JETRO Invest Japan Report 2021
Chapter1. Macroeconomic and Inward/Outward Foreign Direct Investment Trends in the World and Japan
Section2. FDI Trends in the World and Japan
Global Trends in Inward FDI part1

Global FDI in 2020 fell 34.7% year-on-year to 999 billion dollars

According to the United Nations Conference on Trade and Development (UNCTAD), global inward direct investment (net, flow; hereafter, inward FDI) was $999 billion in 2020 (Chart 1-5). It fell 34.7% from the previous year due largely to the impact of COVID-19, the amount of decline exceeded that of the 2008-2009 financial crisis, and it fell below $1 trillion for the first time since 2005.

Chart 1-5: Trends in Global Inward FDI
In 2000, Inward FDI amounted to 111.8 billion dollars in developed economies and 23.8 billion dollars in developing economies, for a total of 135.7 billion dollars. In 2001, it was 54.9 billion dollars in developed economies and 22.4 billion in developing economies, for a total of 77.3 billion dollars, down 43.0% from the previous year. In 2002, 41.4 billion dollars in developed economies and 17.6 billion dollars in developing economies, for a total of 59 billion dollars, down 23.6% from the previous year. In 2003, 33.7 billion dollars in developed economies and 21.3 billion dollars in developing economies, for a total of 55 billion dollars, down 6.9% from the previous year. In 2004, 40.8 billion dollars in developed economies and 29.1 billion dollars in developing economies, for a total of 69.8 billion dollars, up 27.1% from the previous year. In 2005, 59.1 billion dollars in developed economies and 36.2 billion dollars in developing economies, for a total of 95.3 billion dollars, up 36.5% from the previous year. In 2006, 95.3 billion dollars in developed economies and 46.2 billion dollars in developing economies, for a total of 141.6 billion dollars, up 48.6% from the previous year. In 2007, 129.7 billion dollars in developed economies and 60.9 billion dollars in developing economies, for a total of 190.7 billion dollars, up 34.7% from the previous year. In 2008, 40.3 billion dollars in developed economies and 69.6 billion dollars in developing economies, for a total of 148.9 billion dollars, up 21.9% from the previous year. In 2009, 71.7 billion dollars in developed economies and 52.2 billion dollars in developing economies, for a total of 123.9 billion dollars, up 16.8% increase from the previous year. In 2010, 70.7 billion dollars in developed economies and 68.6 billion dollars in developing economies, for a total of 139.4 billion dollars, up 12.5% from the previous year. In 2011, 86.7 billion dollars in developed economies and 74.6 billion dollars in developing economies, for a total of 161.3 billion dollars, up 15.7%from the previous year. In 2012, 75.9 billion dollars in developed economies and 73.3 billion dollars in developing economies, for a total of 149.1 billion dollars, up 7.5% from the previous year. In 2013, 71.4 billion dollars in developed economies and 74 billion dollars in developing economies, for a total of 145.4 billion dollars, up 2.5% from the previous year. In 2014, 66.7 billion dollars in developed economies and 73.5 billion dollars in developing economies, for a total of 140.2 billion dollars, up 3.5% from the previous year. In 2015, 126.8 billion dollars in developed economies and 76.4 billion dollars in developing economies, for a total of 203.2 billion dollars, up 44.9% from the previous year. In 2016, 134.5 billion dollars in developed economies and 72.1 billion dollars in developing economies, for a total of 206.5 billion dollars, up 1.6% from the previous year. In 2017, 89.4 billion dollars in developed economies and 75.3 billion dollars in developing economies, for a total of 164.7 billion dollars, up 20.2% from the previous year. In 2018, 70.8 billion dollars in developed economies and 72.9 billion dollars in developing economies, for a total of 143.7 billion dollars, up 12.8% from the previous year. In 2019, 74.9 billion dollars in developed economies and 78.1 billion dollars in developing economies, for a total of 153 billion dollars, up 6.5% from the previous year. In 2020, 31.2 billion dollars in developed economies 68.7 billion dollars in developing economies, for a total of 99.9 billion dollars, up 34.7% from the previous year.

