The Expansion of FDI Flows – A Major Factor of Globalization

Globalization is the process whereby geographical distance becomes a less important factor in establishing and developing cross-border economic, political and socio-cultural relations; therefore production networks and Foreign Direct Investment (FDI) flows represent the main factors that play a key role in the process of getting international and worldwide spreading. Globalization phenomenon involves a process of deepening and widening of interdependence relations between different economic entities and spheres and takes into account international trade relations, the cross-border movement of international production factors, but mostly the expansion of FDI flows, having significant positive effects on the welfare of nations or geographical areas. The impact of the global economic crisis on FDI flows is a heterogeneous one, as the effects of the depression came to light in many different ways, depending on the level of development, the geographical area or the economic field. The overall fall in global FDI flows during the crisis was accompanied by a significant shift in the traditional pattern of FDI: emerging countries well-endowed with natural resources were becoming a growing source of FDI for developed countries, due to internationalization strategies carried out by their multinational companies (MNCs). Based on recent forecasts, UNCTAD specialists estimate that global FDI will recover to its pre-crisis level in 2011, rising to $1.4-1.6 trillion, approaching its 2007 peak in 2013. However, the business environment remains volatile and MNCs are cautious rather than optimistic regarding their investment plans.