Globalization trends and the impact on FDI decisions

10 Apr Globalization trends and the impact on FDI decisions

Just recently, I had the pleasure to shake hands with Mr. Wim Elfrink, Cisco’s Chief Globalization Officer. He highlighted some major (FDI) globalization trends, and I like to share with you the 10 most striking ones that are open for discussion:

1. This will be the decade of China, the future, however, will be India
2. In 2020, 3 billion people will be connected to the Internet and this will affect our communication behavior, knowledge, access to resources and quality of life.
3. 50% of the world’s population will be urbanized, this means for instance 500 million urban dwellers in India
4. The key reason for Cisco, setting up a second Headoffice in Bangalore was proximity: within a 5 hrs flight radius, 70% of the world’s population can be reached.
5. Other key criteria for choosing India, were growing talent pool, co-operative government, proximity to innovation, sizable domestic market, law and patent protection, top 5 economy in 2020, proximity of global partners, and an active investment community.
6. Population in countries such as Germany, Sweden and Japan is decreasing. The percentage of 65+ in developed countries is (rapidly) increasing to more than 20%. This is significantly slowing down the economy.
7. Also China will face difficulties to accommodate the increasing demand for the right talents due to its one-child policy.
8. Countries such as Pakistan, Iraq, Yemen, Saudi Arabia, Kenya, Bangladesh, Nigeria and to a lesser extent India show huge population growth figures. That is what counts to embrace further economic development.
9. 300 highly educated persons are leaving the Netherlands each day (!) to pursue career opportunities abroad.
10. Think out of the box, develop a vision and execute. Do not engage in FDI for labor arbitrage or cost reductions only! It should always be a combination of Costs and Capabilities, in order to remain competitive in the long run.

This leaves the question: Will Iraq, Bangladesh or Nigeria be the next hot spot for FDI in 2020? Any comments or suggestions are welcomed.