What are the top 10 countries with the highest FDI? - Answers

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What are the top 10 countries with the highest FDI?

Top 10 countries with the highest FDIThe contemporary era of globalization has encompassed all spheres of life. Many believe it is an inevitable process with no alterations. The effects of a globalized world can be felt in all regions, surpassing socio-cultural boundaries. In the face of such an integrated world, one of the driving forces and the results of economic globalization is – Foreign Direct Investment (FDI).

Foreign direct investment is a type of foreign investment, made by an individual or a firm into the business interests of another country. It takes place when an investor establishes foreign business operations or acquires foreign assets including ownership or control. Another type of foreign investment is ‘Portfolio Investment,’ which differs from FDI since the former is the mere purchase of equity of foreign based companies.

The prevalence of FDI is largely seen in open market economies, with little regulations like tariffs, taxes, or government interventions. and is operated by the free market forces of demand and supply.

The motive that runs foreign investment is that companies can seek markets outside their domestic economy. This often promises higher returns and larger markets than a saturated domestic market. The availability of cost saving factors of production for a company outside their local economy can help them in cutting costs and gaining an advantage over their competition. The exchange of technology in the process of foreign investment, aids in building strategic assets. This underlying consequence of foreign investment incentivizes the MNCs to invest abroad.

The FDI process is carried out by considering broader concerns, prior to their beginning:  The political stability of a nation, and a pro-investment government is a welcoming sign to the direct investors. With the WTO regulations, economies with flexible government policies that permit and promote FDI by expanding ports, captive power, developing highways, and more, attract direct investors. The currency of a state is a big variable in determining the level of FDI. The currency should not have large variations in the exchange rates, which could result in loses for the investor in case of a currency devaluation.

Easy accessibility to factors of production including land, labor and capital, as well as interconnected transport facilities eases the direct investment flows as well.

Ideally the maximizing of profits is benefitted equally by the investor and the country being invested in. These advantages include the proportional economic growth in an economy, large markets for the domestic economy, the creation of new jobs and increasing of salaries and employment levels. A major advantage brought by the foreign inflows is the development of human resources. The attributes gained by training and transfer of resources, technology and skills, enhances the competence of the workforce.

Juxtaposing to these conditions, FDI also attaches with itself some downside. While drawing attention away from the home country, FDI may hurt the economic functioning of the investor’s home country. The political scenario of a country may fluctuate and can sometimes result in expropriation: It is the act of government controlling the property and assets. Lastly, the growing trend of FDI, had resulted in pervasive fears in the host countries of modern day economic colonialism, leaving them vulnerable to foreign exploitations.

Netherlands,  being the country with the largest inflow of FDI, and is strategically located at Europe’s front door. It has a competitive international climate and is home to 15,000 foreign companies, world class sea ports, centrally located airports, extensive network of road and rail. Its open culture and highly educated workforce offer a high standard of life with lower cost of living.

In  the United States, the inclination of foreign investors is due to its large consumer base, a transparent justice system, a productive workforce, a high innovation driven business environment and infrastructure. It is the second country with the largest FDI inflows. The country remains the world’s leading economic power and the largest international financial center.

The United Kingdom, despite Brexit, the UK remains a strong host for FDI. London, is still the financial capital of Europe. It has a strong currency and ranks high on the ease of doing business ranking.

Below lying table depicts the top 10 nations with the highest FDI :



FDI (millions of USD)































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