Advancing sustainable development with FDI: Why policy must be 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.