Note: "Developed economies" is as defined by UNCTAD. The amount of inflow to developing economies is computed by subtracting that of developed economies from that of the world.
Source: "World Investment Report 2021"(UNCTAD)

The amount of investment in developed economies decreased by 58.3% year-on-year to $312 billion, and that in emerging economies decreased by 12.1% to $687 billion (Chart 1-6). Both regions saw a year-on-year decrease. In particular, the investment amount in developed economies fell to the 2003 level. In 2020, inward FDI in developed economies accounted for 31.3% of the total, while emerging economies accounted for 68.7%, resulting in a record-high percentage for the latter. Developed economies’ share shrank due to a significant year-on-year decline, while emerging economies’ share exceeded 50% for three consecutive years since 2018.

Chart 1-6: Global Inward FDI by Region (Billion dollars %)
Region 2019 2020
Flow YoY Share Flow YoY Share
World 1,530 6.5 100.0 999 -34.7 100.0
Developed economies 749 5.8 48.9 312 -58.3 31.3
Item of level 2Europe 363 5.3 23.7 73 -80.0 7.3
Item of level 2North America 309 18.2 20.2 180 -41.7 18.0
Developing economies 781 7.2 51.1 687 -12.1 68.7
Item of level 2Africa 47 3.9 3.1 40 -15.6 4.0
Item of level 2Asia 516 3.8 33.7 535 3.8 53.6
Item of level 2Latin America 160 6.9 10.5 88 -45.4 8.8

Among developed countries and regions, Europe fell 80.0% year on year to 73 billion dollars and North America fell 41.7% year on year to 180 billion dollars. By country and region, the U.S. remained the largest recipient of investment in 2020 but declined 40.2% from the previous year to 156 billion dollars (Chart 1-7). Regarding European countries, while Luxembourg (up 320.1% year-on-year) and Sweden (up 158.2% year-on-year) markedly exceeded the previous year's levels, in other major recipient countries, Germany fell by 34.1%, and Ireland fell by 58.8%. The Netherlands saw a new withdrawal. As a result, investment declined significantly in major countries from the previous year due to the decline in investment affected by COVID-19 and the financing of multinational companies.

Chart 1-7: Top Ten Countries and Regions of Inward FDI in 2020 (Billion dollars %)
Ranking in 2020 Country/Region Change in Ranking 2019 2020 2020
YoY
2020
Share
1 United States No change 261 156 -40.2 15.6
2 China No change 141 149 5.7 15.0
3 Hong Kong, China Rank up 74 119 61.7 11.9
4 Singapore Rank down 114 91 -20.7 9.1
5 India Rank up 51 64 26.7 6.4
6 Luxembourg Rank up 15 62 320.1 6.2
7 Germany Rank up 54 36 -34.1 3.6
8 Ireland Rank down 81 33 -58.8 3.3
9 Mexico Rank up 34 29 -14.7 2.9
10 Sweden Rank up 10 26 158.2 2.6
20 Japan Rank up 15 10 -29.5 1.0
Netherlands Rank down 49 -115 -335.5 -11.5
World 1,530 999 -34.7 100.0

The decline in emerging countries and regions was smaller than that in developed countries and regions. Asia saw a 3.8% year-on-year increase, while Africa (-15.6%) and Latin America (-45.4%) experienced decrease. Some Asian countries and regions saw gains in investment amount, such as China (5.7% increase to $149 billion), Hong Kong (61.7% increase to $119 billion), and India (26.7% increase to $64 billion). UNCTAD attributes the impact of multinational corporation’s financial strategies and the relatively early containment of the spread of COVID-19 in Asia to the solid investment in China

Number of global Greenfield investments declined for the second consecutive year

According to the fDi Markets (Financial Times), in 2020, the number of global Greenfield investments*3 (based on the date of publication) was 11,781, down 30.2% from the previous year (Chart 1-8). Due to the impact of COVID-19, the number of Greenfield investments fell sharply, marking the second consecutive year-on-year decline from the record high in 2018. In January-August of 2021, the number of greenfield investments has been sluggish even compared to the same period of the most recent two years, suggesting that it will take time for the number of global greenfield investments to pick up.

