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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 2019:

  • The value of foreign direct investment into the UK, i.e. inward flows, into the UK were worth £35.6 billion, down from £65.9 billion in 2018.
  • The value of inward FDI in the UK (i.e. the stock of FDI invested in the UK) was £1.6 trillion, down very slightly from 2018.
  • In terms of the UK’s outward FDI flows (i.e. investments made by UK companies in companies abroad) the UK recorded a net disinvestment of -£4.8 billion in 2019.
  • The value of the UK’s outward investment position abroad (i.e. the stock of UK FDI invested abroad) was £1.50 trillion, up from £1.45 trillion in 2018.

World FDI

In 2019:

  • World flows of inward FDI increased 3% to $1.54 trillion from $1.50 trillion in 2018; this follows a record high of $2.0 trillion in 2015.
  • Modest growth between 2018 and 2019 is expected to be eclipsed by a dramatic fall in FDI flows in 2020 – this fall is expected to be worse than the one experienced in the two years following the global financial crisis.
  • Global FDI flows in the the first half of 2020 were 49% lower than in the first half of 2019.

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