A recent report revealed that the United States of America was the largest recipient of foreign investments during 2020.
Among the top 10 destinations monitored by the International Monetary Fund, America came at the fore, followed by the countries of the Netherlands, Luxembourg, China, the United Kingdom, the Hong Kong Special Administrative Region, Singapore, Switzerland, Ireland and Germany.
According to the data, the total reported foreign direct investment centers increased by $2.2 trillion, equivalent to an increase of 6% over the figures for 2019.
Despite the uncertainties brought about by the COVID-19 pandemic, the increase in FDI positions is largely in line with the average annual increase over the past five years. Foreign direct investment is called inward direct investment.
The increase from 2019 to 2020 was driven by increases in Europe and Asia Pacific. In Europe, the UK and Germany topped the list with 18% and 15%, respectively.
In the Asia Pacific region, China was the main driver of the increase. In fact, China showed the largest reported increase in both inward and outward direct investment worldwide. Meanwhile, FDI positions in Africa are slightly down from 2019, mostly driven by lower positions in Nigeria.
The United States of America took the leading position as the largest recipient of foreign direct investment in 2019 and strengthened this position in 2020, primarily driven by higher direct investment from Japan, Germany and the Netherlands. Together, these three economies have accounted for most of the increase in foreign direct investment in the United States over the past three years.
Jurisdictions such as the Netherlands, Luxembourg, Hong Kong SAR, Singapore and Ireland remain among the largest direct investors and investing economies. These countries also continued to be attractive destinations for various types of investments, including those directed through special purpose entities (subsidiaries established by parent companies in appropriate countries).
Information on cross-border flows of special purpose entities is scheduled to be made available in early 2022 through the IMF’s Inaugural Data Collection Initiative for Special Purposes.
