Indian companies are expecting that more companies will invest in India escaping from China.

COVID-19 will affect all aspects of our life on the Earth, but with different values and ratios..

Yes..I too feel..FDI will increase..but you never know.

Be safe 🙏

May increase or decrease, it depends on economic condition and reforms, policy on FDI, taxes and monetary regulations of different countries.

It depends!

Deepak Verma ,

Since at least 2010, it is expected that due to the rising costs of labor in China, more and more foreign companies will re-direct their interests to other Asian countries - not only in India, but also Vietnam, Thailand, Malaysia, or, will chose to return to home base.

The current outbreak is just adding to an existing trend.

:)

Not yet clear, I think. In general, there would be an additional fear factor associated with foreign lands and a more inward looking policies are expected to be forthcoming in national policies, as well as in the minds of business decision-makers, including the MNCs.

In the couple of upcoming years some economic factors will depend somewhat on COVID-19 and its aftermost dynamics. FDI is just one of them.

FDI will increase in US support countries and may be negative for Chinese supporters.

From a theoretical perspective, this depends on which type of FDI is considered. Basically, the current impact of Corona can be seen as an increase in trade costs. Higher trade costs have a negative effect on vertical FDI, i.e. FDI that is based on cost savings (-> production relocation), but a positive effect on horizontal FDI that is based on marketing, i.e. FDI that is carried out to be closer to the customer and to save trade costs. Therefore, there will certainly be an impact (at least in the short run) on the value chains and thus vertical FDI and to the promotion of regional products, which can also be provided by MNEs on the local level (and thus more horizontal FDI). The net effect is certainly uncertain, however.

i think FDI will reduce as all foreign countries invest in their own country to pump up their economy or to get back economic activities on track. On the other hand it may also increase as india is maintaining good international relations and also promoting policies to attract FDI.

Thanks to all for your valuable insights and contribution.

Interesting discussion is going on.....thanks to RG members

https://www.lexology.com/library/detail.aspx?g=9c19ff1d-66e6-4799-9a05-2f4867827358

Thnaks Reza Fotohi and Ramatu Ussif for your inputs to this discussion

I think that FDI for new ventures will decrease because with rising uncertainty in the world and the new policies China is adopting after COVID-19, scenarios for new prjects abroad turned out uncertain. So they rather wait. There is no doubt. However, I think for stablished firms and business abroad, FDI for business expansions may rise if countries have followed fiscal policy to sustain economic activity and covid-19 effects are small. So, results on FDI might be ambiguous.

Foreign investment will continue. I think what will happen is that the world needs a period of re-acclimatization, and then the situation will return to the way it was before.

We dont know, but I think FDI will increase

UNCTAD's data show that FDI has been negatively affected by the Covid-19 pandemic (https://unctad.org/en/PublicationsLibrary/diaeiainf2020d3_en.pdf), but that is of course a short-term effect.

What will happen moving forward generally depends on how much and how fast the various national economies around the World pick up. However, there are many factors playing into the equation, including how inward-looking/protectionist economic policies will be, so it is hard to predict how the macro level factors will play out.

At the level of firms, i.e. prospective investors, interesting opportunities arise for those with ideas and money. We should expect to see a lot of acquisitions in some industries, effectively restructuring them. We should also expect new business models to emerge and get traction. Finally, we will see many failures and bankruptcies, leading to divestment instead of investment.

Thank you for this question. I totally agree with Jose U. Mora and Gabriel R.G. Benito. According to UNCTAD

"Updated estimates of COVID-19’s economic impact and revisions of earnings of the largest multinational enterprises (MNEs) now suggest that the downward pressure on FDI flows could range from -30% to -40% during 2020-2021, much more than previous projections of -5% to -15%."

https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2313

Uncertainty will remain a key determinant of the FDI evolution regionally and globally, as it influences consumer and investors behaviour. At the same time, the speed of supply and demand recovery will have a strong impact on FDI.

Assalamualaikum,

During or after bro?, if during pandemi, the answer is no, because likely people will invest when you want to expand your business or maybe you see an opportunity in other country. But during the pandemi, economy tend to decrease and this situation will also decrease foreign investment. It different stories after the pandemi bro...i hope...hehehehe

Dear all - Rangga Laz, Iulia Monica Oehler-Sincai, Gabriel R.G. Benito , Rasha H. Jehad , Jose U. Mora - thanks for your useful insights on this discussion.

In the case of Puerto Rico's economy, we expect an increase in FDI as a result of the return FDI to the US. Puerto Rico is a US territory with lower salaries and high skilled labor force that receive lower salaries than US coworker, our efforts are trying to attract FDI in the pharmaceutical and aerospace industries. Already we have pharmaceutical companies from the US, Mexico, China, Canada, Spain, and France we want to increase FDI attraction from Japan, Singapur, and South Korea.

I agree with Gabriel R.G Benito that on a macro level factors affecting FDI performance will vary considerably. Policy choices adopted by various governments will be driven by a complex mixture of economics, health and politics. Countries such as the USA which are a major source of global FDI may in the medium term encourage domestic investment to revive employment and/or reduce reliance on global supply chains. in such a case global FDI flows will suffer for a while longer. The normalisation of societies will also be impacted by whether there are future spikes in the rate of Covid 19 infections in different countries. This will determine whether there is a V or a W growth or even flatter growth recovery curve. All in all, recovery is going to be brutally uneven, especially in emerging economies, dependent on domestic and global economic, health and political factors.

I think it will decrease for more than three or more years.

It is depend on which business type the FDI will run. The Food related business, Medical & Pharmaceutical, Energy and Telecommunication will significantly increase,

while tourism-leisure-sport, construction, Airline, automobile, will decrease

In my opinion FDI flows will decline due to the world-wide recession. Nevertheless, Bugie Pudjotomo listed right sectors where companies have the best opportunities in dynamic recovery in their foreign expansion.

UNCTAD's World Investment Report 2020 predicts a decline of 40 per cent of FDI in 2020. Recovery is expected only in 2022. See https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2769

See also the self-explanatory charts on the degree of the decline https://unctad.org/en/PressMaterialImages/PR20011f1_en.jpg and on the long-term impact for the decade up to 2030 https://unctad.org/en/PressMaterialImages/PR20011f2_en.jpg

Naturally there will be large variations by sector and economy

First, during the pandemic the flows of FDI among countries have reduced, However, we should expect in the near future to increase again.

Second, with the deglobalization process, these flows of FDI might no be as large as they used to be because firms are looking more towards national or local markets rather than global. This will make firms to re-allocate resources diminishing the risks of having business abroad (in an uncertain world).

Surely FDI is at least partly determined by economic growth in the home country and will decrease in the short-term, aided by import replacement, especially for PPE manufacture?

FDI is the domain of large business entities with large capital. Even if their projects are currently stagnating, they will certainly receive adequate support from individual governments to stimulate the national economy after the pandemic.

In addition, the pandemic will result in a business death for a significant number of local businesses. As a result of this situation, space for large foreign capital to enter such a market will be created.