In 2021, trans-Atlantic FDI increased by 11.3% compared to 2020, propelling China to third place, according to the IMF.
The United States was the world’s leading destination for foreign direct investment (FDI) in 2021, overtaking China, which was relegated to third place, according to a note published Wednesday by the International Monetary Fund (IMF).
In one year, transatlantic foreign direct investment increased by 11.3% (+$506 billion) compared to 2020 to reach a total of $4,977 billion, placing the US well ahead of the Netherlands ($4,331 billion) and China excl. Hong Kong ($3.578 billion), which dropped to third place.
By adding Hong Kong, the Middle Kingdom remains in first place, though with a total of $6.891 billion.
This data comes from the annual FDI survey conducted by the IMF, which collects data from 112 countries.
At the global level, FDI increased by 7.1% if we consider the increases in each national currency. The increase is only 2.3% reported in dollars due to the strengthening of the dollar in the foreign exchange market.
The study also highlights the presence of several small countries in the TOP 10, including Luxembourg, Singapore, Ireland and Hong Kong.
“The apparent disconnect between FDI data and the real economy stems from the fact that FDI is primarily a financial statistic, which also takes into account financial flows between entities that have the same owner, directly or indirectly,” explained the authors of the note, Jannick Damgaard and Carlos Sanchez-Munoz.
In particular, FDI includes the flow of funds that pass through a country before reaching their final destination, “often for tax or regulatory reasons”, thus being able to “inflate” FDI in that economy.
The study carried out thus highlights the importance of offshore financial centers and their consequences in terms of FDI, “which has increased sharply in the years following the financial crisis of 2008”, although their share has significantly decreased over the last five years.