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2019 Trends in FDI Flows and Policy

Ilan Strauss

From: Investment Claims (http://oxia.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. date: 19 April 2021

This chapter looks at movements in foreign direct investment (FDI) flows in 2019 and why one needs to analyse these within a broader context, beginning in 2001. This is when FDI flows fall and broader economic ‘secular stagnation’ in advanced economies begins. From the perspective of FDI, this long-standing stagnation seems to be characterized not simply by low or declining levels, but by FDI no longer responding to its fundamental drivers (proxied here by GDP). The chapter then considers statistical trends in FDI in 2019, and tries to strike a balance between short-term (immediate) explanations and long-running (underlying) factors. It also explores policy trends in FDI in 2019 within the context of increasing global competition and inter-state rivalry. The chapter reviews new regional trade agreements and growing use of national security screening mechanisms on inward FDI, along with developing economy investment liberalization policies to attract more FDI while leveraging it better. Finally, it analyses China–US direct investment dynamics and rivalry within these broader developments.

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