Foreign direct investment - stocks


Data extracted in May-June 2017

Planned article update: December 2019

Highlights

At the end of 2014, the United States was the main location for the EU’s outward FDI stocks and was also the principal inward investor in the EU.

The Netherlands and Luxembourg together held approximately half of all the EU’s FDI stocks at the end of 2015.

Extra-EU foreign direct investment positions, by partner, EU-28, 2015
(% of extra-EU total)
Source: Eurostat (bop_fdi6_pos)


Globalisation patterns in EU trade and investment is an online Eurostat publication presenting a summary of recent European Union (EU) statistics on economic aspects of globalisation, focusing on patterns of EU trade and investment.

In a globalised economy, enterprises can make investments abroad to establish a commercial/territorial presence in foreign markets, for example, by founding hotel chains or retail banks. Within the General Agreement on Trade in Services (GATS), this type of trade in services is referred to as mode 3 (the supply of international services).

Foreign direct investment (FDI) stocks (or positions) measure the total value of direct investment at a given point in time; the statistics presented in this article focus on stocks as measured at the end of the year.

Full article

EU-28's inward and outward investment

FDI stocks were concentrated in the services sector

An analysis of the EU-28’s international investment position at the end of 2014 reveals that the services sector — defined here as financial and insurance activities; professional, scientific and technical activities; distributive trades; information and communication; administrative and support service activities; real estate activities; transportation and storage; accommodation and food service activities — accounted for 59.0 % of outward investment positions and for 87.4 % of its inward investment.

At the end of 2014, the United States was the main location for the EU-28’s outward FDI stocks …

Comparing the EU-28’s positions for inward and outward investment, it is apparent that inward investment appears to be more concentrated in the hands of relatively few, developed economies, while the EU-28’s outward stock of FDI was more widely distributed across a broader range of developed and emerging economies (see Figure 1). For example, while China accounted for a 0.6 % share of inward FDI positions in the EU-28 economy, about 2.4 % of the EU-28’s outward stocks of FDI were held in China.

At the end of 2015, the United States had the biggest share (37.1 %) of the EU-28’s FDI stocks abroad, valued at EUR 2.6 trillion; the second largest partner was Switzerland (11.9 %). Otherwise, offshore financial centres had the third largest share (11.8 %) of the EU-28’s outward stock of FDI at the end of 2015, followed by Brazil (4.8 %) and Canada (3.8 %), while Asian countries together accounted for more than one tenth of the EU-28 total (principally China, Singapore, Hong Kong, Japan and South Korea).

… and was also the principal inward investor in the EU-28

At the end of 2015, the United States held more than two fifths (41.4 %) of the inward investment in the EU-28 from the rest of the world. The United States therefore maintained its position as the major holder of FDI stock in the EU-28 (in 2014, most of the US stock of FDI held in the EU concerned investments in financial services, followed by manufacturing — in particular, food, beverages and tobacco, petroleum, chemicals, pharmaceuticals, rubber and plastics). Offshore financial centres (25.8 %) and Switzerland (10.8 %) were the second and third largest holders of inward FDI stock in the EU-28; the majority of the inward stock held by offshore financial centres was located in Bermuda, Jersey, the Cayman Islands and Gibraltar.

Extra-EU foreign direct investment positions, by partner, EU-28, 2015
(% of extra-EU total)
Source: Eurostat (bop_fdi6_pos)

Financial and insurance activities accounted for almost three quarters of the inward FDI positions held in the EU at the end of 2014

The activity structure of the EU-28’s FDI stock was dominated by financial and insurance activities (for which it ran a deficit), while most other service and non-service activities registered a positive balance. Financial and insurance activities held more than one third (38.7 %) of the EU-28’s outward positions and almost three quarters (73.7 %) of the EU-28’s inward positions. Manufacturing was the second largest activity, with 27.2 % of the EU-28’s outward stocks and 9.5 % of its inward stocks (see Figure 2).

Figure 2: Extra-EU foreign direct investment positions, by economic activity, EU-28, 2014
(% of all economic activities)
Source: Eurostat (bop_fdi6_pos)

Figure 3 presents a detailed analysis of the FDI positions abroad, by manufacturing activity. It shows that at the end of 2014, a majority of the EU-28’s outward stocks of FDI within manufacturing were held in the following activities: chemicals; food, beverages and tobacco; computer, electronic and optical products; coke and refined petroleum [1]. It is also interesting to note that textiles and clothing accounted for the lowest share of the EU-28’s outward stock of FDI in manufacturing activities (0.9 %); this may suggest that enterprises involved in the manufacture of these goods resorted to alternative forms of industrial organisation (for example, outsourcing or subcontracting).

Figure 3: Extra-EU foreign direct investment positions abroad, by manufacturing activity, EU-28, 2014
(% of total for manufacturing activities)
Source: Eurostat (bop_fdi6_pos)

FDI positions in the EU Member States

The Netherlands and Luxembourg together held approximately half of all the EU’s FDI stocks at the end of 2015

Figure 4 presents inward and outward FDI positions in the EU Member States; note the information presented includes stocks of FDI held in other Member States. At the end of 2015, the Netherlands and Luxemburg both accounted for very high shares of the EU’s inward and outward investment positions — indeed, the Netherlands (28.5 %) and Luxembourg (23.3 %) held more than half of the EU’s outward stock of FDI; they were followed by the United Kingdom (9.5 %).

The pattern for inward investment positions was quite similar, as the Netherlands (27.7 %) and Luxembourg (23.0 %) again held a majority of the EU’s inward FDI positions at the end of 2015, followed by the United Kingdom (9.9 %). These high shares for the Netherlands and Luxembourg likely reflect the considerable stock of investment that is held in investment funds and holding companies in both of these jurisdictions.

Germany had 8.4 % of the EU’s outward FDI positions at the end of 2015, which could be contrasted with its 5.5 % share of inward investment positions in the EU; it was a net investor as it had a higher stock of FDI abroad compared with the level of inward FDI that was held in the German economy. A similar pattern was observed for France, which held 7.3 % of the EU’s outward positions, some 2.7 percentage points higher than its share of inward investment.

Figure 4: Foreign direct investment positions, 2015
(contribution to EU total, in %)
Source: Eurostat (bop_fdi6_pos)

Source data for tables and graphs

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Balance of payments - International transactions (BPM6)


Balance of payments - International transactions (BPM6)
European Union direct investments (BPM6)


Notes

  1. Note that the ranking by activity for stocks of direct investment abroad is of lower quality than comparable information pertaining to inward stocks as not all of the EU Member States are able to provide a breakdown of their FDI according to the activity of non-resident enterprises.