| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy


Finfacts changes from 2015

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Global Cost of Living

Irish Tax - Income/Corporate

 

Feedback

 

Content Management by interactivetools.com.

News : Global Economy Last Updated: Feb 2, 2015 - 8:58 AM


China overtook US in 2014 inward investment; Ireland slips on dodgy tax data
By Michael Hennigan, Finfacts founder and editor
Feb 2, 2015 - 8:54 AM

Email this article
 Printer friendly page

China overtook the US in 2014 as the top destination for foreign direct investment (FDI), for the first time since 2003. Meanwhile Ireland slipped but the data is distorted by tax avoidance.

Last year, foreign firms invested $128bn in China, and $86bn in the US, according to the United Nations Conference of Trade and Development (UNCTAD). The growth in China's foreign investment benefitted the services sector as manufacturing slowed.

Global FDI flows declined by 8% in 2014 to an estimated US$1.26tn, down from a revised US$1.36tn in 2013 (data in the latest Trends Monitor exclude Caribbean offshore financial centres and FDI flows passing through special purpose entities (SPE) in Austria, Hungary, Luxembourg and the Netherlands).

The UN agency said that flows were heavily influenced by economic uncertainty and geopolitical risks including regional conflicts, and by the US$130bn mega-buy-back of shares by Verizon (United States) from Vodafone (United Kingdom) which significantly reduced the equity component of FDI inflows to the United States.

FDI flows in developing economies remained resilient in 2014, reaching more than US$700bn, the highest level ever recorded, and accounting for 56% of global FDI flows. The increase was mainly driven by developing Asia − the world's largest recipient region − while Latin America saw its flows decline.

FDI inflows to the European Union (EU) rose by 13% to an estimated US$267bn. Among the largest economies, the United Kingdom saw its inflows rise to an estimated US$61bn, helped by rising reinvested earnings and cross-border M&As. According to UNCTAD estimates, FDI flows to Sweden and Portugal rose significantly, though from very low levels in 2013. Inflows to the Netherlands and Luxembourg increased to US$42bn and US$36bn, respectively. In contrast, inflows to Germany and France were in negative territory, to -US$2.1bn and to -US$6.9bn, respectively. In Germany FDI flows declined due to changes in the flows of intra-company loans, while in France in addition to the repayment of loans to parent companies, a single large divestment took place (Nestlé (Switzerland) sold its 8% share in L'Oreal for US$9bn) .

Lower intra-company loans by EU investors diminished FDI flows to Ireland to just US$10bn from $36bn in 2013..

UNCTAD said cross-border mergers and acquisitions (M&As) rose by 19%, driven mainly by restructuring deals. Announced greenfield investment projects rose by 3% in 2014.

A solid FDI rise remains distant. "A subdued global economic outlook, volatility in currency and commodity markets and elevated geopolitical risks will negatively influence FDI flows. On the other hand, the strengthening of economic growth in the United States, the demand-boosting effects of lower oil prices and proactive monetary policy in the Eurozone, coupled with increased liberalization and promotion measures, will favourably affect FDI flows."

The data are preliminary and the annual flagship World Investment Report will be published next July.

In 2013 China alone received more FDI inflows than all EU countries together

Ireland not among top 67 destinations for Chinese outbound FDI in 2014

Irish outward data exceeds inward flows but this results from mainly American companies becoming Irish for tax avoidance purposes - they have about 600,000 staff.

"I've mentioned to US investors that US companies have more capital invested in Ireland than they do in Brazil, Russia, India and China put together," said Richie Boucher, chief executive of Bank of Ireland in a speech in 2013.

Boucher had fallen for a fairytale promoted by the American Chamber of Commerce in Ireland and reinvested earnings, which relates to cash balances that are technically held in the accounts of American banks in Ireland to avoid a tax liability in the US, are treated as investment inflows.

Changes in cash balances do not reflect FDI project activity.

Ireland's confusing FDI data in age of spin

FDI in Ireland: Grant Thornton publishes promotional brochure not balanced report

UNCTAD report [pdf]

Related Articles


© Copyright 2015 by Finfacts.ie

Top of Page

Global Economy
Latest Headlines
Strong Swiss franc gloom deepens for exporters
Global investors shift focus to China; EM outflows surge to $1tn in 13 months
Global oil glut will continue into 2016
Stable growth momentum in OECD area but slowing expected in China
Prices for major food commodities in July lowest since September 2009
Global manufacturing in July weakest level in two years
US, China and UK lead top 25 target countries for foreign direct investment
Budget surpluses rare in developed countries from 1980s; Italy, France, Greece had none in 60 and 40 years
Singapore, London and Shanghai top cities for new FDI projects in 2014; Dublin in 11th place
Exchange rates shuffle as Dublin ranked 49th most expensive city; Paris at 46; Berlin at 105
Western consumer groups under pressure in China and India
Developing countries facing “structural slowdown” likely to last for years
OECD BEPS Tax Project: Amazon books UK sales in UK; Australia proposes up to 100% in penalties
Emerging Markets Index falls to 12-month low in May as manufacturing contracts
US and world economies slowing in 2015 — OECD
Global manufacturing production rose slightly in May; Trade flows weak
GDP growth in OECD area slowed to 0.3% in the first quarter of 2015
Only one quarter of workers worldwide have stable employment contracts
Automatic Exchange of Tax Information: OECD says countries won't be able to game system
Gates Foundation loses in Swiss family's shares coup
Minimum wage levels in OECD countries
Brent oil benchmark over $68 a barrel - up almost 50% in 2015
Global growth slows and manufacturing dips to 21-month low
Family-controlled firms dominate European business
Top 10 of world’s 250 largest consumer products companies account for 30% of sales
Nine of world's 20 fastest growing economies in Africa
Globalisation maybe stalling as trade growth remains weak
Global growth prospects uneven across major economies says IMF
Emerging markets growth lowest since 2009; Global growth at 30-year average
China's economic rebalancing hitting Latin American economies
New York, London, HK & Singapore top global financial centres index; Dublin recovers
Global growth in modest expansion from low oil prices/ monetary easing says OECD
Composite leading indicators point to positive change in growth momentum in the Eurozone
Global labour market trends portend paradise for some but uncertainty for many workers
Vienna remains top of World Quality of Living Rankings in 2015; Dublin at 34
Zurich and Geneva overtake Singapore to become world's most expensive cities
HSBC Switzerland and Falciani: How it happened
Global economic power to continue shift from advanced economies
Global food price index falls in January; Cereal output set for record
Global debt has risen $57tn or 17% of world GDP since 2007