Columbia International Affairs Online: Policy Briefs

CIAO DATE: 06/2014

The rise of FDI income, and what it means for the balance of payments of developing countries

Miguel Pérez Ludeña

May 2014

Columbia Center on Sustainable Investment


Multinational enterprises (MNEs) multiplied their profits made in developing countries by four between 2002 and 2011 (at current prices). In Latin America and the Caribbean, they rose from US$20 billion in 2002 to US$113 billion in 2011. The growth rate has been even higher in Africa and China, but much lower in developed countries. This rise is explained by an increase in FDI stock in developing economies and the higher average profitability of MNEs.