Foreign direct investment

by · June 7, 2021


Map 1. Foreign direct investment inflows as a ratio to gross fixed capital formation, 2022
(Percentage)

FDI inflows

In 2022, global foreign direct investment (FDI) flows experienced a 12.4 per cent decline, amounting to $1.3 trillion. This decline was mostly in developed economies, where FDI fell by 36.7 per cent to $378 billion. Conversely, FDI flows into developing economies rose by 4.0 per cent reaching a historic peak of $916 billion. However, this increase was uneven across regions. FDI flows to developing Africa declined by 43.5 per cent to $45 billion in 2022 following a record-breaking year of $80 billion in 2021. FDI inflows in developing Asia and Oceania remained flat at $663 billion. And a significant increase was to developing America where flows rose by 51.2 per cent reaching $208 billion. FDI fell by 16.5 per cent to $22 billion in the LDCs.

In 2022, the United States of America remained the largest host economy for FDI. It was followed by China, Singapore, Hong Kong (China), and Brazil. Nine of the top 20 host economies were developing economies.

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

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

FDI outflows

Figure 2. Foreign direct investment inflows and outflows, 2022
(Billions of United States dollars)
Note: Excluding financial centres in the Caribbean (see note, table 1 below).

In 2022, FDI outflows from developed economies decreased by 17.1 per cent to $1 trillion. The value of FDI outflows from developing economies decreased by 5.4 per cent to $459 billion. Flows from developing Asia and Oceania fell by 11.2 per cent.

The top economies for FDI outflows in 2022 were led by the United States, followed by Japan. China was the third largest investor home economy followed by Germany and United Kingdom.

Share of FDI flows

In 2022, developing Asia and Oceania is the largest recipient of FDI, accounting for half of global inflows. Developing Africa accounted for 3.5 per cent of global FDI. Developing America accounted for 16.1 per cent of global FDI. Flows to the LDCs continue to account for less than 2 per cent of global FDI.

Within the same year, the share of developed economies in global outward FDI remained stable, accounting for over two-thirds of the total. Even though FDI flows from developing Asia and Oceania fell by 11.2 per cent, it remained an important source of investment, contributing to a quarter of global FDI.

Figure 3. Selected foreign direct investment flows
(Percentage of world total)

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, 2022
      Note: Excluding financial centres in the Caribbean (see note, table 1).

        Table 4. Foreign direct investment outflows, top 20 home economies, 2022
        Note: Excluding financial centres in the Caribbean (see note, table 1).

          References

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