Foreign Direct Investment in 2021 – A Nascent Recovery?

UNCTAD’s World Investment Report 2022 came out recently. Figure 1 depicts the recovery of FDI inflows.


While flows have recovered, they have not regained levels achieved before Mr. Trump’s trade war. In a previous post, Jardet, Jude and I attributed the decline (pre-2020) to the uncertainty associated with the trade war. Figure 2 shows how inflows have rebounded in 2021.


Looking forward, the Report notes:

This fragile growth of real productive investment is likely to persist in 2022. The fallout of the war in Ukraine with the triple food, fuel and finance crises, along with the ongoing COVID-19 pandemic and climate disruption, are adding stresses, particularly in developing countries. Global growth estimates for the year are already down by a full percentage point. There is significant risk that the momentum for recovery in international investment will stall prematurely, hampering efforts to boost finance for sustainable development.

In our paper, Caroline Jardet, Cristina Jude and I find that FDI inflows respond to economic uncertainty, so that it will indeed be difficult to sustain flows at elevated levels in this environment (post).

Here’s OECD’s estimates of FDI inflows through Q1, and GDP weighted World Uncertainty Index (used in Jardet, Jude, Chinn (2022)).

Figure 1: Global FDI flows, bn USD. Source:OECD.

Figure 2: GDP weighted WUI.

37 thoughts on “Foreign Direct Investment in 2021 – A Nascent Recovery?

  1. David O’Rear

    FDI is notoriously difficult to measure, particularly across jurisdictions. Much of the inflow to Hong Kong, for example, is portfolio flow disguised as direct investment, for dodging some other place’s taxes. US$140 billion, after all, is one heck of a lot of 5-star hotels, and someone would have noticed.

    1. Menzie Chinn Post author

      David O’Rear: Yes, agree – that’s why in our paper we tried to sweep out some of these effects. OECD also have some limited data trying to account for disguised FDI.

    2. pgl

      The last time I looked at HK’s national income accounting, reports exports were just over 200% of GDP and reported imported were just under 200% of GDP.

      “portfolio flow disguised as direct investment, for dodging some other place’s taxes” is a polite way of saying transfer pricing manipulation.

  2. ltr

    July 29, 2022

    China’s FDI inflow up 17.4% in H1

    Foreign direct investment (FDI) into the Chinese mainland, in actual use, expanded 17.4 percent year on year to 723.31 billion yuan in the first half of the year, the Ministry of Commerce said Friday.

    In U.S.-dollar terms, the inflow went up 21.8 percent from a year ago to $112.35 billion, according to the ministry.

    China’s high-tech industries saw a rapid FDI increase of 33.6 percent in the first six months. Specifically, foreign investment in high-tech manufacturing rose 31.1 percent, while that in the high-tech service sector jumped 34.4 percent.

    The service industry received 537.13 billion yuan of foreign investment in the period, up 9.2 percent from a year earlier….

    1. ltr

      January 13, 2022

      China’s FDI inflows hit record-high 1.15 trillion yuan in 2021

      Foreign direct investment (FDI) into the Chinese mainland, in actual use, expanded 14.9 percent year on year to a record high of 1.15 trillion yuan in 2021, the Chinese Ministry of Commerce said on Thursday.

      The figure, excluding the banking, securities and insurance sectors, expanded by 20.2 percent in U.S. dollar terms, ministry spokesperson Shu Jueting told a regular press conference.

      The robust growth came as China’s long-term and sound economic fundamentals and constantly improving business environment retained an appeal to foreign capital, said Zhang Jianping, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the ministry.

      High-tech industries saw FDI inflows jump 17.1 percent from a year earlier, and cross-border investment in China’s high-tech industries saw a year-on-year increase of 17.1 percent in 2021, outpacing the services sector that recorded a 16.7-percent jump during the same period, official data showed.

      Investment in the Chinese mainland from countries along the Belt and Road and the Association of Southeast Asian Nations, respectively, surged by 29.4 percent and 29 percent in 2021 year on year, according to the ministry data.

      In regional terms, foreign investment into the eastern, central and western parts of China recorded a growth rate of 14.6 percent, 20.5 percent and 14.2 percent, respectively, last year….

      1. ltr

        September 29, 2021

        China tops world for the first time in outward foreign direct investment

        China’s outward foreign direct investment (OFDI) grew to $153.71 billion in 2020, ranking first globally for the first time, a report showed Wednesday.

        The OFDI growth rate went up by 12.3 percent year on year in 2020, a large reverse from a contraction of 4.3 percent in 2019.

        China’s OFDI amounting to $2.58 trillion at the end of 2020 remained the third largest in the world, following the United States ($8.13 trillion) and the Netherlands ($3.8 trillion), said the Annual Statistical Communiqué of China’s Outward Foreign Direct Investment 2020, jointly issued by the Ministry of Commerce, the National Bureau of Statistics and the State Administration of Foreign Exchange.

