Fdi in Uk

Foreign Direct Investment in the United Kingdom

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Introduction

Foreign Direct Investment (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.

FDI is irreplaceable to the UK; UK recorded a massive inward FDI stock, 1133.9 billion in 2010. Moreover, Ernst & Young pointed out that UK attracted 679 foreign projects (FDI) in 2011 and created nearly 30,000 new jobs. These showed the importance of FDI to the UK.

However, FDI does not always bring positive effects and might damage the local economy. As a result, effects of FDI have to be determinate clearly and block those may harm the local economy.

Also, it is urgent for government to understand the effects of inward FDI and thus apply different measures to raise their ability for attracting FDI, if they think it benefits the economy. Although UK remains attracting the most FDI in Europe (while data showed that there was a significantly decline of FDI in 1st quarter, 2012 compared to the same period last year, declined $9.7 million from $148 million), surveys suggested that its leading position in Europe will be taken by Germany within two years if actions are not taken.

The report aimed at describes and analyzes the inward FDI in the UK, explains their benefits and drawbacks. Opinions will also be given to the government, discussing about the role and measures they should take.

The Trend of inflow FDI in UK

Flow of FDI

According to Driffield, Lancheros, Temouri, Zhou, the foreign companies invested a 53.9 billion in UK in 2011, which slightly increased 3.2 billion from 2010. However, it is still the second smallest figure since 2004.

UK had been the highest inward FDI flows in Europe since 2004 and the highest in the world in 2005 but the amount...