As the liberal-world-order elite gather in Davos, there are signs that globalization may be slowing.
The United Nations Investment Trends Monitor, released Monday, showed a 16% decline in foreign direct investment worldwide between 2016 and 2017. FDI flows dropped by more than a quarter in what the U.N. terms “developed economies,” with the U.S. and the U.K. responsible for a large portion of that decline.
Developing economies in Asia received 30% of global FDI inflows, reclaiming its position as the largest FDI host region. China, Hong Kong (China), and Singapore were the largest three recipients of investment among the “developing Asia” economies.
Cross-border mergers and acquisitions and “greenfield” projects — businesses building factories and other facilities in foreign countries — both suffered in 2017. The value of cross-border M&As declined by 23%, despite a 44% increase in value of cross-border M&As in developing economies. Greenfield-project value declined 32% to $573 billion, the lowest point since 2003.
The numbers bear out the protectionist swing of the last couple of years. Donald Trump’s inauguration in 2017 brought about the most isolationist policies the U.S. has seen in generations; later this week he will head to one of the most pro-globalization meetings in the world “to advance his America First agenda.”
The report says FDI flows are expected to rebound in 2018, but, then again, last year the U.N. predicted that 2017 would see a 10% increase in overseas investment.
