Foreign Direct Investment (FDI) Statistics

This note defines FDI and looks at recent trends in UK and world FDI

Summary

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 2018:

• The value of foreign direct investment into the UK, i.e. inward flows, into the UK were worth £49.4 billion, down from £80.6 billion in 2017.
• The value of inward FDI in the UK (i.e. the stock of FDI invested in the UK) was £1.5 trillion, up from £1.4 trillion in 2017.
• The UK’s outward FDI flows (i.e. investments made by UK companies in companies abroad) were worth £6.3 billion, down from £99.5 billion in 2017.
• The value of the UK’s outward investment position abroad (i.e. the stock of UK FDI invested abroad) was £1.40 trillion, up from £1.37 trillion in 2017.

World FDI

In 2018:

• World flows of inward FDI fell 13% to $1.3 trillion from $1.5 trillion in 2017; this follows a record high of $2.0 trillion in 2015.
• The USA had the highest level of inward investment at $252 billion; the UK ranked 6th in the world.
• The total value of inward FDI stocks was $32.3 trillion – the USA accounted for just under a quarter of the total, the UK for 6%.
• The USA was also the largest holder of stocks of outward FDI. The UK was the fifth largest holder of outward FDI stock, accounting for 5% of the world total.