The COVID-19 crisis caused global FDI to plummet by a third, jeopardizing sustainable development goals.
The COVID-19 crisis has caused a severe drop in global foreign direct investment (FDI), with a flow of investment falling by a third (from $ 1.5 trillion in 2019 to $ 1 trillion) on 2020, a new report from the United Nations Conference on Trade and Development (UNCTAD) has warned.
The World Investment Report 2021 (PDF) found that the coronavirus pandemic delayed progress in ensuring that less developed countries and those with weaker economies had access to foreign investment funds.
These funds are key to adopting the Sustainable Development Goals (SDGs), a set of goals that the UN and its member states are committed to achieving by 2030, especially the poorest countries at risk of falling behind. as their wealthy counterparts take off technologically.
“This is a major concern, because international investment flows are vital for sustainable development in the world’s poorest regions,” UN Secretary-General Antonio Guterres said in the report’s prologue.
The report found that the fall in FDI was the most severe for developed economies, where it fell by 58%. Flows to Europe fell a whopping 80% as economies collapsed due to coronavirus restrictions and blockages. North America recorded a decline of 42%.
Although FDI in developing economies fell 8% moderately due to resistant flows in Asia (inflows into China increased by 6% to $ 149 billion), investments in new projects infrastructure in developing countries were especially affected.
According to UNCTAD, the number of recently announced green projects fell by 42% and the number of international project funding offers by 14% in developing countries.
In Africa, ecological projects, essential for the continent’s industrialization, fell by 62%. General FDI flows to Africa fell 16% to $ 40 billion. In developed countries, green investment fell 19 percent.
UNCTAD also found that FDI in Latin America and the Caribbean plummeted, falling 45% to $ 88 billion and flows to economies in transition fell 58% to just $ 24 billion. of dollars, the sharpest fall of all regions outside Europe.
A renewed global effort to boost investment is essential to ensure a sustainable and inclusive recovery from the pandemic, so that all countries can have a good development by 2030, UNCTAD stressed.
“But the issue is not just about reviving the economy, but about making the recovery more sustainable and more resilient to future shocks,” UNCTAD Secretary-General Isabelle Durant wrote in the prologue to the report.
The report also points to the specific challenges that will arise with the deployment of recovery investment plans and proposes a framework for policy action to address them.
“Our job today is to move forward in a different way,” Durant added. “This will not be possible without reactivating international investment as an engine of growth and ensuring that the recovery is inclusive and therefore that its benefits are extended to all countries.”