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Foreign direct investment

Direct investment is a category of cross-border investment made by a resident in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that is resident in an economy other than that of the direct investor. The motivation of the direct investor is a strategic long-term relationship with the direct investment enterprise to ensure a significant degree of influence by the direct investor in the management of the direct investment enterprise. The “lasting interest” is evidenced when the direct investor owns at least 10% of the voting power of the direct investment enterprise. Direct investment may also allow the direct investor to gain access to the economy of the direct investment enterprise which it might otherwise be unable to do. The objectives of direct investment are different from those of portfolio investment whereby investors do not generally expect to influence the management of the enterprise. (OECD Benchmark definition)

According to the IMF, the OECD, UNCTAD and all the organisations that publish direct investment statistics, there has been a steady rise in direct investment flows worldwide in recent years (except in 2008 and 2009 due to the financial crisis). This increase is partly linked to the creation of powerful multinational groups. In addition, in some countries such as France, there has been a significant rise in the share of intercompany loans in direct inward and outward investment flows. This reflects the fact that many large multinationals have set up special purpose entities to finance their investments.

FDI Series

Click here to consult French FDI Series.

FDI Reporting

All foreign direct investments (flows to and from France) in excess of EUR 15 million must be declared to the Banque de France within 20 days of completion of the transaction.

Click here if you need to declare an FDI transaction to the Banque de France

Under Article L. 141-6 of the French Monetary and Financial Code, “the Banque de France establishes the balance of payments and the external position of France. […] It is authorised to obtain from credit institutions, payment institutions, investment firms, undertakings for collective investment in transferable securities, financial companies, insurance and reinsurance companies governed by the Insurance Code and industrial and commercial undertakings any document and information necessary for the accomplishment of its main tasks”.

Laws and regulations governing the compilation of France’s balance of payments and international investment position by the Banque de France

Three decisions ensure the proper enforcement of European rules and global standards governing balance of payments and international investment position statistics :

  • Article L.141-6 of the monetary and Financial Code

  • Decision 2007-01 of the Monetary Committee of the Banque de France General Council on the collection of statistics for the compilation of the balance of payments and international investment position of France, the euro area and the European Community.

  • Decision 2009-04 of the Governor of the Banque de France on the reporting of statistics by financial intermediaries for the purposes of compiling the balance of payments and the international investment position.

Further information

Strategies for internationalisation in Pharma

The French pharmaceutical industry uses three different strategies for internationalization. The “domestic market model” prevails downstream in the value chain, mainly for foreign groups’ affiliates. The “factories of the world model” is found upstream in the chain, mainly for industrial subsidiaries, most of which are under French control. The “hybrid model” depicts the strategies industrial and trading subsidiaries, often under foreign control.

A new standard for compiling and disseminating direct investment statistics

In 2009, the method used to estimate the market value of foreign direct investments in unlisted equities was changed. In accordance with IMF and OECD recommendations, the same framework is now used for both inward and outward FDI stocks. The implementation of this new methodology led to a substantial change in the market value of the stock of FDI assets and liabilities at end-2008 and for the period 2002-2007. Nevertheless, the net FDI position at the end of 2008 was still positive at EUR 196 billion, equivalent to 10% of GDP.

The latest statistics on French foreign direct investments

French net direct investment flows were back in surplus in 2016

The value of investments abroad made by French residents was more than double the value of non-resident investments in France. France has resumed its investments in non-resident manufacturing and is seeking out new economic growth opportunities in emerging markets.

 French direct investment stocks

Direct investment made a positive contribution to France’s net international investment position and generated over EUR 40 billion in net income in 2016. This investment mainly consists of equity holdings. The United States is France’s largest counterparty country.


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Updated on: 03/19/2019 16:51