Whenever change is afoot, two conflicting forces come into play. The status quo entrenches, while the disruptors grow bolder and more assertive. The clash intensifies and pressure mounts until things come to a tipping point. 

The status quo of globalisation — Western economies being the driving forces of global trade and investment — is on the line. 

After years of relative quiet, Brazil, Russia, India, China and South Africa — the Brics — are back, emboldened by the addition of six new members from Asia, Africa and South America. China, which has spearheaded the expansion talks, is newly growing its economic influence on the global stage, with outbound FDI reaching record levels in the first eight months of 2023. 

The Brics expansion comes as talks about the de-dollarisation of the global economy are intensifying. So far, it’s hard to see any viable alternative taking over any time soon. Ironically, in Argentina, a country that is often part of these talks, proposals of dollarising the economy instead have gained presidential candidate Javier Milei major consensus and catapulted him to the front of the race for the Casa Rosada. And yet, initiatives to settle trade in currencies other than the dollar are being discussed the world over and the greenback status is slowly, but surely, being eroded. 

Another major source of disruption originates in the nuances of the digital economy. In this issue cover story, we set out to explore the implications of weak digital infrastructure for sovereign countries. Cyber attacks cause material losses to private organisations, which is a strong incentive for upgrading defences. The same incentive may look less straightforward for the public sector, though. That is, until an attack materialises and grinds to a halt the functioning of vital institutions. Then the pitfall is obvious and foreign direct investment features among the possible casualties. 

Succeeding in the digital economy of tomorrow will greatly depend on talent availability. The world is already facing a major shortage of tech talent — particularly in artificial intelligence and cyber security. Early evidence suggests that several outliers already feature among countries investing the most in education, equipping their youth to fill that gap. However, several developed economies are lagging behind, while a number of emerging economies are producing very high numbers of STEM graduates. 

And then there are those countries that have hit the ground running in the wake of the Covid-19 pandemic. Take Saudi Arabia — a country that up until a few years ago was almost banned to all except Muslim pilgrims — which is spending trillions to become a diversified economy and a global brand. 

In the meantime, the West often seems in disarray and unable to navigate these changes. Populism has sent policy-making into a spiral. New leaders spend a great deal of time rolling back their predecessors’ policies. Protectionism, a byproduct of populism, is already showing its shortcomings. Among others, Ford has paused plans for a heavily subsidised $3.5bn battery plant in the US state of Michigan as it’s not sure it can be competitive. 

In the midst of all these changes, fDi has set up an Editorial Advisory Board to better equip ourselves to report on these momentous changes. 

It’s hard to predict when these forces will reach a tipping point. It’s clearer, though, that the West is burying its head in the sand as, all around, the status quo is crumbling. 

This article first appeared in the October/November 2023 print edition of fDi Intelligence