Amid strong corporate earnings and a record year for M&A, foreign direct investment surged to well above its pre-pandemic level in 2021, the Organisation for Economic Cooperation and Development (OECD) reports.
New data from the OECD showed the global FDI bounced back strongly last year, jumping by 88% year-over-year to US$1.8 trillion, which was 37% higher than its pre-pandemic level.
The surge in FDI was, “boosted by record-high levels of reinvestment of earnings and increased equity inflows involving major M&A transactions,” the OECD said.
In particular, cross-border M&A activity was up by 50% from pre-pandemic levels in developed markets, and up 25% in emerging markets.
The U.S. was the world’s top destination for global FDI, followed by China, Canada and Brazil, the OECD noted.
At the same time, the U.S. was also the largest source of FDI flows, “boosted by high levels of reinvested earnings,” the agency reported.
The other leading sources were Germany, Japan, China and the U.K.
Looking ahead, the OECD noted that, “While new investment activity was generally strong in 2021, the prospects for 2022 remain uncertain with the war Russia is waging in Ukraine.”