ISAS Briefs

The global outward foreign direct investment (FDI) stock, which stood at US$14 billion in 1970, increased over 140 times to almost US$2,000 billion by 2007. Of importance also is the fact that a large part of the upsurge in global FDI has been due to mergers and acquisitions (M&As) of existing entities, as opposed to establishing an entirely new entity (that is, 'Greenfield' investment). According to the United Nations Conference on Trade and Development (UNCTAD), global cross-border M&A deal in 2006 were valued at around US$880 billion, having peaked in 2000 at almost US$1,200 billion. In comparison, there were a negligible number of deals pre-1980 and a relatively modest US$150 billion worth of M&A deals in the early 1990s. Also noteworthy is the growing significance of developing Asia in these cross-border M&As, both as sources of finance as well as destinations of investments. These cross-border M&A flows have deepened the economic integration of developing Asia with the global economy.