The Evolution of Foreign Direct Investment since 1970

A foreign direct investment (FDI) is an investment made by a company or government into a foreign company or project. The investment may involve either developing a multinational presence, acquiring a source of materials, expanding a company's footprint... Frequently, Foreign Direct Investment goes beyond the capital investment, as it establishes effective control of the foreign business or influence on the decision-making.

It seems that patterns of foreign investment have been undergoing shifts, but a clear successor to China in terms of attracting foreign direct investment (FDI) has not emerged yet. Globally, foreign direct investment (FDI) as a percentage of GDP peaked around the time of the financial crisis, nevertheless, investment in China stagnated slightly earlier, in the early 2000s, just after its accession to the World Trade Organisation and following rapid inflows into the manufacturing sector.

Although China's FDI growth has slowed, China and the US still dominate global FDI flows in absolute terms. Meanwhile, countries like India and Mexico are showing positive FDI trends, but they have not yet reached a level to establish themselves as enduring strategic players in the global investment landscape.

Major recipients of foreign direct investment in recent decades

India has underinvested in recent decades and, although FDI is coming in, net investment remains basically unchanged relative to the size of the economy. However, as the country continues to develop, there is potential for increased FDI, especially if there are improvements in infrastructure, logistics, and technology transfer facilitated by multinational corporations.

Net FDI as % of GDP: Relative to the Indian economy, net investment is basically unchanged.

Monitoring FDI flows, infrastructure developments, and cost improvements will be essential in assessing the evolving investment landscape, especially in emerging economies like India and Mexico.