FDI’s Limits And Benefits

VOL. 38  NO. 5

Foreign Direct Investments (FDI), the topic of this month’s cover story, is often an unreliable economic indicator. Data about FDI is reported usually with delay, and it is hard, if not impossible, to understand which specific sectors are receiving the investments in a given country. Add to that the distortions of investments moving from one country to the other, while the funds originally come from a third country that has initially invested— or “parked” the money— in the first country.

Having said all that, one wonders why these data are still interesting and offer many indications of economic trends worldwide. In the cover story written by Deborah Ritchie, for example, we see how nearshoring and friendshoring have caused some sizeble direct investments moves within Asia, from China to the Americas, and to Mexico. We can also see why there are some signs of recovery in certain countries and regions based on the recent global trend of decreased FDI. Or, in other words, we are offered some indications of economic trends that have just started to show concrete signs of relevance. FDI data often also reflects the effect of global geopolitical tensions better than many others and can become an early indicator of major economic transformations.

In this issue, we also recognize the Best Banks in the world with our annual awards. As usual, we celebrate big and small banks that outperformed their competitors in all countries and regions, no matter the economic conditions. This year, the global banking sector managed to overcome major contagion risks due to the failure of banks in Europe and the US, presenting record profits in many regions.  As a result, banks’ resilience and some significant M&A activity became one of the year’s key trends in the banking sector.

Andrea Fiano | Editor at Large