The pattern of foreign direct investment in the late 2010s and early 2020s: under international externalities

Abstract

This article aims to discuss to determine the nature of foreign direct investment (FDI) flows in the late 2010s and early 2020s. International externalities affecting the FDI pattern at the global and regional levels. The research method is mainly qualitative through Document analysis. From theoretical and empirical evidence, this study shows that under the influence of international externalities, investors' motives change leading to a change in their investment strategy and thus a change in the direction of FDI inflows. Research results support the view that COVID-19 is not the only factor that changes the FDI pattern. Several key externalities have been identified such as the Sustainable Development Goals initiated by the United Nations, the New Industrial Revolution, the Policy towards Economic Nationalism, and the Coronavirus Prevention Policy as well as the post-pandemic economic recovery policies. Countries need to have strategies to attract external forces that are both consistent with the current pattern of FDI and coordinated with internal resources to develop the country. This study has contributed to the theory of FDI in modern times. Today, motivations such as exploiting factors of production, seeking strategic assets (tangible assets), and seeking efficiency in distant markets (offshoring) have gradually weakened. They are gradually being superseded by seeking efficiency in the near market (onshoring, nearshoring), and investments in service industries that will complement the autonomous motive.