Three Reports Offer Opportunity to Triangulate Global FDI Data
Three Reports Offer Opportunity to
Triangulate Global FDI Data
Mexico — where Tesla is planning its next
Gigafactory in Nuevo León near Monterrey (pictured)
— saw FDI rise by 12% to $35 billion last
year.
Photo courtesy of Visit Mexico
This week the U.S. Bureau of Economic Analysis (BEA) for the first time
revealed data on foreign direct investment in the U.S.
in 2022 that showed a 51% decrease to $177.5 billion
(preliminary) — significantly below the average of $298.8
billion for 2014-2021. The manufacturing sector, at $55.2
billion, accounted for 31.1% of total expenditures.
“Total planned expenditures for greenfield investment
initiated in 2022, which include both first-year and future
expenditures, were $85.7 billion,” the BEA reported. “By
industry, total planned expenditures for greenfield
investment were largest in semiconductors and other
components manufacturing and in electrical equipment,
appliances, and components manufacturing, which includes
batteries.”
The United States accounts for
4% of the world’s population and 13.7% of the world’s inward
FDI.
sources: BEA and
UNCTAD
By region of ultimate beneficial owner (UBO), Asia and
Pacific had the largest total planned expenditures. By U.S.
region, the Southwest had the largest total planned
expenditures.
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Among other findings (and one
major caveat):
By state, California received the most investment,
totaling $29 billion, followed by Texas ($20.7 billion)
and Illinois ($10.9 billion). Here is how the rest of
the Top 10 shake out:
4. Pennsylvania
$10.6 billion
5. New Jersey
$10.3 billion
6. Florida
$9 billion
7. North Carolina
$8.3 billion
8. New York
$7.6 billion
T9. Massachusetts
$6,682,000,000
T9. Tennessee
$6,682,000,000
However (here’s that
caveat), FDI investment figures in 18 different states —
including prominent FDI recipients such as Arizona,
South Carolina and Georgia — were suppressed “to avoid
disclosure of data on individual companies.” Those
undisclosed figures total nearly $18 billion, or almost
10% of the U.S. total.
California and Florida had the largest employment
resulting from new investment (13,400 each), followed by
Texas (13,300) and Illinois (11,200). Next in the Top
10:
5. Pennsylvania
8,500
6. New York
8,300
7. Ohio
7,000
8. Indiana
6,300
9. New Jersey
4,800
10. Wisconsin
4,600
The manufacturing sector
accounted for a full 65% of greenfield FDI with a total
of $5.3 billion, led by computer and electronic products
($1.8 billion). By state, California is cited with the
highest level of greenfield investment ($1.5 billion),
but again, that leaves out such multibillion-dollar FDI
recipients as Georgia and Arizona.
By country of UBO, the country investing the most was
Canada, with expenditures of $37.9 billion. The United
Kingdom ($34.7 billion) was second, followed by France
($16.5 billion). By region, Europe contributed 57.4% of
new investment in 2022.
FDI Into Europe
Does the U.S. return the favor? Another recently released FDI
resource is the EY European
Attractiveness Survey 2023, which finds that
European inward FDI was up by 1% in 2022 but remains 7%
below pre-COVID-19 level. U.S. corporate investment accounts
for 21% of the projects (1,240 total), by far the most of
any country.
Companies announced 5,962 greenfield and expansion projects
in 44 European countries in 2022, compared with 5,877 in
2021. Meanwhile, FDI-affiliated jobs created fell by 16%
year-over-year. A C-suite survey conducted as part of the
research found that 29% of responding businesses have
postponed planned investments as a direct result of the
energy crisis.
source:
EY
“France, the UK and Germany continue to attract the bulk of
FDI and retain the top three spots, accounting for around
half of total projects,” the report stated. “But in 2022
their performance was muted: FDI projects edged up 3% (1,259
projects) in France but were down 6% in the UK (929) and 1%
in Germany (832).”
“There is scope for optimism, as 67% of the businesses
surveyed indicate plans to establish or expand operations in
Europe over the next year,” the EY report stated. Among
other findings:
Romania is among the top 15 countries in Europe in terms of
the number of FDI projects, with 69 projects in 2022, a
significant increase of 86% compared to 2021, and pronounced
investment in the semiconductor manufacturing sector.
“Romania demonstrates that it has become a mature economy
with substantial future growth potential, ranking fourth in
Europe in terms of new job creation with 239 jobs created
per new project in 2022, after Serbia, Spain and Hungary,”
said EY. “One of the most striking features of the 2022 vs.
2021 data is the growth of FDI projects in several southern,
central and eastern European states, including Italy (+17%),
Poland (+23%), Portugal (+24%), Romania (+86%) and Turkey
(+22%).”
Ireland, where FDI investments were up by 21%, “bucked the
trend by recording a substantial increase, partly reflecting
its agile, pro-business agenda and appeal to large U.S.
corporates.”
The biggest sector for FDI projects in 2022 was software and
IT services, up 8% and accounting for 20% of total projects.
It was followed by business services and professional
services, up 27%. However, only 33% of respondents plan to
increase their investment in manufacturing. “Encouragingly,”
the report said, “64% of executive respondents expect to
increase their European footprint in R&D over the next three
years.” (Watch for more analysis of further EY findings in
an upcoming installment of the Site Selection Snapshot.)
The Rest of the World
For global FDI perspective, UNCTAD’s World Investment Report
2023 published July 5 finds that global FDI declined by 12%
in 2022, to $1.3 trillion, after a strong rebound in 2021
following the steep drop induced by COVID-19 in 2020. That
means the above-cited U.S. inward FDI figure of $177.5
billion accounted for roughly 13.7% of all global FDI last
year. (The U.S. population of 335 million, meanwhile,
accounts for just over 4% of the world’s total of 7.98
billion.)
Among the report’s findings:
Developing countries accounted for two-thirds of global FDI
in 2022, with Latin America and the Caribbean experiencing a
significant increase as flows increased by 51%, reaching
$208 billion, the highest level ever recorded.
“In South America, flows to Brazil rose by 70% to $86 billion
— the second-highest level ever recorded — due to a doubling
of reinvested earnings,” the report said. “The number of
international project finance deals rose by 29% to 138,
ranking the country fifth worldwide. FDI more than doubled
to $15 billion in Argentina, doubled in Peru to $12 billion
and rose by 82% in Colombia, to $17 billion. Flows to
Mexico, the second-largest recipient in Latin America,
increased by 12% to $35 billion, with a rise in new equity
investment and reinvested earnings. The value of net
cross-border mergers and acquisitions (M&As) jumped to $8.2
billion (from less than $1 billion in 2021).
While FDI flows to Africa declined to $45 billion in 2022
from the record $80 billion set in 2021, the number of
greenfield project announcements rose by 39% to 766. “Six of
the top 15 greenfield investment megaprojects (those worth
more than $10 billion) announced in 2022 were in Africa,”
UNCTAD said. While many regions of the continent declined,
North Africa was on the upswing as Egypt “saw FDI more than
double to $11 billion as a result of increased cross-border
merger and acquisition (M&A) sales,” UNCTAD said. “Announced
greenfield projects more than doubled in number, to 161.
International project finance deals rose in value by
two-thirds, to $24 billion.”
