FDI By Country

I wanted to bring to your attention data with regards to Foreign Direct Investment by Country (or FDI by country). FDI is understood as “An investment made by a company or entity based in one country, into a company or entity based in another country. Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a nation’s stock exchange. Entities making direct investments typically have a significant degree of influence and control over the company into which the investment is made. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies” (Investopedia).

International organizations such as the IMF and the World Bank, among others say of Direct Investment: “direct investment reflects the aim of obtaining a lasting interest by a resident entity of one economy (direct investor) in an enterprise that is resident in another economy (the direct investment enterprise). The “lasting interest” implies the existence of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence on the management of the latter. Direct investment involves both the initial transaction establishing the relationship between the investor and the enterprise and all subsequent capital transactions between them and among affiliated enterprises4, both incorporated and unincorporated” (Duce, 2003: 2).

It is important to examine Foreign Direct Investments for various reasons. For example, “Since the early 1980s, world FDI flows, now attributable to almost 54,000 transnational corporations, have grown rapidly—faster than either world trade or world output (Table 1). During 1980–97, global FDI outflows increased at an average rate of about 13 percent a year, compared with average rates of 7 percent both for world exports of goods and nonfactor services and for world GDP (at current prices) during 1980–96. In 1998, global FDI inflows increased for the seventh consecutive year, and outflows for the third consecutive year, to reach some $430–440 billion. (In principle, world FDI flows measured in terms of annual inflows should be equal to those measured in terms of annual outflows. In practice, however, because of differences in national methodologies and coverage, they are not)” (IMF.org).

Students and scholars of international relations often want to see what the FDI by country is. This can be important when looking at international business and international relations, or if one wants to understand how much a country is investing abroad, possibly because their research question asks “why” countries or corporations are looking to invest in other countries. In addition, someone may want to know how the FDI by country has also affected the recipient countries (those receiving the foreign direct investment). This is also important because “FDI has become an important source of private external finance for developing countries. It is different from other major types of external private capital flows in that it is motivated largely by the investors’ long-term prospects for making profits in production activities that they directly control” (IMF.org).

Here is a link to data by the World Bank with regards to FDI by country. I encourage you to take some time and compare the data with regards to FDI by country.