        China’s influence in global foreign direct investment continues to expand. The flow of China’s OFDI accounted for more than 10 percent of the world for five consecutive years, the report said….

      2. ltr

        June 23, 2022

        China’s non-financial outbound direct investment up 2.3 pct in January-May

        BEIJING — China’s non-financial outbound direct investment (ODI) reached 287.06 billion yuan in the first five months of the year, up 2.3 percent year on year, official data showed Thursday.

        In U.S. dollar terms, the ODI rose 3 percent from a year ago to 44.6 billion dollars, according to the Ministry of Commerce.

        In the January-May period, non-financial direct investment into countries along the Belt and Road increased 10.2 percent year on year to 8.19 billion U.S. dollars….

  3. pgl

    There has been a lot of chatter about the semiconductor sector. Alas some of this chatter comes from our Usual Suspects who know nothing about this sector. It seems our Speaker of the House met with one of the larger manufacturers:

    House Speaker Nancy Pelosi (D-Calif.) will meet with the chairman of Taiwan’s biggest semiconductor manufacturer during her visit to the island, in a sign of how vital computer chips are to the U.S. economy and national security. Pelosi and the chairman of Taiwan Semiconductor Manufacturing Company (TSMC), Mark Liu, will discuss implementation of the recently passed Chips and Science Act, which provides $52 billion of federal subsidies for domestic chip factories, according to people familiar with the matter, who spoke on the condition of anonymity to discuss Pelosi’s sensitive schedule. The meeting, planned for Wednesday Taiwan time, comes as TSMC builds one chip factory in Arizona and considers expanding that project to include additional factories on the same site, one of the people said.

    Taiwan FDI into the US. And the Usual Suspects tell us Biden does not do international trade. Really? BTW Pelosi serves a district not too far from Intel which basically invented this sector.

    1. Anonymous

      the government in Taipei calls itself

      republic of china

      how come all the republic of china independence supporters say the post Japanese name for formosa

      1. baffling

        well the island is not really chinese. the original population is from the pacific rim population, not mainland china. historically, china has very little legitimate claim to the island. probably as much as Japan does.

      2. Barkley Rosser

        Maybe because that is what the people living in thr ROC call it?

        I remember back in the 50s people in the US were calling it by that old name that was given to it by the Portuguese, but it certainly seems reasonable to call it what the inhabitants call it.

        You really have quite a habit of coming up with some seriously dumb things some times.

  4. pgl

    Josh Hawley fist bump the 1/6 domestic terrorists turns out to be a Putin poodle:

    Missouri Senator Josh Hawley wrote in an op-ed that he does not believe the US should throw its support behind Sweden and Finland joining NATO, becoming the first senator to announce his opposition to the alliance.

    Could someone please tell McConnell that is time for this traitor to be banished from his conference?

      1. baffling

        because nato resists the unprovoked attacks currently underway by Russia. nato does good for the world. apparently you are a fan of anarchy.

  5. Macroduck

    Emerging market FDI flows, as represented in figure 1 are larger and steadier than those for developed economies. I assume that’s because China and Hong Kong are included among EMs. Any time China is included in an EM aggregate, information about EMs in general is obscured.

    I am curious to know if EM flows are as steady as portrayed in figure 1 with China excluded.

  6. ltr

    July 31, 2022

    Belt and Road Initiative paves way for shared future via common development
    By Shi Xiaomeng

    BEIJING — For many years, commuters, merchants and tourists had to spend endless hours to travel by land from the Croatian mainland to the southern part of the eastern European country. A bridge recently inaugurated has made those exhausting experiences a thing of the past.

    Opening for traffic earlier this week, the 2.4-km-long bridge finally connects two parts of the nation facing each other across the blue waves. Now it just takes a breezy three-minute drive for local residents and travelers to cross the strait for their trips to Dubrovnik, a medieval city known as the “Pearl of the Adriatic.”

    Connectivity matters, not only for tourism, but also for the movement of goods and access to services. A much smoother flow of trade is expected to create thousands of local jobs. Another piece of good news for people living in the southernmost part of Croatia is that they now can enjoy easier access to educational and health facilities on the country’s mainland.

    In the long run, this flagship project of Belt and Road cooperation, along with others of its kind, is expected to help revive growth in the region and spark new possibilities for common development in other parts of the world. This is precious against the backdrop of the lingering COVID-19 pandemic, a tottering global economy and mounting geopolitical uncertainties.


    Initiated by Chinese President Xi Jinping in 2013, the Belt and Road Initiative (BRI) envisions trade and infrastructure networks connecting Asia with Europe and Africa along the ancient Silk Road routes.

    Over the past 10 years or so, the BRI has followed the guiding principles of extensive consultation, joint contribution and shared benefits. It has made impressive headway in delivering tangible benefits to local residents through such connectivity projects as the Peljesac Bridge, the Mombasa-Nairobi Standard Gauge Railway in Africa, and the new Haifa port in Israel, among others.

