FDI, the global crisis and sustainable recovery

The western financial and economic crisis that began in 2008 was the worst for 70 years – by far more severe than, for example, the Asian financial crisis in the 1990s and the post-September 11, 2001 crisis. Among its many effects has been a significant downturn in global foreign direct investment (FDI), a phenomenon whose impact has been different in developing and developed economies. Since economic growth is the single most important FDI determinant for attracting investment, the global economic slowdown, accentuated by the crisis, rendered key markets less attractive for foreign investors – and hence depressed FDI flows. This impact was aggravated by severe restrictions on the ability of firms to invest abroad.