About this article
FDI refers to investment that adds to, deducts from or acquires a lasting interest in an enterprise operating in an economy other than that of the investor, where the investor’s purpose is to have an effective voice in the management of the enterprise. Direct investment is a financial concept and is not the same as capital expenditure on fixed assets. It covers only the money invested in a related enterprise by the parent company with the enterprise having the discretion on how to use it.
The FDI survey collects financial information relating to direct investment in the UK by enterprises located abroad (inward FDI) and to direct investment abroad by enterprises located in the UK (outward FDI).
In either scenario, the foreign investment must be at least 10% of the ordinary shares or voting power – this is the minimum level of investment considered necessary to have an effective voice in the management of an enterprise. Data on investments less than 10% that are classed as portfolio investments are collected elsewhere within ONS.
FDI makes an important contribution to flows, earnings and positions for the UK balance of payments. It is also used as a factor in measuring gross national income, which determines contributions to the EU.
FDI statistics can be used to measure the international investment patterns between the UK and the rest of the world, either by country or groups of countries.
Inward FDI data indicates which sectors of the economy are of interest to foreign competitors and where long-term growth is expected to be. Outward FDI indicates which countries of the world are expected to be growth areas and where a company might wish to invest.
Within the UK, FDI estimates are used by a large number of government departments for briefing and policy formation purposes. These include HM Revenue & Customs, Cabinet Office, HM Treasury, UK Trade Investment, the Bank of England, the Department for Business, Innovation and Skills and the Department for International Development.
UK FDI figures are also extensively used for policy, analysis and negotiations by international organisations, including Eurostat, United Nations Conference on Trade and Development (UNCTAD), Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF), as well as a number of foreign embassies. More widely, the FDI estimates are used by commercial companies, academics and independent researchers.
Annual FDI Surveys
|Selection criteria||Previously returned international investment position values (net book value). If not available then number of foreign affiliates.||Previously returned international investment position values (net book value). If not available then UK turnover.|
|Sample||2,100 – selected proportional to size so that largest businesses are most sampled||3,500 – selected proportional to size so that largest businesses are most sampled|
|Overall response rate for 2013 data by net book value (NBV)||94%||90%|