United States, the Netherlands, Luxembourg and China are among the world’s top ten recipients of Foreign Direct Investment (FDI) by end-2020, according to the International Monetary Fund.
The United Kingdom, Hong Kong SAR, Singapore, Switzerland, Ireland and Germany also come in top ten table of receiving FDI. The total foreign direct investment positions increased by 2.2 trillion dollars from 2019 to 2020. This comes to six percent, the IMF added. The International organisation said that the increase in foreign direct investment positions, despite uncertainties created by the COVID-19 pandemic, is largely in line with the average annual increase over the past five years.
THE SURGE
The IMF mentioned that the surge from 2019 to 2020 was led by increases in Europe and Asia Pacific. In Europe, the United Kingdom and Germany topped the list, accounting for 18 percent and 15 percent, respectively. In Asia Pacific, the increase was mainly driven by China. In fact, China showed the largest reported increase in both inward and outward direct investment worldwide. At the same time, foreign direct investment positions in Africa decreased slightly from 2019, mostly driven by lower positions in Nigeria.
THE UNITED STATES
The IMF states that the United States took the leadership position as the largest recipient of foreign direct investment in 2019 and consolidated that position in 2020,. This was mainly driven by higher direct investments from Japan, Germany, and the Netherlands. These three economies accounted for most of the increase in foreign direct investment in the United States over the last three years. Netherlands, Luxembourg, Hong Kong SAR, Singapore, and Ireland remained among the top direct investors and investee economies. They continued to be attractive destinations for different types of investments, including those channeled through special purpose entities (subsidiaries created by parent companies in countries of convenience). Information on cross-border flows of special purpose entities will be made available in early 2022 through the IMF’s inaugural data collection initiative for special purpose entities
COORDINATED DIRECT INVESTMENT SURVEY
The Coordinated Direct Investment Survey is the only worldwide survey of foreign direct investment positions, conducted annually by the IMF. The database presents detailed data on bilateral direct investment relations among economies. It aims to provide a geographic distribution of inward and outward direct investments worldwide, contribute to a better understanding of the extent of globalization, and support the analysis of cross-border linkages and spillovers in an increasingly interconnected world.
