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Foreign direct investment (FDI) is defined as investment in an enterprise operating in a foreign economy, where the purpose is to have an “effective voice” in the management of the enterprise. In FDI statistics, an “effective voice” is owning 10% or more of a company; any investment below this is counted as ‘portfolio’ investment and not included in FDI statistics.

FDI can be either inward or outward:

  • Inward FDI measures investments made in a country from another country.
  • Outward FDI measures investments made by domestic companies in a foreign economy.

FDI statistics measure two different concepts – flows and stocks:

  • Flows measure annual levels of investment on a net basis.
  • Stocks record the total book value of all existing FDI, inward or outward.

FDI in the UK

In 2021:

  • The value of foreign direct investment into the UK, i.e. inward flows, into the UK were worth -£51.7 billion, down from £34.8 billion in 2020.
  • The value of inward FDI in the UK (i.e. the stock of FDI invested in the UK) was £2.0 trillion, up very slightly from 2020.
  • The value of outward FDI flows (i.e. investments made by UK companies in companies abroad) was £61.7 billion, compared to -£74.8 billion in 2020.
  • The value of the UK’s outward investment position abroad (i.e. the stock of UK FDI invested abroad) was £1.8 trillion, up very slightly from 2020.

World FDI

In 2021:

  • The value of world inward flows rebounded, after falling sharply in 2020, reaching $1.6 trillion, an increase of 64% in cash terms compared to 2020 and an increase of 7% compared to 2019.

  • The USA maintained its position as the world’s largest recipient of inward FDI flows, accounting for just under a quarter of world inward investment flows. 

  • The USA also the world’s largest investor abroad, accounting for around a quarter of outward FDI flows.

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