Outside In | The FDI earthquake you probably missed, and what it signals for global trade
David Dodwell says some of the reasons for the 23 per cent drop in foreign investment worldwide last year – such as Trump’s tax reform and ‘America first’ protectionism – will persist for some time, and this means their impact should not be ignored
This investment earthquake meant that Asia was the world’s most important destination for foreign investment, with its share, steady at US$476 billion, accounting for 33 per cent of global flows (compared with 25 per cent in 2016). China (attracting US$136 billion) and Hong Kong (attracting US$104 billion) remain the world’s second- and third-most-important destinations for FDI, after the US.
Perhaps it should be no surprise that this dramatic news was missed. It appeared in what is among the world’s most boring “bibles” – the UN Conference on Trade and Development’s (UNCTAD) annual world investment report. As I plough through its 200 pages of turgid text and inscrutable tables, I believe I am one of a minority of human beings to ever turn its pages.
Yet its insights are fascinating. What could have happened to trigger such a precipitous fall in foreign investment – from US$1.87 trillion in 2016 to US$1.43 trillion last year?