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FDI


Foreign investment in an uncertain future


Foreign direct investment (FDI) has never really recovered from its peak before the 2007 fi nancial crisis – yet the extent to which investment has collapsed over the past year is still shocking. With confi dence shot, and vaccine roll-out slow across much of the world, the situation doesn’t look much better going forward either. Andrea Valentino chats to Terry Toland at Kearney’s Global Business Policy Council, about the huge consequences of the pandemic on FDI, what it means for input and output countries, and how environmentalism might re-emerge as a key driver.


ne way or another, foreign investment built our world. Cast your mind back to those first multinationals – London’s East India Company, or its rivals in Amsterdam or Lisbon – or think ahead to their successors in the nineteenth century. From British work on Brazilian electricity lines to the German money that flowed to Arab railways, the modern infrastructure of whole countries is based on investment from abroad. As early as 1914, worldwide FDI was worth around $15bn. Even by 1932, GDP for the whole of China was a mere $28.8bn.


O


Despite the wars, revolutions and downturns that followed, this trend has broadly continued. Though


it’s yet to fully recover after the 2007 crash, FDI in 2019 accounted for $1.39trn, or about 2% of international GDP. The numbers have been especially rosy in developing countries. If Brexit has stymied FDI in the UK, for instance, Russia saw inflows double to $33bn. It’s a similar story in Brazil, with FDI jumping 26%. Though the numbers in China and the US were less remarkable, in short, it seemed like FDI was finally starting to clamber back to its salad days before the Great Recession, where it was worth a bewildering 5.3% of global economic output. Then, of course, the pandemic struck. With markets literally in lockdown, outside investment


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Finance Director Europe / www.ns-businesshub.com


Faiz Zaki/Shutterstock.com


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