- The amount of foreign direct investment (FDI) globally has risen from $US14 trillion to $US26.7 trillion over the past decade.
- The amount of FDI in Australia has risen every year since 2009, reaching $796 billion in 2016.
- The United States remains the largest source of FDI.
The world is becoming more interconnected by the day, leading to increased investment from abroad.
According to Australia’s Foreign Investment Review Board (FIRB), the amount of foreign direct investment (FDI) globally has risen from $US14 trillion to $US26.7 trillion over the past decade, an increase of nearly 90%.
FDI is defined as foreign ownership of 10% or more of a business, meaning it has some control over its operations.
As an open, AAA-rated economy that has consistently run current account deficits over this period, Australia has benefited from this surge in global foreign investment, helping to meet the shortfall between domestic saving and domestic investment.
Indeed, according to the FIRB, the amount of FDI in Australia has risen every year since 2009, reaching $796 billion in 2016.
And that figure doesn’t even take into account portfolio investment from abroad — far larger than FDI — which includes stock or bond purchases that do not offer the investor any control over business operations.
So who are the largest foreign direct investors in Australia?
Look no further than the chart below, courtesy of the FIRB using data from Australia’s Bureau of Statistics (ABS).
While not as large as it once was in percentage terms, the United States remains Australia’s largest source of FDI.
Japan comes in a distant second place with the UK rounding off the podium places in third.
While China is now Australia’s largest source of foreign investment per annum, its level of FDI is still only the fifth largest on the list, sitting behind the Netherlands.
“Collectively, these trends show that historically important economies such as the United States, Japan, and the United Kingdom continue to dominate the share of FDI into Australia. Emerging investor countries, especially China, are also becoming significant source countries,” the FIRB said.
“Foreign investment plays an important and beneficial role in the Australian economy because it helps drive economic growth, creates skilled jobs, improves access to overseas markets and enhances productivity.”
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