The geopolitical landscape is increasingly becoming a key variable in the decision-making process of the largest publicly traded companies when directing investments abroad, new data points out.
The world is once again becoming fragmented in two blocs, but the playing field is by far more complicated than that of the cold war, when the Soviet Union and the U.S. became the leaders of a world divided by economic and political views.
A new analysis by Bloomberg Economics reveals that cost-effectiveness is beginning to cease being the main factor companies look at when investing abroad.
A new trend is emerging by which companies are becoming more prone to making major investments — like outsourcing manufacturing — in like-minded countries.
The analysts looked at a 2023 vote amongst UN nations calling on Russia to withdraw from Ukraine. As an exercise, they divided the world into two major blocks: those who condemned the invasion as those who did not.
The bloc condemning the invasion includes all North, Central and South America (with the exception of a few small countries like Bolivia and Cuba); all of Western Europe, Australia, Japan, as well as half of Africa and half of South-east Asia.
The bloc not denouncing the invasion includes most of continental Asia including China, India, Russia, Pakistan, Iran, Kazakhstan and the remaining countries in Africa and the Asia/Pacific region, which include South Africa and Vietnam.
The analysts then looked at shifts in major foreign investments between the blocs, specifically checking ...