Archive:Foreign direct investment statistics
.PNG)
External trade may be complemented or substituted by producing (and often selling) goods and services in countries other than where an enterprise was first established: this approach is known as Foreign direct investment (FDI), whereby the enterprise concerned either invests to establish a new plant/office, or alternatively, purchases existing assets of a foreign enterprise. FDI is a type of international investment where an entity that is resident in one economy (the direct investor) acquires a lasting interest (at least 10 % of the voting power) in an enterprise operating in another economy.
Main statistical findings
(%25_of_extra_EU-27_FDI).PNG)
.PNG)
(EUR_1_000_million).PNG)
Flows of FDI fluctuate considerably from one year to the next – partly as a function of economic fortunes, with FDI flows generally increasing during times of rapid growth, while disinvestment is more likely during periods of recession as companies focus on core activities in their domestic market. Inflows of FDI from non-Community countries into the EU-25 were valued at EUR 145 022 million in 2006, which was 54 % more than in 2005. Outward flows of FDI from the EU-25 to non-Community countries were valued at EUR 202 223 million. Despite the rapid increase in inward flows of FDI, the EU-25 remained a net investor abroad with net outflows of EUR 57 201 million in 2006 (down from EUR 91 810 in 2005).
Stocks of FDI show the value of all previous investments at the end of the reference period. Inward FDI stocks for the EU-25 accounted for 16.1 % of GDP in 2005, while outward FDI stocks were valued at 21.9 % of GDP. Stocks of EU-25 FDI abroad were largely concentrated in North America, which accounted for 39.1 % of the total in 2004. North America was an even more important partner in terms of stocks of FDI within the EU-25, accounting for 51.7 % of all FDI made by non-member countries. The share of Asian countries in outward stocks rose from 14.7 % to 15.4 % and inward stocks of FDI rose from 9.0 % to 9.4 % between 2003 and 2004.
It should be noted that the relatively high importance of FDI in Luxembourg should be interpreted with caution, and results mainly from the role of Luxembourg-based holding companies.
Data sources and availability
Annual EU foreign direct investment statistics give a detailed presentation of FDI flows and stocks, showing which Member State invests in which countries and in which sectors. Eurostat collects FDI statistics for quarterly and annual flows as well as for stocks at the end of the year. FDI stocks (assets and liabilities) area part of the international investment position of an economy at the end of the year.
Outward flows and stocks of FDI (or FDI abroad) report investment by entities resident in the reporting economy in an affiliated enterprise abroad. Inward flows and stocks of FDI report investment by foreigners in enterprises resident in the reporting economy. FDI flows are new investment made during the reference period, whereas FDI stocks provide information on the position, in terms of value, of all previous investments at the end of the reference period. The intensity of FDI can be measured by averaging the value of inward and outward flows during a particular reference period and expressing this in relation to GDP.
The financial account of the balance of payments (BoP) records all financial transactions; it includes foreign direct investment, portfolio investment, other investment and reserve asset flows. There are two kinds of FDI:
- the creation of productive assets by foreigners (greenfield investment);
- the purchase of existing assets by foreigners (acquisitions, mergers, takeovers, etc.).
FDI differs from portfolio investments because it is made with the purpose of having control or an effective voice in management and a lasting interest in the enterprise. Direct investment not only includes the initial acquisition of equity capital, but also subsequent capital transactions between the foreign investor and domestic and affiliated enterprises.
The sign convention adopted for the data shown in this section, for both flows and stocks, is that investment is always recorded with a positive sign, and a disinvestment with a negative sign.
Context
In a world of increasing globalisation, where political, economic and technological barriers are rapidly disappearing, the ability of a country to participate in global activity is an important indicator of its performance and competitiveness.
In order to remain competitive, modern day business relationships extend well beyond the traditional foreign exchange of goods and services, as witnessed by the increasing reliance of firms on mergers, partnerships, joint ventures, licensing agreements, and other forms of business cooperation.
External trade may be complemented or substituted by producing (and often selling) goods and services in countries other than where an enterprise was first established: this approach is known as foreign direct investment (FDI), whereby the enterprise concerned either invests to establish a new plant/office, or alternatively, purchases existing assets of a foreign enterprise. FDI is a type of international investment where an entity that is resident in one economy (the direct investor) acquires a lasting interest (at least 10 % of the voting power) in an enterprise operating in another economy.
Conventional trade is less important for services than for goods and while trade in services has been growing, the share of services in total intra-EU trade has changed little during the last decade. However, FDI is expanding more rapidly for services than for goods, as FDI in services has increased at a more rapid pace than conventional trade in services. As a result, the share of services in total FDI flows and positions has increased substantially, with European services becoming increasingly international.
Further Eurostat information
Publications
- European Union foreign direct investment yearbook 2007 – Data 2001-2005
- OECD Benchmark Definition of Foreign Direct Investment