Foreign direct investment, or FDI, is an investment that involves an individual or company owning 10% or more of a company overseas. These investments are not controlled by an individual investor; they are part of a portfolio. Even though they do not have control over the company, they can have influence over the policies, operations, and management of the foreign business. In 2016, the global total of FDI was $1.54 trillion, and the figure is expected to rise to $2 trillion by 2025.
FDI in the United States is expected to increase by $187.2 billion by 2020, mainly from Germany and Europe. This increase is mostly due to affiliates in manufacturing, wholesale trade, and finance and insurance. FDI in the United States is expected in the coming years to rise to over $4 trillion. However, the regulation does not apply to intra-EU investments. For these reasons, FDI is a valuable tool for a nation’s economic development.
Foreign direct investment has many benefits for a nation’s economy. It helps create jobs, diversify economies, and integrate into global value chains. As such, most countries improve their investment climates to attract more investment. However, recent findings have indicated that it is just as important to retain and expand existing investments. Another method to improve the environment for FDI is the participation of EU countries in the Energy Charter Treaty negotiations. Further, EU countries are participating in the negotiations for the modernisation of the Energy Charter Treaty.
In addition to promoting foreign investments, FDI also improves the economy of the host country. While the FDI benefits the host country, it may also result in a burden for the country. For this reason, the EU has made FDI regulations a priority. The FDI Regulatory Restrictiveness Index has been updated every two years, and the 2010 version includes more detailed information. If you want to learn more about foreign direct investment, visit the FDI Resource Hub.
In addition to FDI, the Commission has also taken a significant step towards regulating foreign direct investment. The EU has recently issued new regulations to help regulate the flow of FDI. The new regulation does not establish a separate vetting mechanism for FDI. Rather, it aims to make the entire process smoother and more efficient. If the government is concerned about FDI, it must take the stance that it will not encourage dumping.
To encourage FDI, the EU is negotiating the Energy Charter Treaty with countries in the Eurasian Economic Union. The EU has pledged to help these countries modernise their FDI policies, including by ensuring that they do not discriminate against foreign investors. As an investor, you should also take note of the FDI Regulatory Restrictiveness Index and other relevant laws. It will help you to decide which countries have the best policies for FDI.