Foreign direct investment

by Sonia Blachier · June 7, 2021

Map 1. Foreign direct investment inflows as a ratio to gross fixed capital formation, 2021

(Percentage)

Trends and global patterns

Global FDIforeign direct investment flows in 2021 were US$1.6 trillion, up 64.3 per cent from the exceptionally low level in 2020. The 2021 recovery brought growth in FDI in all regions. FDI as a ratio to gross fixed capital formation (GFCFgross fixed capital formation) rose from 4.3 per cent in 2020 to 7.1 per cent in 2021.

Outflows by group of economies

In 2021, developed economies more than tripled their investment abroad to US$1.3 trillion, from US$408 billion in 2020. The value of FDI outflows from developing economies rose by 17.8 per cent to US$438 billion. Developing Asia and Oceania remained a major source of investment flows even during the pandemic.

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 by group of economies

Figure 2. Foreign direct investment inflows and outflows, 2021

(Percentage of world total)

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

FDI flows to developing economies grew more slowly than those to developed economies but still increased by 29.9 per cent, to US$837 billion. FDI flows to Africa reached US$83 billion – a record level – from US$39 billion in 2020, more than doubling the 2020 level. In developing Asia and Oceania, FDI inflows rose to an all-time high for the third consecutive year, reaching US$619 billion, an increase of 19.3 per cent. In developing economies in the Americas, FDI inflows rose by 56 per cent to US$134 billion, recovering part of the ground lost in 2020.

Origins and destinations of foreign direct investment

In 2021, the share of global inflows accounted for by developed economies returned to pre-pandemic levels, at about half of the total, from just one third in 2020. The share of developing economies in global flows remained just above 50 per cent. FDI flows to Africa accounted for 5.2 per cent of global FDI and FDI to developing Asia and Oceania, the largest recipient region of FDI, accounted for 39.1 per cent of global inflows.

The share of developed economies in global outward FDI flows rose from 52.3 per cent in 2020 to 74.3 per cent in 2021, while the share of developing economies dropped from 47.7 per cent to 25.7 per cent. Developed Europe was the largest source of global FDI outflows (32.3 per cent), followed by the developed economies in the Americas (28.9 per cent).

Figure 3. Selected foreign direct investment flows

(Percentage)

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

Concepts and definitions

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 its foreign affiliate resident in the reporting country, or capital received by a foreign direct investor resident in the reporting country from its foreign affiliate abroad.

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, 2021

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

Table 4. Foreign direct investment outflows, top 20 home economies, 2021

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

References

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