Monday, 25 January 2016

The EU, a net investor in the rest of the world

In World Economy News 26/01/2016

At the end of 2014, the European Union (EU) held Foreign Direct Investment (FDI) stocks of €5 749 billion in the rest of the world (+7.6% compared with the end of 2013), while stocks held by the rest of the world in the EU amounted to €4 583 bn (+9.6%), meaning that the EU held a net investment position of €1 166 bn vis-a-vis the rest of the world.
Special purpose entities (SPEs) resident in the EU played a significant role in both outward and inward FDI positions. At the end of 2014, they accounted for half (50%) of the FDI stocks held by the EU abroad and for 63% of the FDI stocks held by the rest of the world in the EU.
These data, subject to revision, are issued by Eurostat, the statistical office of the European Union. The information on FDI stocks help to quantify the impact of globalisation and provide a measurement of longstanding economic links between countries. They provide an indication of the relative importance of a country’s economic presence abroad, or that of foreign partners in the reporting entity, measured in terms of FDI capital.
More than a third of EU FDI stocks held in the USA
North America, and in particular the United States, represented the main partner of the EU for FDI. At the end of 2014, the United States (€1 985 bn, or 35% of total stocks held by the EU in the rest of the world) was the leading location of EU FDI stocks, followed by Switzerland (€632 bn or 11%), Brazil (€344 bn or 6%) and Canada (€275 bn or 5%). The United States was also by far the main investor in the EU (€1 811 bn, or 40% of total FDI stocks held by the rest of the world in the EU), ahead of Switzerland (€509 bn or 11%). Together, these two countries accounted for slightly over half of FDI stocks held by the rest of the world in the EU at the end of 2014.
* Excluding Hong Kong
The sum of continents does not always equal total extra-EU due to rounding and because of not allocated stocks.
The source dataset can be found here.
Geographical information
The European Union (EU) includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.
Gulf Arabian countries include Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates and Yemen Offshore Financial Centres (OFC) is an aggregate which includes 40 countries. As examples, the aggregate contains European financial centres, such as Liechtenstein, Guernsey, Jersey, the Isle of Man, Andorra and Gibraltar; Central American OFC such as Panama and Caribbean islands like Bermuda, the Bahamas, the Cayman Islands and the Virgin Islands; and Asian OFC such as Bahrain, Hong Kong, Singapore and Philippines. Therefore, the countries included in the OFC aggregate are also included in the corresponding continental aggregate.
Methods and definitions
The main methodological reference used for the production of statistics on foreign direct investment stocks is the International Monetary Fund (IMF)’s sixth balance of payments manual (BPM6).
Foreign direct investment (FDI) stocks denote the value of the investment at the end of the period. FDI are the category of international investment that reflects the objective of obtaining a lasting interest by an investor in one economy in an ente rprise resident in another economy. The lasting interest implies that a long-term relationship exists between the investor and the enterprise, and that the investor has a significant influence on the way the enterprise is managed. Such an interest is formally deemed to exist when a direct investor owns 10% or more of the voting power on the board of directors (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise). Special Purpose Entities (SPEs) are mainly financial holding companies, foreign-owned, and principally engaged in cross- border financial transactions, with no or negligible local activity in the Member State of residence. Data on FDI held abroad by resident SPEs and by the rest of the world in resident SPEs are only available for some selected partner countries, for the Offshore Financial Centres aggregate and for the Total Extra-EU aggregate.
Revisions and time table
The figures presented in this news release correspond to the latest annual FDI data transmission by the EU Member States. Data for the EU aggregate take into account confidential data and estimates for Member States missing data. This ensures adherence to international standards and exhaustiveness of the EU aggregates. The annual data covered in this News Release will be updated in one year’s time when revised data will be transmitted by Member States.

Source: EUROSTAT European Union Statistical Office