“Injured” FDI – El Sol de México

an introduction

The health crisis we are experiencing all over the world has affected all areas of government, companies, institutions and individuals. Some sectors were the biggest winners such as: digital business, digital commerce, and basic necessities where I am not specifically referring to food, but to health related products ranging from: antibacterial gels, alcohol, medical equipment, pharmaceuticals and of course, vaccines. However, it is now important to analyze the behavior of foreign direct investment globally during the year 2020.

UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) was established on December 30, 1964 and is responsible for determining aid for developing countries to benefit from international trade, investment, financial resources and technology. The above happens under the umbrella of achieving sustainable and comprehensive development. Likewise, it generates analysis of trade and investment behavior across the world. On this occasion, I am referring to the latest edition, 2021, which was barely published this week.

2021 report

In this latest post, you can see the economic movements that have taken place in both recipient countries and FDI generators due to the impact of the pandemic. In the following image you can see: 1) the ranking of the top 10 countries for this release with the comparison of the previous year, 2) in parentheses is the order of the previous report, and 3) the numbers at the end of each bar correspond to the total amount in billions. The two dominant nations, the United States and China, have continued the same stance of receiving foreign direct investment derived from the strength of their economies despite the pandemic. He also notes that in the case of Mexico, which was in 14th place, it rose to 9th place. However, in the case of FDI outflows, China was the main investor for the following reasons: 1) its great resilience during the pandemic, 2) because it left the harsh embargo implemented before the rest of the world, 3) for the continuity of its commitments gained through debt diplomacy Towards the countries on its list of the New Silk Road, 4) for being the big factory of the world of goods most in demand during the pandemic, v) for digitizing its operations inside and outside its scope The state, 6) because it is the backbone of world trade, 8) because it is the epicenter of the last stage in the production of a large amount of goods that it had no alternative suppliers, 9) because of its extraordinary diplomacy for vaccines and of course X) due to the size and strength of its economy which makes it a major player in field of foreign direct investment.

Fountain: an explanation of the information obtained in www.unctad.org

Foreign direct investment by country groups

With regard to the investment obtained by some groups of countries, six countries have been considered:

1. G20 (Germany, Saudi Arabia, Argentina, Australia, Brazil, Canada, China, South Korea, the United States, France, India, Indonesia, Italy, Japan, Mexico, Russia, the United Kingdom, South Africa, and Turkey. The study excludes the European Union.)

1. RCEP (Vietnam, Malaysia, Singapore, Brunei, Indonesia, Philippines, Thailand, Laos, Burma and Cambodia), along with China, Japan, South Korea, Australia, and New Zealand)

1. Brix (Brazil, Russia, India, China and South Africa)

1. USMCA (Canada, USA and Mexico)

1. CPTPP (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam)

1. AfCFTA (54 African Union countries)

FDI inflows by country groups

Fountain: www.unctad.org

But where I want to look is RCEP (Regional Comprehensive Economic Partnership) Where the great leader is precisely China. Therefore, we are witnessing a new confrontation between China and the United States in the field of inward and outward investment flows. So I am now adopting the new term for foreign direct investment diplomacy.

Foreign Direct Investment Diplomacy

By this term I mean the expansion of the diplomatic tentacles of these two giants as they are two of the biggest hoarders of FDI and at the same time, they are surgically drawing their lines of action to decide what and where to invest without “dumping” their diplomacy. It’s a good job, with no margin for error due to the level of geopolitical and geoeconomic interests of these two countries.

So from being “infected” with COVID-19, it is now a hand-embroidered FDI diplomacy by China and the United States.

coordinator

Bachelor of Global Business Administration

Ibeoamerican University

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