All shook up: How foreign direct investment is shaping future business

“Over the past few years, many media headlines have frequently highlighted debates around decoupling and deglobalization. And events in 2025 actually added further fuel to these discussions, including a once in a century tariff shock. But our view is that, what's happening right now is not necessarily deglobalization, but rather a reconfiguration of global trade network. Even last year, global trade still managed to grow, and I think that's an important signal pointing to reconfiguration, not decoupling.”

“Announced investments from, let's say, western multinationals into China have essentially collapsed. So announced FDI greenfield FDI new projects into China have dropped by about 70%. Whereas at the same time, announced projects within advanced economies have actually increased. And that and projects going into The United States essentially doubled.”

“Let me introduce the way that the these deals are actually getting made is a little bit different. And what's happening is what we call the rise of mega deals. So what do we mean by this? Deals that are worth over $1,000,000,000 So a single project, let's say a single factory or a single line that costs over $1,000,000,000 to make, these we call mega deals. And what we've essentially seen is these mega deals now make up about half of all announced investment values. And this is up. Okay? So it used to be something like 30% before the pandemic. Now we're up to 50%.”

“If you go deeper on China, China has undergone a a notable shift from being a major investee of FDI to a prominent investor of FDI, especially in future shipping industries. So compared to pre COVID level, yes, you know, the the inflows declined, but China actually held up its outbound investment. And those outbound investments are increasingly going to Europe, The Middle East, and and Latin America.”

“India stands out for for its, balancing act, which is very interesting. So FDI inflows into India have grown roughly in line with the other global average. But then what was interesting is how balanced those inflows are. So so about one third of FDI came from North America, another one third from Europe, and another one third from Advanced Asia.”

“What we saw was that there's about a 100 economies for which three multinationals, just three multinationals, drive over half of all investment into the region, into that specific country, which essentially means that, you know, it it just takes one or two projects not going according to plan. And essentially a huge chunk of the the investment potential is lost.”

“In about 65% of, cases, FDI actually led to meaningful improvement in in terms of, export, performances. And those successful cases share three common patterns. Number one is that, you know, these, successful, sector and country, cases in those economies. You know, they actually became well integrated into global or regional value chains, building very strong upstream or downstream, linkages. Second condition is that, they strengthen the, the infrastructure in order to translate FDI into productivity gains. And the third condition is, you know, those economies, you know, they use FDI as seed capital and then catalyzed, domestic investment.”

“If I try to encapsulate it, you know, as folks are digging for gold, they're they're gonna need shovels. So, you know, if you're a provider of shovels, it's a good time to be in business. And what do we mean by this? As these mega projects play out, the attention naturally gets drawn to the project itself. But we always have to think that there's an ecosystem around it of suppliers of inputs that those big projects need. So, for example, a huge semiconductor fab is created somewhere in the world. That's gonna need the chemicals. That's gonna need the machinery. That's gonna frankly need, you know, the catering services for the canteen.”