Companies with Foreign Direct Investment (FDI) Links Play Significant Role in UK Capital Investments

A recent article delves into the involvement of companies with foreign direct investment (FDI) links in capital investments within the UK.

According to the findings, companies with FDI links accounted for approximately 51.5% of the reported acquisition values in 2021, while the remaining 48.5% were contributed by companies without FDI links.

In the same year, companies with outward FDI links were responsible for 19.7% of the reported capital acquisitions in the UK, surpassing companies with both inward and outward links (18.7%) and those with only inward links (13.2%).

Microdata analysis reveals that although there were more capital acquisitions by companies without FDI links in 2021, companies with outward FDI links demonstrated a three times higher average value per acquisition than their counterparts without FDI links.

Specific industries where companies with FDI links dominated the reported capital acquisitions in 2021 include electricity, gas, water supply, retail, transport, and accommodation.

The analysis also highlights that companies with outward FDI links played a significant role in capital acquisitions related to new construction, computer hardware, purchased computer software, and other machinery and equipment.

The study combines data from the Foreign Direct Investment Survey and the Quarterly Acquisition and Disposal of Capital Assets Survey to understand the correlation between FDI links and capital investments. However, it acknowledges that the relationship between cross-border financial flows and capital expenditure remains uncertain.

Moreover, the article provides insights into capital acquisitions based on the type of FDI link, the industry, and the asset type. It indicates that companies with FDI links have been crucial contributors to the UK’s capital investments landscape, with their impact varying across sectors and asset categories.

The findings offer a deeper understanding of the role of FDI-linked companies in shaping the UK’s capital investment landscape and underline the significance of these firms in driving economic growth in the country.