| World Bank IMF and Dev Agencies |    1465 VIEWS  |
| World Bank IMF and Dev Agencies | |
| 1465 VIEWS | |
 |
A Japanese automobile manufacturer builds an assembly plant in Mexico. An Italian software company opens a sales office in Kenya to reach the Kenyan market with their services. A large Australian mining company acquires a smaller Angolan one for diversification.
All are examples of foreign direct investment where a business decision
is made to somehow take a stake or interest in a company by an investor located
outside its borders.
According to the latest results of our Coordinated Direct Investment Survey ,
and as shown in our Chart of the Week, the world's top ten recipients of
foreign direct investment by end-2020 were the United States, the Netherlands,
Luxembourg, China, the United Kingdom, Hong Kong SAR, Singapore, Switzerland,
Ireland, and Germany. Total reported foreign direct investment positions
increased by $2.2 trillion-or six percent-from 2019 to 2020 (among economies
that reported data for both 2019 and 2020).
Despite the uncertainties created by the COVID-19 pandemic, the increase in foreign direct investment positions is largely in line with the average annual increase over the past five years. Foreign direct investment in the reporting economy is also called inward direct investment.
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 took the leadership
position as the largest recipient of foreign direct investment in 2019 and
consolidated that position in 2020, mainly driven by higher direct investments
from Japan, Germany, and the Netherlands. Together, these three economies
accounted for most of the increase in foreign direct investment in the United
States over the last three years.
Low-tax jurisdictions such as the 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.
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.
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