The Importance of FDI and Why It Must Be Revived
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The Importance of FDI and Why It Must Be Revived

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The following content is sponsored by the Hinrich Foundation.

Hinrich Foundation

The Importance of FDI and Why It Must Be Revived

Foreign direct investment (FDI) has long been a hallmark of globalization, helping to transform entire firms, cities, sectors, and economies. For evidence of this, we look no further than China.

Attracting cumulative net inflows of $3.5 trillion since 1979 has enabled the country to grow its GDP by almost 8,000%. Over a similar time frame, China has also lifted 700 million citizens out of poverty.

Despite all of the benefits that FDI can deliver, global investment flows have been in a downward trend since the Global Finanicial Crisis of 2009. Our sponsor, the Hinrich Foundation, puts this collapse into perspective.

The Decline of FDI

The COVID-19 pandemic took a heavy toll on FDI in 2020, especially in terms of greenfield investment. These investments involve the construction of new facilities in foreign countries.

Region or CountryChange in Greenfield FDI* (%)
Developing countries-56%
East Asia & Pacific-47%
China-59%
Brazil-16%
India-10%

*Year-on-year decrease in the fourth quarter of 2020.

Within developing economies, FDI decreased the most in China as it was the first country to suffer a COVID-19 outbreak. For Brazil and India—two countries which experienced major outbreaks in 2021—FDI is expected to be fall much further.

Taking a long-term view, however, exposes an even greater issue.

With investment dropping to multi-decade lows, it seems that FDI has become less attractive than it once was.

Identifying the Forces Behind the Decline

Across levels of economic development, public policy mixes are becoming less conducive to inward FDI—investments made in a domestic market by foreign entities.

This coincides with a rise in protectionist attitudes by governments around the world. In India, for example, Amazon and Walmart face restrictions that do not allow them to hold any inventory. The country also imposes data localization measures that make it difficult for companies to operate efficiently.

As a result of these types of measures, the Economic Policy Uncertainty Index has trended significantly higher than it has in previous years.

Another contributing factor to FDI’s collapse is a rise in geopolitical rivalries, particularly between Western economies and China. Since 2015, over 60 foreign governments including Australia, Canada, the United States, and the UK have taken action against Chinese FDI projects.

In many cases, national security is at the center of these disputes.

Changing the Course

For decades, FDI has been a proven mechanism for transferring better practice, capital, and technology around the globe. In addition to boosting GDP and reducing poverty, it has the potential to:

  • Create new supply chains
  • Promote knowledge sharing between economies
  • Stimulate innovation
  • Modernize management training and education
  • Improve business practices and standards
  • Strengthen environmental practices and standards

Nonetheless, governments continue to demand more from international businesses, often calling for higher quality FDI—investments that do more to advance sustainable development and tackle climate change.

Despite these demands, businesses are facing numerous obstacles when attempting to enter foreign markets. This has the knock-on effect of diminishing the financial returns that FDI can generate.

Moving forward, increased cooperation between the public and private sectors is likely to play a key role in reviving FDI’s appeal.

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Value in the Ground: Cartier Resources’ Chimo Mine Project

Cartier Resources (TSX-V: ECR) is advancing the Chimo Mine Gold Project in the Abitibi region of Quebec, showing its potential with past producing mines.

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Value in the Ground: Cartier Resources’ Chimo Mine Project

The sponsor of this graphic, Cartier Resources (TSX-V: ECR), has instigated an exploration strategy to increase ounces in the ground at the historic Chimo Mine in the heart of the Abitibi that continues to deliver increasing resources.

Cartier is deploying the strategy in the right region, with the right backers to find gold faster at a lower cost. This graphic provides an overview of the project’s massive potential.

Proven Endowment: The Abitibi Greenstone Belt

There are many prolific past-producing gold districts in Canada, but the Abitibi is one of the largest and well understood gold-bearing regions with readily available exploration infrastructure.

This region extends from Wawa in Northwestern Ontario to the East near Val-d’Or, Québec—a landscape that hosts some of the most productive gold mines in Canada.

Cartier’s Chimo Mine project located in the historic Abitibi Greenstone belt of Québec builds on a legacy of gold production with a project ready for investors.

Tried and Tested Exploration Strategy

The best place to find gold is where companies discovered and mined it before. Between 1964 and 1997, three companies produced 379,012 ounces of gold at the Chimo Mine.

