Tracing three decades of foreign direct investment booms and busts and their recent decline — GED Blog

Development of global FDI flows in the last three decades

Following the fall of the iron curtain at the beginning of the 1990s, global FDI experienced a decade of slow but steady increase. The 1990s were a phase of accelerating globalization and outsourcing activities by western multinationals, in which FDI in developing countries with low labor cost (e.g. China) played an important role. The developed economies dominated global FDI flows, while FDI from developing countries played a negligible role in terms of outflows, but due to outsourcing a clearly more important role in terms of inflows (figure 1 and 2).

No end of global insecurities ahead: Poor prospects for global FDI:

FDI constitute an integral part of the global economy. However, companies need a stable and foreseeable economic environment in order to increase their investment activities. If this condition is not given, companies may hold back and postpone investment decisions or even disinvest.



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