Posts Tagged ‘FDI’

The rise and fall of globalisation

December 22, 2010

I just stumbled across a nifty new Google tool called the Google Labs Books Ngram Viewer, which allows users to compare the occurence of particular words or phrases over time within the enormous repository of scanned books with Google land.

I thought an International Business readership might be interested in the rise and fall of some of our most important terms over recent decades (click on the graphs for larger versions and the full search parameters).

Here’s globalisation:

And with the US spelling, and also capitalised (i.e. globalization, Globalization, Globalisation):

The latter graph is for a longer timeframe (right back to 1900). Both figures show the steep rise in the use of the term from the late 1980s (coinciding with a surge in foreign direct investment and increasing numbers of newly multinational firms).  A plateau and then decline in usage around 2003 is certainly noticeable.  I’m guessing the phenomenon has become much less discussion-worthy as the various features (greater connectedness, trade, investment etc) became more commonplace (or perhaps less controversial).

Here are the various single word versions of multinationals (since 1960):

It is quite surprising that the term rose considerably earlier, but did not grown along with globalisation. The two-word versions look very similar:

International business, global strategy, multinational strategy, transnational strategy all peaked around 1990 too. Global strategy had the most substantial dropoff, reflecting perhaps the splintering of terminology and concepts to more fine-grained conceptualisations of competitive advantage:

Foreign direct investment rose up through the literature from the early 1970s, shot up in the mid-1980s, but fell in this millenium:

What other terms should we look at?


Globalisation slows as FDI slides

February 9, 2009

I asked a couple of weeks back what multinationals might be doing in the current uncertain times.

New data from the United Nations answers the questions somewhat. We now know what they were doing last year – they were slowing down their expansion. As the figure below shows, foreign direct investment (FDI) flows dropped sharply in 2008.


Now these are flows, not stocks, so it doesn’t indicate a retreat per se, but rather a tapering off in expansion. Nevertheless, this is the first dropoff since the dot-com crash.

The figures make pretty gruesome reading for developed countries, as the declines are all happening there. FDI into developing nations has, in fact, grown slightly.

The report provides further insights into the make up of FDI. It seems mergers and acquisitions are on the decline. And as the report points out, even if there remains considerable activity on that front, the value of each transaction has dropped along with asset prices. The count on greenfield investments is up (but no value is given). Likewise, of the regulatory changes impacting upon FDI, a greater percentage of reforms were investment inhibiting than in previous years.

It is definitely a tougher time for multinationals generally, and this will impact (negatively) upon the speed of any economic recovery. It is not clear to me how any of the crisis responses from governments are reflecting this reality or acting to stem the tide. Are multinationals the forgotten component in the policy mix?