This type of strategy is known as brownfield exploration. Brownfield exploration looks for gold in areas known to host gold mineralization. It offers investors less risk, reducing the amount of uncertainties a company faces.

Ounces in the Ground: Growing a Gold Resource

Cartier delivered its first-ever resource estimate within three years and proved the value at Chimo. In November 2019, the company published its first mineral resource estimate of the central gold corridor on the Chimo Mine property.

It reported Indicated resources of 481,280 ounces of gold and Inferred resources of 417,250 ounces of gold. This resource estimate came from only one-third of the property.

This was just the beginning for Cartier Resources and the Chimo Mine.

In 2021, Cartier upgraded its resource estimate with drilling from its North and South corridor. The company increased the indicated resources to 684,000 oz Au (6,616,000 tonnes at 3.21 g/t Au) and the inferred resources to 1,358,000 oz Au (15,240,000 tonnes at 2.77 g/t). This gives the property over 2 million ounces of gold in the heart of the Abitibi.

Why Invest in Chimo?

Cartier Resources has consistently applied an exploration strategy to develop and increase the known gold resources at the Chimo gold mine.

It built on the foundations of a proven past producer and continued exploration success to discover more gold. In the heart of a safe and established mining jurisdiction, Cartier has put the Chimo Mine back on the Abitibi gold map.

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Visualizing the Rise of Cryptocurrency Transactions

As cryptocurrency transactions rise, merchants are looking to position themselves to take advantage of this new wave of crypto spenders.

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daily crypto transactions

Visualizing the Rise of Cryptocurrency Transactions

After Bitcoin and cryptocurrency’s wild bull run in late 2020 and early 2021, many holders are now using cryptocurrencies for their intended purpose: payments.

Every day, approximately $12 billion are transferred across the Bitcoin, Ethereum, and Litecoin blockchains, with millions of people using cryptocurrency for payments daily.

This graphic sponsored by CoinPayments looks at the rising transactions of the Bitcoin, Ethereum, and Litecoin networks.

Cryptocurrency Transactions are Rising in Value and Number

While prices are often the focus when crypto is in the spotlight, transaction counts show how much a network is being used as a medium of exchange. In just over five years, daily transactions across the Bitcoin, Ethereum, and Litecoin networks increased sixfold, from just 250,000 to more than 1.5 million transactions a day.

In mid-2017, Ethereum overtook Bitcoin in daily transactions as ETH was necessary to participate in ICOs (initial coin offerings), which fueled much of the speculation in the 2017 price run. With Ethereum still hosting thousands of ERC-20 and ERC-721 tokens on its blockchain today, its transaction counts have grown to be much higher compared to Bitcoin and Litecoin’s.

Along with crypto’s rising transaction numbers, the average USD value per transaction has increased by a minimum of 4x over the past five years.

YearAverage Value per Bitcoin TransactionAverage Value per Ethereum TransactionAverage Value per Litecoin Transaction
2016$2,426$588$1,357
2021$32,943$19,139$5,458

Source: Coin Metric
2021 figures as of July 13th, 2021

Crypto Spenders are Searching for Merchants

As transaction counts and values rise, merchants play a vital part in pushing forward the adoption of digital currencies for payments.

Many cryptocurrency users consider merchant adoption as a key barometer of success for crypto adoption. While companies like AT&T, Namecheap, and Overstock already accept crypto payments, there are still many businesses around the world which don’t offer cryptocurrency as a method of payment.

In a survey of over 8,000 U.S. consumers, 66.7% of crypto owners and 54.2% of non-owners said that not enough merchants accept cryptocurrency. Along with this, 47% of crypto owners said they seek out merchants that accept crypto for purchases, indicating clear demand for more crypto-accepting businesses.

How Can Merchants Make the Most of the Crypto Boom?

As the world embraces crypto, merchants need the in-store and online tools to be part of this next wave of commerce. Accepting crypto opens merchants up to an untapped audience of new consumers, eager to spend their crypto.

CoinPayments makes it easy to start accepting crypto payments at online checkout and with POS systems, with features like auto-coin conversion and over 2,000 coins supported.

Find out more about how the crypto market is growing, adapting to consumer needs, and the opportunity it presents to merchants around the world.

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