Of all the economies, the United States saw the biggest gain in inbound foreign direct investment in 2021. According to the IMF’s Coordinated Direct Investment Survey’s most recent report, the US position improved by $506 billion (11.3%) last year.
Currently, the United States is the main recipient of FDI worldwide, with China rising to take third place. Additionally, it demonstrates how the top 10 economies worldwide frequently feature smaller economies. On this list are The Netherlands, Luxembourg, Singapore, Hong Kong SAR, Ireland, and Switzerland.
They display cross-border financial flows and positions between organizations connected by at least a 10% direct or indirect ownership stake. Such flows may result in investments in a nation’s productive infrastructure, such as new factories and equipment.
They may be simply financial investments with little to no connection to the real economy.
For instance, as a first step toward their end destination, many multinational corporations establish special purpose businesses in offshore financial centers where money just circulates through the economy.
These organizations, which are frequently created to get tax or regulatory benefits, can greatly skew FDI numbers. Even though they have only a minimal real influence on the host economy.
According to the most recent CDIS data, offshore financial centers continue to represent an excessively large part of global FDI.
However, since 2017, their share has slowly decreased while the major economies, like China and the United States, have seen an increase. Although the precise causes of this growth are difficult to pinpoint, they are probably connected to a number of policy measures.
This emphasizes the ongoing need for thorough and timely information to help policymakers better understand . Moreover, these developments and decisions about foreign tax and investment policies are better understood.
In addition to the CDIS, the IMF has started a project to gather information on special purpose entities and early this year published the first batch of SPE statistics.
