The FDI angle:

• Outward foreign direct investment (FDI) stock is the total cumulative investment made overseas by a country at a specific point in time.
• Countries with the largest FDI outward stock are developed countries.
• Why does this matter? These economies are the legal homes of major multinational companies and have a massive impact on global trade and investment.

Global outbound FDI stock declined in 2022, in contrast with its huge expansion over the past three decades, which reflects multinationals accumulating massive stockpiles of investment abroad.

At the end of 2022, the market value of global outward FDI stock stood at $39.8tn, down from $42.67tn in the previous year, according to Unctad figures. This was largely driven by a fall in outbound investment by multinationals in developed countries, according to Unctad’s 2023 global investment report, but the trend “was distorted by the withdrawal of capital by a telecommunication company in Luxembourg”. The decline is at odds with its astounding growth since 1990, the earliest year with data available, when global outward FDI stock stood at just $2.25tn.

Outward FDI stock in a country is the total cumulative direct investment made overseas by domestic companies at a specific moment in time. It is an indicator of a country’s external economic relations. Countries with greater outward FDI stocks tend to be home to major multinational companies and are more integrated with the global economy. 

This is in contrast to outward FDI flows, which show how active investors in a country have been over a specific period of time such as a year or quarter.

The US has invested abroad more than any other country. The world’s largest economy had accumulated more than $8tn of outward FDI at the end of 2022, down by 17.6% from the previous year. No other source country has ever exceeded the US’s outbound FDI stock, which reached $1tn in 1993. It took another nine years before another country, namely the UK, reached this milestone. 

The US is also the top destination for inward FDI stock, which is the investment a country has accumulated from foreign companies. Global inward FDI stock was valued at $44.3tn at the end of 2022, more than outward FDI stock. Differences in these FDI measures are due to factors such as country reporting standards, exchange rate fluctuations and round tripping, when countries with favourable regulatory regimes are used as intermediaries for FDI flows.

At the end of 2022 the country with the second largest stock of outbound FDI was the Netherlands with $3.25tn. That figure was down by 6.4% from the previous year, but is more than treble the $945.5bn it had accumulated at the end of 2007, before the global financial crisis. It is a popular location for multinationals to base themselves such as auto giant Stellantis, aircraft maker Airbus and Heineken, the Dutch brewing company.

More FDI data trends:

• Top 10 countries by FDI stock in 2022
• The growing capital intensity of greenfield FDI
• The top 10 FDI projects of 2023

China placed third. Asia’s largest economy had outward FDI stock worth $2.93tn at the end of 2022, an increase of 5.2% from 2021. Chinese companies have become increasingly active on the international stage in recent years. Outward FDI stock in China rose by 343% in the decade up to 2022. 

The UK ranked fourth overall in 2022 with an outward FDI stock of $2.2tn, down by 7.3% from a year earlier. Hong Kong — a Chinese special administrative region, financial centre and popular base for multinationals doing business in mainland China — also placed fifth overall. Outward FDI stock in Hong Kong was valued at $2.05tn at the end of 2022, an increase of 65% from a decade earlier.

Canada was the only other country to have an outward FDI stock above $2tn. It was followed by Japan ($1.95tn), Germany ($1.93tn) and Luxembourg ($1.63tn). Singapore ranked 10th overall with $1.59tn. The only other countries with outward FDI stock valued at above $1tn at the end of 2022 were France, Switzerland and Ireland.