As COVID-19 cases begin to spike all over the world again, the global economy might be in more trouble since foreign direct investment is the key driver for trade and development.
According to UNCTAD’s latest Global Investment Trends Monitor released on October 27th, global foreign direct investment fell 49% in the first half of 2020 compared to 2019 (UNCTAD, 2020). This hits home because developed economies like the United States have seen more of decline in FDI than any other economy. According to the report, FDI flows to North America fell by 56% to $68 billion (UNCTAD, 2020).
The report also shows China has had relatively stable FDI at $76 billion (UNCTAD, 2020). This could not only be due to the Chinese government putting in place effective measures to retain investment but also the new measures put in place to attract new investment.
Luckily, the rate of decline is expected to slow down and flatten out across the globe as investors begin to gain trust. However, I believe flows will continue to be uncertain until we can get to the bottom of this health crisis. It is also important to keep in mind geopolitical outcomes will play as a key factor for development.
“Global Foreign Direct Investment Falls 49% in First Half of 2020.” UNCTAD, 27 Oct. 2020, unctad.org/news/global-foreign-direct-investment-falls-49-first-half-2020.