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The Crucial Role of FDI Attraction In Times Of COVID19

The spread of the Coronavirus and its impacts have become increasingly visible during the last weeks and affect almost all dimensions of the global economy. Thus, the flow of foreign direct investment (FDI) will not be spared from the repercussions of the COVID-19 pandemic. Recently, the UN Conference on Trade and Development (UNCTAD) published a report stating that COVID-19 “could bring global foreign direct investment flows to their lowest levels since the 2008-2009 financial crisis". The UN trade body predicts that FDI could decline by 5% to 15% worldwide”.

This will particularly affect the automotive, aerospace and energy sectors. As a result, site selection and location marketing are likely to see increasing competition for investors in an already highly competitive market. Key success factors will be a concise positioning and strategically planned efforts based on e.g., analyses of existing clusters and supply chains.

Currently, Economic Development Organizations (EDOs) on national, regional and local levels are focusing on supporting companies to handle the situation and to avoid job losses. Attracting new investors becomes inevitably of secondary importance. Notwithstanding this challenging situation, EDOs must not lose sight of the significance of investment attraction to ensure the creation of new jobs and future prosperity.

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