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Foreign direct investment

Advancing sustainable development with FDI: Why policy must be reset


Published 03 June 2021

Properly guided, foreign direct investment (FDI) has transformed the prospects of economies and played a vital role in working towards the Sustainable Development Goals. But over the past five years, in particular, public policy has created headwinds for FDI by and large. Discussions on the contribution of international business to pressing global challenges urgently need a reset.

In many countries, foreign direct investment (FDI) outperforms aid, remittances, and portfolio investments as the largest source of external financing. The investments create jobs, boosts productivity, and bring management expertise and technology. Often, FDI fosters better working conditions and environmental practices. Subsequently, industries modernize, domestic supply chains emerge, infrastructure develops and improves, as do regulatory reforms and living standards.

Since 2018, however, FDI has suffered a steady decline, both in aggregate and in developing countries. Policy reforms can help to reverse this trend. Simon Evenett and Johannes Fritz suggest in the 27th Global Trade Alert report, entitled Advancing Sustainable Development with FDI: Why Policy Must be Reset, a path forward for restoring FDI’s transformative power. In supporting this important report, the Hinrich Foundation retains optimism in FDI and encourages action to address the regulatory gaps that hold back investment.

Webinar Series

The report launch will be complemented by a series of webinars featuring a presentation by Simon Evenett. The webinars will serve audiences in several regions, from Asia to the Americas and Europe.

Upcoming

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Johannes Fritz is the CEO of the St. Gallen Endowment for Prosperity through Trade and a Research Assistant at the Swiss Institute for International Economics and Applied Economic Research, University of St Gallen.

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