International Investment in the Age of Geopolitical Competition, Technological Change and Trade Confrontation

The document analyzes a downward trend in global foreign direct investment (FDI), noting a 20% decrease in the first half of 2019. It identifies five disruptive forces: rising trade tensions, expanded national security safeguards, the digital economy, shifts in investment treaties, and pressures for responsible business conduct. The briefing concludes with three potential future scenarios ranging from enhanced cooperation to semi-permanent technological fragmentation.

• Global foreign direct investment (FDI) flows have seen a significant decline, with a 20% decrease in the first half of 2019 to $572 billion, following a 27% drop in 2018 compared to the previous year.
• Developing countries are particularly vulnerable to these trends; private sector FDI into developing countries fell by 30% between 2016 and 2017, and project finance for these countries also declined by 30% in 2018.
• Trade tensions between the US and China have severely chilled bilateral investment, evidenced by a 77% decline in mergers and acquisitions (M&As) by Chinese firms into the US in 2018, dropping from $30 billion in 2017 to $7 billion.
• Some countries may benefit from trade-war-induced supply chain reconfigurations; for instance, Viet Nam attracted a record $18 billion in FDI in 2018.
• National security screening of FDI has expanded to include advanced technology sectors such as biotechnology, robotics, and network industries to prevent technology espionage, sabotage of critical infrastructure, and the misuse of sensitive data.
• Technological changes and digital regulations—including data localization, digital taxation, and 5G rollout—are altering how firms structure production and distribution, potentially splitting global value chains through AI, cloud computing, and 3D printing.
• The international investment treaty framework is fragmenting, with the EU transforming its policy and the US scaling back investor-state dispute settlement (ISDS) in the US-Canada-Mexico Agreement, while countries like India, Indonesia, and South Africa are rejecting first-generation treaties.

APA

Novik, A., & Wu, M. (2020). International Investment in the Age of Geopolitical Competition, Technological Change and Trade Confrontation. World Economic Forum. http://www3.weforum.org/docs/WEF_GFC_Investment_Scenarios_Briefing_Paper.pdf

Chicago

Novik, Ana, and Mark Wu. International Investment in the Age of Geopolitical Competition, Technological Change and Trade Confrontation. World Economic Forum, 2020. http://www3.weforum.org/docs/WEF_GFC_Investment_Scenarios_Briefing_Paper.pdf.

Wikipedia

{{cite report |last1=Novik |first1=Ana |last2=Wu |first2=Mark |title=International Investment in the Age of Geopolitical Competition, Technological Change and Trade Confrontation |publisher=World Economic Forum |date=January 2020 |url=http://www3.weforum.org/docs/WEF_GFC_Investment_Scenarios_Briefing_Paper.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{novik2020international, author = {Novik, Ana and Wu, Mark}, title = {{International Investment in the Age of Geopolitical Competition, Technological Change and Trade Confrontation}}, institution = {World Economic Forum}, year = {2020}, month = jan, url = {http://www3.weforum.org/docs/WEF_GFC_Investment_Scenarios_Briefing_Paper.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }