western multinationals, the UN trade and development agency said in a report this evening.
'The emergence of these multinationals marks a deep shift in the world economy,' said Anne Miroux, one of the authors of the World Investment Report 2006. 'It's an additional sign of a transfer of economic power to developing regions, especially Asia,' she said.
2005 was the second consecutive year of net growth in FDI worldwide.
However, Ireland experienced a significant reversal of investment from foreign multinationals last year, today's report reveals. Much of the decline is as a result of US companies repatriating money home due to a change in legislation in the US.
In 2004, Ireland had a FDI figure of €9 billion. But last year, instead of money coming into the economy €18 billion left the country.
Ireland's performance in terms of getting foreign investment has resulted in it slipping from number five to 89 last year, in an index of 141 countries.
Economists also say the reversal is down to Ireland's poorer performance in manufacturing. The country is struggling to land significant jobs projects in that area with much of the work now going to low cost economies like India and China.
Manufacturers say costs like the 20% hike in electricity simply make Ireland too expensive.
Today's UN report shows that although industrialised economies are still predominant as sources and destinations for investment, developing countries showed high FDI growth rates. West Asia and Africa recorded 'unprecedented' investment inflows to record levels of $34 billion and $31 billion, the report said.
Flows into South and East Asia also achieved a new high of $164 billion in 2005, an annual increase of 19%. Investment flows into industrialised nations, which attract 59% of FDI, rose by 37% over 2004 to $542 billion, the report found.
Britain, the US and China ($72 billion) were the largest recipients, according to UNCTAD.
FDI into Britain tripled to $165 billion, largely due to the $74 billion technical merger of the Dutch and British parts of the oil giant Shell.
FDI flows into the US - where British companies remain the largest investors - fell by 19% to $99 billion.
Inflows into the European Union nearly doubled to $422 billion, most of it due to rising cross-border investment within the 25-nation bloc. The EU's 15 'old' members accounted for $388 billion of that amount, partly due to the UK surge. The ten new members attracted 19% more FDI, reaching a record $34 billion.
