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INSIDEFDI


Economicdevelopment is the true vaccine


RAISING LIVING STANDARDS ACROSS THE BOARD WOULD REDUCE THE VULNERABILITY OF POORER COMMUNITIES, WRITES JACOPO DETTONI


At first, we assumed it was the elderly. However, as whole communi- ties became exposed, it becameclear that this was an over-simplification. A report by the UK government’s


C


Public Health England found that people belonging to the black, Asian, minority ethnic (BAME) com- munities are up to twice as likely to die of Covid-19 than those in white ethnic groups. Ethnicity, though, has little to do


with it. BAME communities often have frontline occupations. They are also more likely to live in deprived areas and thus be more exposed to the virus through factors such as public transport and multigenera- tional households. The economic crisis nowfollow-


ing in the wake of the pandemic is likely to be just as ruthless. The World Bank estimates it will widen inequalities within developed econo- mies and push between 71 million and 100 million people into extreme poverty in developing economies. This spiralling effect is worry-


ing. A vaccine might make things even worse by dividing the world into those who can find and pay for it, and those who cannot. Unlocking investment to lift deprived and distressed communi- ties is a no-brainer for those looking for alternative solutions. At themoment, financial and


physical investment is incredibly concentrated. Take venture capital: in 2019 alone, VC investment into US-based companies totalled $136.6bn, inspiring the envy of tech ecosystems elsewhere. As much as 85% of thatmonster investment went to just three urban areas: San Francisco, NewYork and Boston. When it comes to foreign invest- ment, our analysis suggests that half


August/September 2020 www.fDiIntelligence.com


ovid-19 has been ruthless in exposing themost vulnerable members of our population.


of the world’s top 100 FDI destina- tions had 40% or more of total pro- jects concentrated in a single city. This tended to be in developing or small countries but they are not alone. In Japan, more than half of all FDI projects announced since 2003 went to Tokyo. There are great talents and busi-


nesses away fromtraditional centres of investments that the market is failing to recognise. Theremay be good reasons for that (such as lack of infrastructure); theremay not. Sometimes it boils downthe sim- plest things. “Meeting people is really at the


core of what we do,” Anna Mason, who has been travelling around the US on the Rise of the Rest bus tour with US billionaire Steve Case, tells me. Investment promotion agencies


(IPAs) and economic development organisations play a vital role in cre- ating the opportunity for those meetings. They are no panacea, but their contribution is substantial when it comes to raising the profile of communities and advocating to national authorities for better poli- cies and resources. The London School of Economics


found that, on average, regional IPAs in less developed regions increase the probability of attracting foreign capital by up to 14%. Welike to think that Covid-19


exposed us all equally as a global community; the reality is that it exposed some more than others. And some of themost exposed people are also the least likely to have early access to any prospective vaccine. Lifting deprived communities


through investment – and in doing so, protecting them– is tomeamore realistic ambition.■


Jacopo Dettoni is the editor of fDi. 3


THERE ARE GREAT TALENTS AWAY FROM TRADITIONAL CENTRES OF INVESTMENTS THE MARKET IS FAILING TO RECOGNISE


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