Continue with Google
According to the report, South Asia received FDI worth $28 billion in 2010, which was down 27 percent compared to the previous year. [break]
Even FDI of $38.3 billion that the region received in 2009 was less than what the region received in 2008 by more than $10 billion. The region had received FDI worth $48.7 billion in 2008.
The region has been witnessing such a massive drop in FDI inflow mainly because of the decline of FDI inflow in India. Of the total FDI coming in the region, India has been receiving hefty 85 percent, and the recent drop in FDI inflow was recorded because India itself received less FDI worth $34.58 billion in 2009 and $24.16 billion in 2010, compared to $ 41.17 billion of 2008.
Contrary to drop in India, China received $185.08 billion in FDI in 2010, recording a hefty growth of 66 percent over what it received in 2009. In 2009, however, China too had recorded a drop in FDI inflow.
The report was developed by Multilateral Investment Guarantee Agency (MIGA) of the WB Group, carrying out survey of top executives of the global companies.
In the survey, the report says global investors cited access to finance, macro-economic instability, access to qualified staff, political risk and corruption as major constraints to cross border investments in developing countries in the next three years.
Global investors also identified breach of contract, adverse regulatory changes, transfer and convertibility restrictions and non-honoring of government guarantees as major hurdles their companies are facing in the developing countries.
Given such constraints, investors have been using joint venture or alliance with local company as the main mechanism to mitigate political risk when investing in developing countries, according to the report.
Related story
Take holistic measures to boost FDI in Nepal
