Foreign direct investment (FDI) into OECD countries in 2006 reached its highest level since 2000 and the near-term outlook for FDI remains strong, buoyed by high corporate profits, low interest rates and robust macroeconomic growth. A new OECD report, Trends and Recent Developments in Foreign Direct Investment, forecasts FDI in its 30 member countries to increase by a further 20% in 2007.
Inward FDI rose 22% to USD 910 billion in 2006, up from USD 747 billion in 2005 and USD 491 billion in 2004, according to the latest estimates from the OECD.
The United States was by far the world’s largest recipient of FDI in 2006, attracting USD 184 billion from OECD countries. This is the largest amount of direct investment in the US economy since 2001, in part due to a decline in the exchange rate value of the US dollar. Most of this FDI went into takeovers of existing firms, while greenfield investment accounted for just USD 14 billion.
FDI in 2006 was lifted by a small number of very large cross-border mergers and acquisitions (M&As). The biggest five such transactions, valued at close to USD 120 billion, involved takeovers in the UK service sector (USD 54 billion), Canadian mining (USD 34 billion) and the Luxembourg steel industry (USD 32 billion).
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