Foreign direct investment

Map 1. Foreign direct investment inflows as a ratio to gross domestic product, 2020

Trends and global patterns

FDI fell dramatically in 2020 during the COVID-19 crisis. Global FDI flows dropped by 35 per cent in 2020, to US$1.0 trillion from US$1.5 trillion in 2019. This is almost 20 per cent below the 2009 financial crisis level.

The decline was heavily skewed towards developed economies, where FDI inflows fell sharply by 59 per cent to US$329 billion in 2020, a level last seen in 2003. FDI flows to Europe fell by 78 per cent, largely because of negative FDI in countries with significant conduit flows, such as the Netherlands and Switzerland. FDI to North America declined somewhat less sharply, by 42 per cent.

FDI to developing economies decreased at a more moderate 9 per cent rate, mainly because of robust flows in Asia. The fall in FDI flows across developing regions was uneven, with 45 per cent in America and 16 per cent in Africa. In contrast, flows to Asia rose by 3 per cent.

Figure 1. World foreign direct investment inflows
(Billions of United States dollars)

Note: Excluding financial centres in the Caribbean (see note, table 1 below).

Inflows and outflows by group of economies

Figure 2. Foreign direct investment inflows and outflows, 2020
(Billions of United States dollars)
Note: Excluding financial centres in the Caribbean (see note, table 1 below).
In 2020, FDI from developed economies decreased by 56 per cent to US$354 billion, the lowest since 1997. Outflows from Europe (including large negative flows) fell by 79 per cent to US$80 billion. Outflows from developing countries fell by 7 per cent to US$386 billion. Developing Asia was the only region recording expansion in outflows, increasing by 6 per cent to US$388 billion. FDI outflows from Africa fell by 68 per cent in 2020 to US$1.6 billion from US$4.9 billion in 2019. Outflows from developing America collapsed in 2020, recording an overall disinvestment for the first time ever (-US$3.5 billion).

Origins and destinations of foreign direct investment

Developed economies’ share in global outward FDI dropped to a record low of 48 per cent in 2020. Europe accounted for 11 per cent, North America accounted for 19 per cent and developed Asia accounted for 16 per cent.

On the recipient side, as a result of robust flows in Asia, developing economies accounted for 67 per cent of global FDI inflows, up from 48 per cent in 2019. Developing Asia is the only region recording growth, accounting for 54 per cent of global inward flows. Developing America accounts for 9 per cent and Africa for 4 per cent.1

Figure 3. Selected foreign direct investment flows
(Percentage)

Note: Excluding financial centres in the Caribbean (see note, table 1 below).

Concepts and definitions

Foreign direct investment (FDI) is defined as an investment reflecting a lasting interest and control by a foreign direct investor, resident in one economy, in an enterprise resident in another economy (foreign affiliate).

FDI inflows comprise capital provided by a foreign direct investor to a foreign affiliate, or capital received by a foreign direct investor from a foreign affiliate. FDI outflows represent the same flows from the perspective of the other economy.

FDI flows are presented on a net basis, i.e., as credits less debits. Thus, in cases of reverse investment or disinvestment, FDI may be negative.

FDI stock is the value of capital and reserves attributable to a non-resident parent enterprise, plus the net indebtedness of foreign affiliates to parent enterprises -—
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Summary tables

Table 1. Foreign direct investment flows by group of economies
Note: Excluding financial centres in the Caribbean, namely: Anguilla, Antigua and Barbuda, Aruba, the Bahamas, Barbados, British Virgin Islands, Cayman Islands, Curaçao, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Sint Maarten and Turks and Caicos Islands.

    Table 2. Foreign direct investment stock by group of economies
    Note: Excluding financial centres in the Caribbean (see note, table 1).

      Table 3. Foreign direct investment inflows, top 20 host economies, 2020
      Note: Excluding financial centres in the Caribbean (see note, table 1).

        Table 4. Foreign direct investment outflows, top 20 home economies, 2020
        Note: Excluding financial centres in the Caribbean (see note, table 1).

          Notes

          1. For further analyses on that topic, see -—
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          References

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