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COMMENT BEYOND20


Therecent history of global investment– adata perspective


ALEX IRWIN-HUNT LOOKS BACK OVER THE PAST 30 YEARS OF FDI


2000, global FDI grew at an average rate of 15.3% per year, according to Unctad data. Asmuchof this growthcamefromthe prolif-


I


eration of global value chains (GVCs)—wherethe production process is fragmented across multi- ple countries in search of efficiency—the global economy became increasingly interdependent. GlobalGDP(3.8%) and trade (6.2%) also grew


during this decade, helped by export-led growth policies and economic liberalisation, including in former Soviet Union countries. The upward FDI trend continued into the


noughties, albeit at a slower pace,embodied by China’s rise as an economic powerhouse and major manufacturing destination. Between 2000 and 2010, the underlying


trend in global FDI grew at an annual average rate of 8%, exceeding GDP growth of 7%, but lagging behind trade (9%). However, the global financial crisis brought


a dramatic turning point, significantlymuting global FDI inflows, falling from the annual average rate of 4.9% between 2000 and 2007, to a mere 0.4% in the years that followed (2008– 2019), according to Unctad figures.


n the decade leading up to fDi’s foundation, companies were expanding across borders at break-neck speed. Between 1990 and


Greenfield granularity The headline FDI figures that Unctad compiles — which include both cross-border deals and greenfield investment — provide a solid over- view of shifting investment over the past twenty years. But greenfield FDI project data enables an evenmore granular understanding. fDi Markets, fDi’s database that has tracked


announced cross-border greenfield investment since 2003, provides insights as to where, when and how companies have ventured into foreign markets, withadditional capability to sort across geographies, industries and business activities. Looking across 18 years of global greenfield


FDI, it can be split into four distinct periods: the pre-crisis climb (2003–2008), the choppy recov- ery (2009–2012), the steady six (2012–2017) and the pre-pandemicboom(2018–2019). As seenin the overall FDI figures, greenfield


FDI project announcements followed a similar path. Then in 2018 and 2019, global greenfield FDI projects grew rapidly to reach new heights — a large part of which was made up by soft- ware and IT services (tech) companies.


Rising intangibility In 2003, the tech sector accounted for 10.5% of the global total of greenfield FDI projects. By


24


www.fDiIntelligence.com December 2020/January 2021


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