Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
21
Following the financial crisis in 2009-10, global FDI outflows rose by 16% in 2011 to an
estimated US$1.66trn. This surpassed pre‐crisis levels, but remained 25% short of the 2007
peak. However, the growth of FDI outflows in 2011 did not translate into an equivalent
expansion of productive capacity: much of the growth was owing to cross‐border acquisitions
and increased amounts of cash reserves in foreign affiliates, rather than to much‐needed direct
investment in new productive assets, for example through greenfield investment projects.28
According to the IIF,29 there is now a significant ‘rotation’ taking place in the composition of
emerging-market capital flows away from official reserve accumulation towards private-sector
outflows into higher-yielding assets such as equity investments (both portfolio and direct).
Indeed, the IIF expects that outward investment and lending by emerging-market residents –
excluding reserve accumulation – will reach $1trn in 2013, almost ten times the $103bn
average in 2000-2003.
2 NCTAD Global Investment Trends monitor, April 2012
29 “Capital flows to emerging market economies”, Research Note, Institute of International Finance (IIF), June 2013