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FDI in A Time Of Crisis

As companies reconsider their investment portfolios, three strategies will determine which countries catch their eye.


The global value chain is being redrawn. Rising geopolitical tensions and outright conflict have pushed an already ailing global economy into critical condition, and though GDP and trade are showing signs of recovery, foreign investment behaviour is still erratic.

There is no reason to be overly concerned, for now. FDI took roughly three times as long as GDP and trade to recover from the dotcom crash in 2000 and the great financial crash in 2008, and on both occasions went on to surpass pre-crisis levels before the next crash.

In part, this reflects the long cycles of FDI. Deciding where and how to invest can take companies years and getting it wrong can be incredibly costly. But what the data doesn’t show is how important these periods are for countries' economic prospects. “What you saw following the financial crisis in 2008 was companies leaving particular markets and reassessing their options,” says Ana Novik, Head of the OECD’s Investment Division.


“Once the financial conditions improved they were able to invest in markets that provided them with greater stability and opportunities.”

With FDI still struggling to consistently pick back up following the pandemic, countries once again have an opportunity to carve out new flows of foreign investment. Three types of FDI winners have emerged from past crises, and their strategies are worth examining. The first is the market winners. “These countries rely on their inbuilt competitive advantage, whether that’s natural resources or strength in a particular industry,” says Rami Rafih, Managing Director and Partner at Boston Consulting Group.

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