Global foreign direct investment (FDI) rose by 16 per cent last year to an estimated $1.66 trillion (€1.258 trillion), the first time it surpassed pre-crisis levels of 2007, the United Nations Conference on Trade and Development said.

The agency’s Global Investment Trends Monitor described the prospects for 2012 as “guarded” due to the fragility of the global economy.

Increases in flows of FDI tend to be beneficial for Ireland. By many measures, such as the percentage of total employment accounted for by foreign companies, Ireland is highly dependent on foreign investment.

The report only provides figures for FDI outflows. Inflow data will be published later in the year.

Last year, Irish companies reduced their foreign investments. Outward FDI was negative to the tune of $1.6 billion, according to the report. Ireland was the only country in the developed world to register disinvestment abroad last year. In 2010, total outward FDI by Irish companies stood at $17.8 billion.

Globally, companies’ FDI last year was accounted for in large part by mergers and acquisitions and increased amounts of cash reserves kept in foreign affiliates. The third form of FDI – investment in greenfield projects, such as new factories – “appeared to be limited”, the report said.

FDI from developed countries rose by 25 per cent in 2011, exceeding $1.23 trillion, with the EU, North America, and Japan all contributing to the growth.

Preliminary responses to the conference’s annual survey of FDI intentions among multinational firms reveal they are generally less optimistic for 2012 than before.