Measuring foreign direct investment

• Global FDI flows rebounded to USD 802 billion in the first half of 2024. Much of the increase came in the first quarter of 2024 when they more than doubled, whereas global FDI flows dropped by 36% in Q2 2024.
• FDI inflows to the OECD area increased by 80% but this this is mainly the result of upswings from large disinvestments in the Netherlands. Excluding FDI flows received by Luxembourg and the Netherlands, which highly fluctuated in recent years, OECD FDI flows were down by 14%.
• FDI flows into non-OECD G20 economies dropped by 19%, as FDI flows in the People’s Republic of China continued to decline in a context of geopolitical risk and economic policy uncertainty impacting foreign investors’ confidence. 
• The United States was the leading FDI recipient worldwide, followed by Brazil and Mexico. 
• There was a marginal rise in cross-border merger and acquisitions in advanced economies, as they went up by 16%, amidst a resilient global economic context. 
• Capital expenditures of announced greenfield investment projects experienced a significant decline in emerging markets and developing economies, hitting their lowest quarterly levels over the past two years in Q2. 

The 4^th edition of the OECD’s Benchmark Definition of Foreign Direct Investment (BD4), released in 2008, makes recommendations for compiling FDI statistics that result in more meaningful measures of FDI. Among those is the separate identification of capital channeled through special purpose entities (SPEs), whose role is to facilitate the internal financing of multinational corporations but that have little or no physical presence in an economy. Excluding such entities from FDI statistics offers a much better picture of the amount of FDI that remains in an economy and is not simply passing through.

BD4 also recommends presenting statistics according to the economy of the ultimate investor in addition to the immediate investor, to identify the economy of the investor who ultimately controls the investment and thus bears the risks and reaps the rewards. 

FDI statistics disaggregated by partner economy and by industry for 2022 are available in the online OECD International Direct Investment Statistics database. The database includes detailed indicators on inward and outward FDI flows, income and positions by main destination or recipient economy, and by industry, accounting for resident special purpose entities. Additional indicators are also made available, such as inward FDI positions by ultimate investing economy and a cross-classification of FDI by region and by industry.