1. UK joins CPTPP
The UK has joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) last week in the largest trade deal since Brexit. The UK is the first European nation to join the trade bloc.
Negotiations began in June 2021. The 11 members agreed in a meeting in Vietnam on the UK’s accession earlier this month.
The UK has existing trade deals with all member nations except Malaysia. The Government’s economic impact assessment estimates the deal is worth a 0.08% boost to UK GDP.
China submitted a request to join the CPTPP in September 2021 but concerns about compliance have prolonged the negotiating process.
2. France FDI
Credit Chris Karidis via Unsplash
France came fifth in the western Europe FDI table last year after UK, Ireland, Spain and Germany. IN 2021 France was 13th globally for FDI with the biggest investors Luxembourg, Switzerland, Netherlands and the UK. Manufacturing, finance and insurance are the most invested sectors. The Economist says that long-standing weaknesses in the economy for example tax systems and labour market will prevent further reforms and may inhibit future FDI.
FDI Intelligence has listed 5 projects that France is in the running for to raise FDI in 2023 totalling €25bn. The 5 companies European countries are competing for are Moderna the US pharmaceutical company, Taiwanese battery manufacturer Prologium, Chinese electric vehicle firm BYD, Vietnamese EV company Vinfast and South Korean electronics subsidiary of Samsung.
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3. The importance of low costs in FDI
Source: World Bank Global Investment Competitiveness Report 2019
Source: World Bank Global Investment Competitiveness Report 2019
Investment Monitor published an article based on World Bank Global Competitiveness Report 2018 (pre-pandemic) which reports that low taxes are critically important or important to 58% of companies when selecting a jurisdiction for FDI however in the following report 2019 this number rises to 77%.
Similarly, the importance low cost of labour and materials increased from 53% to 75% in the same period (critically important or important).
During the same period, the importance of political stability decreased from 87% to 84%.
Presumably global uncertainty, supply chain woes and general instability made input costs of greater importance to companies considering investing in foreign entities.
Read World Bank Global Investment Competitiveness Report 2019
4. FAMEX Mexican aerospace event
Mexico will host its aerospace event FAMEX during April 26-29 in Santa Lucia airbase, Mexico. Arranged by the Mexican air force, FAMEX has been running since 2015 to promote FDI in aerospace and defence. There are 315 exhibitors in 2023 according to the website.
The most recent FAMEX was in 2021. 100,000 people were reported to have attended.
The US is the top investor in Mexico followed by Canada, Spain and Japan. This year the special focus is on space, security, defence, unmanned aerial vehicles (UAVs), surveillance systems, airport and frontier security.
Visit the website http://www.f-airmexico.com.mx/en/index.html
5. Kearney FDI index report
US consulting firm Kearney has released its global FDI confidence index which reports that intention to increase FDI in the next 3 years is up 6% to 82%. Investor perspectives are slightly downbeat due to the Ukraine war, high energy prices and global inflation.
Top recipient countries are US for the 11th consecutive year, Canada, Japan, Germany and UK according to the report.
A new addition to the report is the emerging market global ranking. Singapore jumped the most spots from 18th to 9th.
6. Possible impacts of Chat GPT on foreign investments
Chat GPT is the AI powered chat bot that has ‘taken the internet by storm.’ It is the fastest growing app in the internet’s history reaching 1 million users in just 5 days after release. Its maker is OpenAI, a US-based artificial intelligence research lab.
Users can ask any question from kidney bean recipes to what’s the impact of Chat GPT on foreign investments to how to build a can opener and it does the work for you, in written form, instead of the user having to google, read, disseminate, and write / do. It has controversially been used by judges in court cases to decide and an AI form of the app DoNotPay was used by a defendant in a speeding fine case to argue his case in court.
Chat GPT stands for Generative Pre-trained Transformer. It is called a versatile language processing tool. Chat GPT learns innovatively using AI as a human would do to amass information and answers on topics and interact with humans in speech and text.
The most obvious case against the chat bot would be to do with copyright. The inputs come from a wide variety of sources being books, articles and written materials that are all subject to copyright. The infringement may flow through to the user who may be seen to contribute to the infringement.
Regarding foreign investments the most obvious impacted area is jobs. As an investment, whilst many AI companies vie to make a profit, companies may start to incrementally integrate AI to improve margins for example by deploying in customer service or in healthcare applications.
Featured image Credit Graham Zebedee CMG via LinkedIn
