The Future of FDI: Achieving the Sustainable Development Goals 2030 through Impact Investment
| DOI | http://doi.org/10.1111/1758-5899.12714 |
| Date | 01 September 2019 |
| Author | Juri Suehrer |
| Published date | 01 September 2019 |
The Future of FDI: Achieving the Sustainable
Development Goals 2030 through Impact
Investment
Juri Suehrer
Dubai Investment Development Agency
Abstract
Publicized as a global call for action in 2015, the United Nations General Assembly passed a resolution on the Sustainable
Development Goals 2030 (SDGs). Before issuing the SDGs in 2015, the United Nations Conference on Trade and Development
(UNCTAD) has already identified in 2014, as part of their World Investment Report, that especially developing countries are
facing an estimated USD 2.5 trillion funding gap annually in the efforts to achieve the SDGs. Yet, the investment opportunities
and challenges for investors, when contributing to the closure of this funding gap while benefiting from its economic poten-
tial have not been widely discussed. Despite that Foreign Direct Investments (FDI) are a key driver to sustainable economic
growth and prosperity of a nation, policies and a holistic framework linking the 2030 Agenda to actionable investment oppor-
tunities for private investors are missing. Furthermore, a global platform capturing, channeling and promoting investment pro-
jects aiming to achieve the SDGs through impact investment has not been established. Utilizing global financial resources
more effectively while developing new approaches and tools to promote impact investments, which demonstrate the benefits
for investors to tap into the funding gap of the 2030 Agenda, will have the potential to significantly shape and influence the
future of FDI.
A global paradigm change has happened since the 2030
Agenda for Sustainable Development by the United Nations
came into effect. The 17 Sustainable Development Goals
(SDGs) detailed through 169 precise targets how to achieve
those goals were a trigger for academia, governments and
corporations worldwide to not only consider their individual
contribution to achieve the SDGs, but also to determine
how to transform strategic decision-making, business pro-
cesses and operations to benefit from this global sustainabil-
ity agenda (Hill, 2011).
Macro-economic planning and micro-economic attempts
to quantify the economic potential of the SDGs on the one
hand (Sauvant and Ortino, 2013) and a new and innovative
way to determine what is an impactful and sustainable
return of a project or an investment on the other hand. In
light of the theory of change, considering the economic
value of impact enabled through the SDGs, sustainability
has become a relevant strategic business factor, especially
for foreign direct investments (FDIs). Away from a purely
profit and return oriented decision-making, investors tend
towards innovative models measuring the impact of invest-
ments and the financial value creation through contributing
to achieving the SDGs. Especially in developing countries
and emerging markets the potential for those impact invest-
ments is significant (OECD, 2016).
The question is, however, how leading investment desti-
nations in the world such as Singapore, London or Dubai
establish ways to facilitate and channel impact investments,
individually using their unique value propositions. While
developing countries are lacking of global recognition in the
investor community and individual investment potential is
difficult to determine, leading investment destinations
would have the capability and knowledge to establish ways
of channeling funds into countries, which the 2030 Agenda
is aiming for. Much more than a middleman those locations
could not only act as an economic powerhouse to influence
investors, but also commit themselves to being a trigger for
investors to target the right sectors. This also includes the
enforcement of transparency on existing investment pro-
jects, tackling the ambitious targets of the 2030 Agenda and
promoting them. Following a classic fund-raising philosophy,
investments could be targeted to those in need, while sub-
stantial impact would be achieved, driving the fulfilment of
the 2030 Agenda. Not only horizontal FDI, but also forward
and backward vertical FDI would be considerable from a
strategic perspective.
Policies and a holistic framework
Overall, internationalization approaches are often driven by
start-ups or young innovative companies looking for ways
to invest and expand. Determinants of FDI location decision-
making is mostly influenced not only by profit expectations
but also by economic factors such as local re-investment
potential, financial stability and economic impact. The area
of determinants of foreign investment decisions has widely
been researched in the academic world, however the con-
nectedness between FDI and investment decision factors
Global Policy (2019) 10:3 doi: 10.1111/1758-5899.12714 ©2019 The Author. Global Policy published by Durham University and John Wiley & Sons Ltd.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, whic h permits use and
distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
Global Policy Volume 10 . Issue 3 . September 2019 413
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