  1. *3

    Refers to a form of investment in which a corporation is newly established in the destination country

Chart 1-8: Trends in Global Greenfield Investment
The number of Global Greenfield Investments is 8,403 in 2003, increased 6.4% YoY to 8,956 in 2004, increased 6.4% YoY to 9,532 in 2005, increased 17.5% YoY to 11,196 in 2006, increased 3.9% YoY to 11,637 in 2007, increased 33.1% YoY to 15,486 in 2008, decreased 18.0% YoY to 12,698 in 2009, increased 5.8% YoY to 13,429 in 2010, increased 12.0% YoY to 15,042 in 2011, decreased 8.5% YoY to 13,766 in 2012, increased 3.5% YoY to 14,250 in 2013, decreased 3.0% YoY to 13,829 in 2014, decreased 3.4% YoY to 13,352 in 2015, increased 1.1% YoY to 13,497 in 2016, increased 5.4% YoY to 14,228 in 2017, increased 19.7% YoY to 17,033 in 2018, decreased 1.0% YoY to16,868 in 2019, and decreased 31.2% YoY to 11,600 in 2020. 11,625 in January-August 2019, 8,302 in the same period of 2020, and 6,852 in the same period of 2021.

〔Source〕"fDi Markets"(Financial Times)(as of Oct.11th, 2021)

Looking at the number of investment projects in 2020 by investor country and region, the U.S. accounted for the largest number at 2,446 cases, down 32.9% from the previous year, followed by the U.K. (1,138 cases, down 28.7%), and Germany (1,051 cases, down 28.6%) (Chart 1-9). Although investments from all the top 10 countries and regions decreased from the previous year, there was little change in the ranking of countries and regions. Except Japan and China (excluding Hong Kong), all countries were Western countries..

Chart 1-9: Number of Global Greenfield Investments by Investor Country and Region in 2020 (# of Project, %)
Ranking Country/Region Change in
Ranking
# of Project YoY Share
1 US No change 2,446 -32.9 20.8
2 Uk No change 1,138 -28.7 9.7
3 Germany No change 1,051 -28.6 8.9
4 France No change 682 -27.8 5.8
5 Switzerland Rank up 604 -25.2 5.1
6 Japan Rank down 547 -34.7 4.6
7 China No change 394 -40.4 3.3
8 Netherlands Rank up 386 -24.6 3.3
9 Spain Rank down 340 -34.5 2.9
10 Sweden Rank up 299 -7.7 2.5
World 11,781 -30.2 100.0

In terms of recipient countries and regions of greenfield investments, the U.S. marked the largest number of 1,529 cases, down 20.7% from the previous year, followed by Germany (964 cases, down 17.5%), and the U.K. (873 cases, down 34.9%) (Chart 1-10). All of the top recipient countries and regions for greenfield investment saw a year-on-year decline.

Chart 1-10: Number of Global Greenfield Investments by Recipient Country and Region in 2020 (# of Project, %)
Ranking Country/Region Change in
Ranking
# of Project YoY Share
1 US No change 1,529 -20.7 13.0
2 Germany Rank up 964 -17.5 8.2
3 UK Rank down 873 -34.9 7.4
4 France Rank up 511 -29.9 4.3
5 Spain Rank up 452 -33.8 3.8
6 Poland Rank up 380 -1.0 3.2
7 India No change 373 -45.1 3.2
8 China Rank down 358 -54.6 3.0
9 UAE No change 351 -13.8 3.0
10 Canada Rank up 300 -15.7 2.5
18 Japan No change 197 -14.3 1.7
World 11,781 -30.2 100.0

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