FDI flows in the primary sector have been declining fast. The share of FDI in the manufacturing sector has remained stable and it is the single most important sector in the developing countries. The share in services sector has been increasing in both developed and developing countries. The industry with the largest share of inward FDI in the world is finance followed by trade. The services like banks, insurance securities and other financial services, has remained top recipient of FDI over the past decade. The m3I in the services sector has been growing over the past years at a faster rate than the FDI in other sectors.
Cross Border Mergers and Acquisitions
Cross border mergers and acquisitions are another major trend in FDI, for the past several years, mergers and acquisition involving firms located in different countries have increased significantly. Cross-border mergers and acquisitions are primarily concentrated in developed countries, but there is also a trend towards an increase in such deals in some developing countries. The number and value of total cross-border mergers and acquisitions have increased significantly worldwide. The absolute value of all cross-border mergers and acquisitions sales and purchases amounted to 544 billion dollar in the year 1998. This witnessed 60% increase over the year 1997. Mergers and acquisitions represent a significant share of FDI flows, at least in the developed countries. In the year 1998, there were 89 mega cross border mergers and acquisitions deals. These mega deals accounted for nearly three- fifths of the total of all cross-border mergers.
Recent cross-border mergers and acquisitions have been concentrated in industries that are losing comparative advantages. In the year 1998, the largest cross-border mergers was in the oil Industry followed by the automobile industry and the banking and telecommunication industry, The non-petroleum mining and refining industries also witnessed good mergers and acquisitions.
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