Investment
Introduction
Foreign direct investment (FDI) is the investment by an individual or a company from a different country and in which the particular investor has full control over the business. FDI has many benefits to the investor and the host country (Lyroudi, John, and Athanasios 97). FDI keeps changing from time to time. This paper will analyze the prediction on what FDI will be in 2020.
The overall benefits of FDI are overwhelming and assist in the economic growth of a country or the world. The prediction of future FDI, therefore, becomes important because it affects global economic growth (Lyroudi, John, and Athanasios 98). FDI is predicted using different variables constituting the different industries in which FDI occurs. When these macroeconomic variables grow, the foreign direct investment is supposed to grow and vice versa. Past statistics are also important in the prediction of the FDI.
In 2014, the global FDI inflows decreased as compared to that in 2013. However, in the following years, FDI had increased, and this trend was expected to continue. Nevertheless, this trend is not automatic and is subject to change. Several factors in the individual countries may affect the general status of the global FDI (UNCTAD 4). In 2017, the global FDI will grow to a tune of about $ 1.7 trillion. It is also predicted to grow to about $1.9 trillion in 2018. This increasing FDI trend is expected to continue even in 2020, by which FDI will account for at least $ 2.0 trillion of the global gross domestic product (UNCTAD 4). This is because of the increased interests to invest in different industries that grow quickly. Such industries include service and manufacturing industries (OECD 6). These industries have the potential to internationalize quickly, and this increases the FDI. In fact, internationalization is expected to increase towards 2020. Again, there are economic hopes that the individual countries will increase their FDI, which will then increase the global FDI (OECD 4). The policies adopted by countries will be the key factors for this FDI growth.
This predicted increase in the FDI value will result from the individual effort by countries to major on foreign investments. Major boost will come from the large economies of the world (OECD 4). Countries such as the U.S., India, China, European countries, and Latin America have economies that are stable. These economies are expected to grow through the four years up to 2020 and beyond (OECD 4). Considering that these countries have higher foreign direct investments, it then means that their economic growth will translate to increased FDI value (Lyroudi, John, and Athanasios 98).
For example, foreign direct investment of developed economies will increase to about $ 998 billion by 2018, while that of the developing economies will rise to$ 818 billion the same year (UNCTAD 3). This trend is expected to increase through the following two years. This will make the global FDI value to increase by 2020 (UNCTAD 4). Primary, manufacturing, and service industries are expected to be the drivers towards the increasing FDI value and the overall growth of global economy.
Looking at the trend of FDI, the world remains optimistic that the predicted increase will happen. For the last two years, there has been a positive change in the value of the FDI (OECD 4). The prediction relies on this, and also on the growing economies of the world. The U.S., India, China, Latin America, and the Euro zones have a positive prediction of their FDIs (UNCTAD 3). The developing countries and transition economies will have their FDI values increase by 2020. This means that the global FDI will increase, to not less than $2.0 trillion by then (UNCTAD 3).
Conclusion
Foreign direct investment affects the economic wellbeing of the world (Lyroudi, John, and Athanasios 98). Its prediction is, therefore, necessary for proper economic planning. FDI is predicted to change positively in 2020 and beyond, which will boost the global economy.
Works Cited
Lyroudi, Katerina, John Papanastasiou, and Athanasios Vamvakidis. "Foreign direct investment and economic growth in transition economies." South-Eastern Europe Journal of Economics, vol. 2, no.1, 2004, pp 97-110
OECD. FDI in figures, 2016, pp. 1-12, http://www.oecd.org/daf/inv/investment-policy/FDI-in-Figures-October-2016.pdf. Accessed 25 Jan. 2017.
UNCTAD. “Global Investment Trends.” World Investment Report 2016, United Nations Publications, 2016, pp. 1–34, http://unctad.org/en/PublicationsLibrary/webdiaeia2016d3_en.pdf. Accessed 25 Jan. 2017.