    “We are seeing connectivity, we are seeing airports remodeling, and we are seeing ports remodeling,” said Charles Onunaiju, director of the Nigeria-based Center for China Studies, when speaking of China’s infrastructure investment in Africa.

    When describing the economic benefits of Belt and Road cooperation, Onunaiju invoked Lekki Deep Sea Port, Nigeria’s first deep seaport under construction by China Harbour Engineering Company in Lagos.

    Official data show the project will create up to 170,000 jobs and bring revenues totaling 201 billion U.S. dollars to the state and federal government through taxes, royalties and duties….

    1. CoRev

      Barking Bierka – the Disgusting NYC Jerk, why are you so interested in rape articles? How many times do we need to be exposed to your fetishes?

      As a reminder, that’s how you got Disgusting added to your descriptor.

      1. pgl

        WTF – did Cramer raped someone? Oh wait the dog chasing its own tail was replying to another comment. OK!

        So I take it you endorse those miners gang raping those women. Good to know how much of a disgusting human being you really are.

        1. Moses Herzog

          See, I’m slow to the take again. I just assumed CoRev was referring to this:

          From the Jane Mayer New Yorker article:
          The part of the book that caused the most controversy concerns Trump’s divorce from his first wife, Ivana. Hurt obtained a copy of her sworn divorce deposition, from 1990, in which she stated that, the previous year, her husband had raped her in a fit of rage. In Hurt’s account, Trump was furious that a “scalp reduction” operation he’d undergone to eliminate a bald spot had been unexpectedly painful. Ivana had recommended the plastic surgeon. In retaliation, Hurt wrote, Trump yanked out a handful of his wife’s hair, and then forced himself on her sexually. Afterward, according to the book, she spent the night locked in a bedroom, crying; in the morning, Trump asked her, “with menacing casualness, ‘Does it hurt?’ ” Trump has denied both the rape allegation and the suggestion that he had a scalp-reduction procedure. Hurt said that the incident, which is detailed in Ivana’s deposition, was confirmed by two of her friends.

          I guess it becomes “consensual” after the woman gets a $15 million cash payment. #MeTooCashUpFront

  7. pgl

    So how did big bad China punish Taiwan for letting Speaker Pelosi visit?

    China has suspended some trade with Taiwan in apparent retribution for a visit by the US House Speaker Nancy Pelosi to the self-governing island. The curbs include the suspension of some fruits and fish imports from Taiwan, and exports of natural sand to the island. China is Taiwan’s largest trading partner, with bilateral trade worth $273 billion last year, accounting for 33% of the island’s total trade with the rest of the world, according to the Taiwanese government. Experts are also concerned about the impact escalating tensions between Taipei and Beijing may have on Taiwan’s semiconductor industry.

    That’s it? Taiwan can sell its fruit and fish to people here or Australia or Japan. And TSMC can sell more of its semiconductors to us. If China decides to punish its own people this way we can enjoy lower prices for not only semiconductors but also fish.

  8. ltr

    July 28, 2022

    Cumulative Number of Child COVID-19 Cases

    Over 14 million children are reported to have tested positive for COVID-19 since the onset of the pandemic according to available state reports; nearly 331,000 of these cases have been added in the past 4 weeks. Approximately 6.2 million reported cases have been added in 2022.

    14,098,981 total child COVID-19 cases reported, and children represented 18.5% (14,098,981/76,163,222) of all cases

    Overall rate: 18,732 cases per 100,000 children in the population

    American Academy of Pediatrics

  9. ltr

    August 3, 2022

    Chinese mainland records 101 new confirmed COVID-19 cases

    The Chinese mainland recorded 101 confirmed COVID-19 cases on Tuesday, with 38 attributed to local transmissions and 63 from overseas, data from the National Health Commission showed on Wednesday.

    A total of 335 asymptomatic cases were also recorded on Tuesday, and 6,219 asymptomatic patients remain under medical observation.

    The cumulative number of confirmed cases on the Chinese mainland is 229,802, with the death toll from COVID-19 standing at 5,226.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    1. Noneconomist

      Nevada in-laws just invested in home solar. They only get 300+ days of sun/year. How will this investment ever pay off?

      1. baffling

        we could have cheaper and more reliable renewable grid already if we did not have a faction of people that are simply foot dragging. the fossil fuel industry has a vested interest in keeping the grid working as an antique, and have effectively resisted any changes because they know what the future holds. a modern grid would be much better. its just like the electric car. superior to an ICE. and yet we still have some neanderthals who keep trying to throw sand in the gears.

    2. pgl

      “But a significant portion of the electricity produced in the High Plains stays there for a simple reason: It can’t be moved elsewhere. Despite the growing development of wind energy production in Texas, the state’s transmission network would need significant infrastructure upgrades to ship out the energy produced in the region.”

      Have you been to Lubbock? It is famed from being 300 miles from any civilized city.

      Now this is likely going to get CoRev chasing his own tail. And based on his latest barking – it seems this rapid dog is looking for gang rapes to participate in.

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