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Foreign direct investment

This FRED graph plots quarterly foreign direct investment (FDI) flows into the U.S. as a percent of GDP. And what is FDI? It’s the flow of capital across borders when a firm owns a company in another country. But it’s more than simply owning stock in a foreign company: It implies that the investor is directly involved in the foreign company’s day-to-day operations.

FDI is beneficial to job creation and a country’s growth. In the U.S., it began to pick up after 1975 and spiked in the late-1990s and early 2000s, corresponding with the tech bubble. During recessions, which are represented in the graph by shaded bars, FDI systematically falls. Since the Great Recession, average FDI flows have been higher than in previous decades, ranging from 1% to 2% of GDP each quarter.

How this graph was created: Search for and select “Rest of the world; foreign direct investment in U.S.; asset, flow series (ROWFDIQ027S).” From the “Edit Graph” panel, use the customize data option to add the nominal quarterly GDP series (GDP). In the formula box, type ((a/1000)/b)*100 and click “Apply.”

Suggested by Brian Reinbold and Paulina Restrepo-Echavarria.

View on FRED, series used in this post: GDP, ROWFDIQ027S

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