Foreign Direct Investment Is on The Rise Around The World

WHY IS THIS IMPORTANT? It is now a competitive requirement that businesses invest all over the globe to access markets, technology, and talent. Foreign direct investment (FDI) data are a clear indicator of the trend toward globalization. FDI includes corporate activities such as businesses building plants or subsidiaries in foreign countries, and buying controlling stakes or shares in foreign companies. It doesn't include short term capital flows, such as the portfolio investments of "emerging market" mutual funds.

THE TREND: Foreign direct investment has been on the rise around the world since the 1970s. No surprise, the United States, the world's largest economy, sees far greater FDI activity than the other major industrialized economies in sheer dollar terms. But even as a percentage of GDP, U.S. FDI inflows and outflows (the total of American firm investments abroad and foreign firm investments in the United States) are 32 percent greater than in Germany, and over 100 percent greater than in Japan. U.S. foreign direct investment activity has grown from an average of $45.3 billion in the 1970s to an average of $117.5 billion in the first half of the 1990s (in constant 1990 dollars), and from 1.04 percent of our GDP to 1.64 percent.

THE DATA:

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Productivity Paradox | Knowledge Economy
Nine Myths | Data Sources | Endnotes | The Authors

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