At the time of writing, only the first of three televised presidential candidates’ debate have taken place — an event that offered more heat than light. The president and close advisors had then been notified of their Covid-19 infections, and the country was reporting more than 43,000 new daily cases than in the previous week. This is not confidence-building for foreign investors, but does it matter? The US is perennially one of the top foreign direct investment (FDI) destinations in the world. Moreover, will the election results even matter? 

It is interesting to look back at how inward FDI has increased or decreased in the years immediately preceding and following US presidential elections. Using 49 years of World Bank data on global FDI between 1972 and 2019, some interesting facts emerge.   


Over this period, the median year-over-year change in inward US FDI was +15%. Half the time FDI growth was higher, but half the time growth was lower or substantially negative. Annual change in FDI was positive 29 times (about 60 percent of the time) but negative in all other years. Investment flows are highly volatile, although annual variability appears to have decreased over time (this pandemic year not included). 

There have been 12 presidential elections over the five decades reviewed. A decrease in annual FDI variability is visible both for the calendar year prior to the election and also for the election year itself (the election being always in November). Only for the year immediately following an election has there been a slight increase in FDI volatility. 

So, what might we expect in 2021? Perhaps there is a clue in the data specifically regarding the political party of the newly elected president. In the years immediately following the election or re-election of a Republican president, inward FDI to the US has fallen, on average, by more than 12%. However, after a Democratic presidential win, inward FDI has typically held steady. Further analysis may determine the statistical significance of other influences like the simultaneous electoral outcomes in the House and Senate. History suggests that a win by Joe Biden in November could be a positive factor for inward US investment. We’ll have to wait and see if the election can counteract other macro global events. 

Gregg Wassmansdorf is a senior managing director at Newmark Knight Frank, a global real estate services firm and a member of the Site Selectors Guild.