US is World’s Top Destination for Foreign Investment

Asian Immigrants and Hurdles in America

The United States recorded the largest increase of inward foreign direct investment in 2021 and China moved to the third position, said the International Monetary Fund  in its Coordinated Direct Investment Survey.  

The survey showed the US position increasing by 506 billion dollar, or 11.3 percent, last year. The IMF also pointed out that inward FDI positions rose by an average of 7.1 percent in national currencies  for the 112 economies that reported data. In dollar terms, this global growth figure translates to only 2.3 percent, due to the recent strengthening of the greenback.


The survey also shows smaller economies taking prominent positions among the global top ten. The Netherlands ( second position), Luxembourg, Hong Kong SAR, Singapore, Ireland, and Switzerland all appear on this list even though none of these economies rank among the top 10 when it comes to gross domestic product.

“The apparent disconnect between FDI data and the real economy comes down to the fact that these numbers are fundamentally a set of financial statistics. They show cross-border financial flows and positions between entities tied to each other by a direct or indirect ownership share of at least 10 percent. Such flows can end up as investments into productive activities within a country, like funds going into new factories and machinery, but they can also be purely financial investments with little to no link to the real economy,” the IMF said.

The latest data from the CDIS shows that offshore financial centers still account for a disproportionately high share of global FDI. However, their share has gradually declined since 2017, while that of the largest economies such as the United States and China has increased.

“The exact drivers of this development are hard to disentangle, but are likely linked to several policy initiatives. For example, the fall in the offshore financial centers’ share of global FDI comes after the US Tax Cuts and Jobs Act took effect in 2018,” it said. The CDIS is the only worldwide survey of FDI positions and is conducted annually by the IMF. The database presents detailed data on bilateral FDI relations among economies. It aims to provide a geographic distribution of inward and outward FDI 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.


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