- Frank Emmert
World Investment Report 2021 Now Available!
The new UNCTAD World Investment Report has been published and can be downloaded here.
Among the most striking findings is the drop of foreign direct investment (FDI) on account of the Covid-19 pandemic. Around the world, FDI dropped by an average of 35%, or 500 billion US$. This is a much more dramatic decline than the one after the 2008 financial crisis.
Different countries and regions were hit differently, however. The average decline in developed economies was 58%, with Europe seeing an 80% decline in FDI and North America a more moderate decline of 42%.
By contrast, developing economies fared somewhat better. The decline in Latin America was around 45% but Africa saw a decline of "only" 16%, and the developing nations in Asia actually experienced an increase of 4%.
Last but not least, the decline of FDI flows to economies in transition was very significant at 58%.
Some conclusions can be drawn immediately from these numbers: Asia is (still) dominating global FDI inflows and now draws more than half of all FDI. The shift away from China and into Vietnam and other regional powerhouses played a significant role. Africa continues to do relatively well as a whole, which begs for more research into the question whether the continent is finally catching up and actually developing.
At the other end of the scale, Latin America has not resolved its structural problems and, similarly, the transition economies have yet to build the institutional structures and legal systems that inspire confidence even in times of crisis. Finally, the decline of FDI to "old" Europe may be explained by the fact that very mature economies with stagnating or declining population size, combined with aging populations and tight public finances, simply don't offer the kind of opportunities that will be chased even during difficult times.