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FDI flows and stocks
Foreign direct investment (FDI) is a key element in the rapidly evolving process of international economic integration. FDI creates direct, stable and long-lasting links between economies. FDI encourages the transfer of technology and know-how between countries, and it allows the host economy to promote its products more widely in international markets. Finally, FDI is an additional source of funding for capital investment.
Definition
Foreign direct investment (FDI) is defined as investment by a resident entity in one economy with the objective of obtaining a lasting interest in an enterprise resident in another economy. The lasting interest means the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence by the direct investor on the management of the direct investment enterprise. Absolute control by the foreign investor is not required, and ownership of 10% of the voting power is the criterion used.
Inward stocks are the direct investments held by non-residents; outward stocks are the investments held in other economies.
The stock tables also show the distribution of stocks according to industry (mainly manufacturing) and services.
Comparability
International standards call for FDI stocks to be valued at market prices but most OECD countries report their FDI stocks using book values as recorded in the balance sheets of direct investors. Book values may be very different from market values and the rules for establishing book values also vary between countries.
Despite improvements in recent years, there are also methodological differences between countries as regards the inward and outward flow of FDI. For more details, see the joint IMF/OECD analysis of how countries apply the international standards (see the methodological publications below).
Totals for OECD and EU are only for the countries for which data are available. Data for 2004 and 2005 are provisional.
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Long-term trends Both inflows and outflows of FDI worldwide dropped drastically in 2001 following the spectacular investment boom of the late 1990s. FDI into the OECD area continued to decline until 2004 when inflows picked up timidly by 6% and outflows by 27%. The global environment for FDI improved in 2005 while at the same time corporate profitability was generally strong. Direct investment into OECD picked up in 2005 when inflows reached $622 bn. The United States and the United Kingdom were the main destinations for FDI in the OECD. Investment flows to EU countries also increased notably by 75% while half of the increase accounts for FDI flows into the United Kingdom, which tripled in 2005. Investments into China, amongst the foremost destinations of FDI, further progressed. FDI outflows from the OECD dropped slightly by 8% reaching $716 bn in 2005. This drop in 2005 was to a large extent influenced by the one-off decline in US inflows due to temporary effects of the changes in tax legislation. Nevertheless, OECD area continued to be net outward investor at around $95 bn in 2005, less than in 2004 but quite high by historical standards. |
Source
- OECD (2005), International Direct Investment Statistics Yearbook, OECD, Paris.
Further information
Analytical publications
- OECD (2005), International Investment Perspectives, OECD, Paris.
- OECD (2006), Reviews of Foreign Direct Investment, OECD, Paris.
- OECD (2006), Policy Framework for Investment: A Review of Good Practices, OECD, Paris.
Statistical publications
- OECD (2002), Measuring Globalisation: The Role of Multinationals in OECD Economies, OECD, Paris.
- OECD (2005), Measuring Globalisation: OECD Economic Globalisation Indicators, OECD, Paris.
Methodological publications
- IMF, OECD (1999), Report on the Survey of Implementation of Methodological Standards for Direct Investment.
- OECD (1996), OECD Benchmark Definition of Foreign Direct Investment, Third edition, OECD, Paris.
- OECD (2001), Non-Tariff Measures in the ICT Sector: A Survey, OECD, Paris.
- OECD (2005), Measuring Globalisation: OECD Handbook on Economic Globalisation Indicators, OECD, Paris.
Websites
- OECD International Investment, www.oecd.org/daf/investment.
| Texts | |
| • | Indicator web page |
| • | Indicator in PDF |
| Tables (xls) | |
| • | Outward and inward FDI stocks |
| • | Inflows of foreign direct investment |
| • | Outlows of foreign direct investment |
| Graphics | |
| • | FDI stocks |
| • | Inflows of foreign direct investment |
| • | Outlows of foreign direct investment |
Inflows of foreign direct investment
Outlows of foreign direct investment
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