Global foreign direct investment flows dropped by 23% to $1.43 trillion in 2017 from $1.87 trillion in 2016, according to the United Nations Conference on Trade and Development, or UNCTAD.
The decline was driven in part by a 22% decrease in the value of cross-border mergers and acquisitions, according to UNCTAD's World Investment Report 2018.
But the report said a decrease in rates of return was the "key contributor" to the negative results. The global average return on foreign investment stands at 6.7%, down from 8.1% in 2012. The steepest declines came in Africa and in Latin America and the Caribbean.
UNCTAD said that the expansion of global value chains decelerated amid a deteriorating world trade climate. It noted that global value chains showed substantial growth in 2010-2012, but dropped in correlation with the FDI ever since.
The U.N. body projected global flows to marginally rise in 2018 but stay "well below the average over the past 10 years." It also expects rising trade tensions to further reduce investment in global value chains, and the decelerating growth of productive assets and employees to negatively affect the prospects of attracting investment in productive capacity.
