Industry transformation is keep moving despite slow comparison with pre-COVID-19, but next normal is keep continuing. From the recent UN release foreign direct investment (GDI) we will notice which country gains the most. They have various variables to impact on GDI, slow down due to COVID-19 pandemic is just one of them. Others include planned strategic investments that are being considered for years and execute during the period.
World trends toward shorter value chains, higher concentration of value added and declining international investment in physical productive assets is nothing new. As such, developing countries will be challenged for intent to attract FDI following the previous formula, as investors expect something more. Since a lot of developing countries will be willing to get even better terms for attract them coming for longer periods of time. Those in the hotlist is more likely to attract FDI due to most of investor will go, and it will backed by aggregate upgrade of the condition make them more easy to carry out their business, such as receive needed component for them produce their goods at the same place or just next door.
For the most export-oriented investment geared towards exploiting factors of production, resources and low-cost labour will remain important, this is how multinational corporations (MNC) create their wealth. But investors will measure it with other business variables and factors.
The effects onInternational production of the technology, make it trend toward reshoring (returning the production and manufacturing of goods back to the company’s original country, also known as onshoring, inshoring, or backshoring), as more and more look for shorter, less fragmented value chains and higher geographical concentration of value added. Some countries is actually facing re-industrialize, premature de-industrialization for developing countries. Trend toward supply chain digitalisation eliminate lot of low value activities, as world moving toward hard and soft digital infrastructure. Trend toward regionalisation, geographical distribution of value added is increasing, as regional economic cooperation, industrial policy and investment promotion continue to attract to setup regional value chains. As the robotics and automation, purely rely on the low-cost labour will not more be the only factors for most of the high tech goods producer, since they are now allow flexible on-demand production for small quantity but large variable product, which is more likely the case for the shorten technological lifespan, and require flexible shift the order and making for the technological product for the different order based on the requirements.
The world will notice significant divestment, relocation and investment diversion and shift to other attractive countries and nations where the investor aggregate believes provide the best business environment for them, and worth their collective investment for the long term business return.
Without surprise everyone, US followed with China ranked in the top two for the top 20. The US is gaining almost doubt about the investment of China alone, maybe it due to previous US government policy. Follow with Singapore, Netherlands, Ireland. Next 5 from 6 to 10 is Brazil, Hong Kong, UK, India, Canada, Germany. The rest of 10 (11 to 20) are Australia, France, Mexico, Russia, Italy, Cyprus, Indonesia, Sweden, Israel.
For the outflow, invest in oversea, Japan leads the world, is almost number 2 US and number 3 Netherlands sum up. The list follows with 4 to 10 (China, Germany, Canada, Hong Kong, France, Korea, Singapore). The rest 11 to 20 are the UK, Italy, Spain, Sweden, Russia, Belgium, Ireland, Denmark, UAE, Brazil.
From the list we got developed economies such as US and Europe countries. But what worth to notice is beside big geographical countries like India, Russia, Brazil, the rest is small, or we can use the world tiny geographically size, as you can see Singapore, Hong Kong, Netherlands, Ireland, they are attract investor no by pure low-cost labor, that is some of the lesson for everyone to consider what make them so attractive compare with others.
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