Covid-19 is bad news for foreign direct investment, but there may be a silver lining

Value investors may kickstart a virtuous cycle of capital going abroad again as soon as economies reopen, write Cristián Rodríguez-Chiffelle and Peter Vanham

 
Just over a year ago, InvestChile – the South American country’s foreign direct investment (FDI) promotion agency – welcomed 300 foreign investors of 21 nationalities in Santiago. In a two-day event, they attended plenaries, workshops and over 200 meetings including with President Piñera, advancing over 7 billion dollars in potential projects. Fast-forward to today, and the view from Chile could not have changed more radically.

FDI roadshows in Santiago, and in every other capital, are a picture of the past. InvestChile’s work shifted almost overnight: in confronting the emergency, priorities changed – from attracting FDI overseas – to deploying a crucial domestic effort to help international companies ensure their business continuity in Chile, thus keeping the economy running.

This is not an isolated case. All over the world, foreign investors sail today without a compass in uncharted waters. The Covid-19 pandemic is leaving not only desolation for the lives that are being lost, but also many questions about the post-coronavirus economy, such as how global investment flows will behave as the emergency clears.

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Πηγή: blogs.lse.ac.uk