Global average 17%; Belgium tops with over 94%.
By Deepak Chitnis
WASHINGTON, DC: A newly released report by leading professional services firm UHY Advisors reveals that only 6.6% of the US Gross Domestic Product (GDP) comes from Foreign Direct Investment (FDI), a paltry figure when compared against the global average of 17%.
The study examined the inflow of FDI into 33 major nations over the last five years – which is when the global credit crisis began – ranking them in terms of how much of each country’s total GDP was made up of FDI. As it turns out, the US ranks a measly 29th, trailed only by Germany (4.2%), Denmark (3.1%), Italy (3.1%), and Japan (0.6%). The US percentage of 6.6% equals about $1.043 trillion in total.
Analysts at UHY Advisors say that although it’s important for the US to increase its FDI percentage, just because that number is low does not mean the country is completely failing in that regard.
“The USA is the biggest economy in the world and of course exposure to that huge market is attractive for most international investors,” said Chief Operating Officer Rick David in a statement. “On a daily basis, we are being called upon to assist the foreign investor in navigating the FDI process. When measured against the US GDP, the US may not be amongst the leaders as a location for FDI, however, it is still a target of much FDI.”
India also made the list, coming in at 22nd place with about 9.0% of their total GDP coming from FDI. That translates to about $165.6 billion, putting India right in between Argentina at 21 (9.4%, $44 billion) and Austria at 23 (8.7%, $34.7 billion).
The list was topped by Belgium, which records a whopping 91.4% of its GDP from FDI. While that equals about $442 billion, the percentage is leagues ahead of all other countries that were surveyed. Number two was Singapore, with 74%, or $203.3 billion. Ireland came in at number three (44.1%, $92.8 billion), Estonia at number four (31.6%, $6.9 billion), and Uruguay at number five (22.7%, $11.1 billion).
UHY Chairman Ladislav Hornan credits the small countries’ higher percentages to their being able to offer “significant tax incentives to companies choosing to locate there” He added, however, that “those tax incentives only work because they also have a well-educated workforce, strong infrastructure and the sophisticated ecosystem of suppliers that a multinational needs when they decide to locate to a country.”
Other noteworthy nations were the United Arab Emirates, which clocked in at 13th with 14.5%, or just under $40 billion. The UK followed right behind, with 13.5% and $329.4 billion in FDI. The Russian Federation ranked 17th on the list, with 13.0% of their GDP made up of FDI, or $261 billion, and Canada came in at 19th, with 11.0% and $200.1 billion.