It might not be surprising to learn that the U.S. is the top destination for foreign direct investment (FDI).
According to new United Nations data cited by U.S. Trust’s Joseph Quinlan, the U.S. accounted for $US159 billion of inflows of the global total of $US1.46 trillion of flows in 2013. This is down from $US168 billion in 2012.
“What’s more, notwithstanding last year’s drop, America’s FDI inflows in 2013 were still greater than combined inflows to China and India ($155 billion),” noted Quinlan. “China ranked second in FDI inflows last year, taking the Silver medal, while the Bronze medal goes to Russia thanks to a large one-off investment by a major British oil company in Russia’s economy. India wasn’t even on the same playing field as the U.S. and China.”
This came as the U.S. economy accelerated through the year. But, it’s important to note that these moves in overseas investment are about much more than short-term economic growth.
“[T]he U.S. remains the perennial favourite of foreign multinationals thanks to multiple factors including a large and wealthy population, top-notch universities, a transparent rule of law, an ease of doing business that compares favourably with other nations, world-class innovative capabilities, a relatively young population, deep capital markets, and declining energy costs, to name just a few,” added Quinlan.
It’s interesting to see so much money come into the U.S. Sure, it’s the world’s largest economy. But there are many places around the world that offer fatter returns.
For now, the U.S. should enjoy this position as it means more money for capital investment and R&D.
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