As the year comes to a close, it’s time for new year’s resolutions and predictions. Here are mine.
With regards to resolutions, after an endless list of failures, I feel emboldened by a rare success.
Last year I decided to cut down on the use of disposable cups. I often indulge in coffee when I’m at the office or taking a stroll outside. The amount of paper cups and coffee lids I used to throw away would annoy me. Therefore I decided to buy a non-disposable cup (partly) made with recycled coffee husks, and I’ve enjoyed it ever since.
The switch to a non-disposable cup has been surprisingly convenient, for two main reasons. First, coffee tastes better. It’s as simple as that. Second, my favourite coffee shop saved me about a third of the cost of each cup of coffee because I used a non-disposable cup. As a back-of-the-envelope calculation, that amounts to about £100 in a year. On top of that, and most importantly, I reduced to near-zero the amount of trash my coffee addiction generates.
I'm clearly no environmental hero and I’m conscious that many of my habits do have an environmental impact: first and foremost, flying. However, I feel that personal commitments are an overlooked element in the overall conversation around sustainability. When I attend or follow events on the topic, I often wonder what each of us attending and discussing the big picture is doing on a personal level to be more sustainable.
Going into 2023, I’ve decided to cut down on single-use plastics. My new year’s resolution won’t save the world, but hopefully will be part of a growing conversation around personal habits and sustainability.
As regards my 2023 prediction, I expect ‘boosterism’ to face a reality check. The kind of hype that has been pushed around across a number of sectors will be countered by the new reality of a global economy facing rising interest rates and an overall feeling of uncertainty stemming from geopolitical tensions.
According to data from our proprietary foreign investment monitor fDi Markets, as many as 126 mega investment projects (projects with a capital commitment equal to or greater than $1bn) have been announced between January and October this year (foreign investment projects and US interstate projects combined). That’s already the greatest number of megaprojects in a year since the global financial crisis of 2008/2009.
Many of them will deliver; many others will not, I suspect. There are a few reasons for that.
Capital was incredibly cheap and available for more than a decade before central banks started ramping up interest rates across geographies earlier this year. When the cost of capital is marginal, its allocation can become a bit loose.
During the past five years, “capital was misallocated” to a lot of start-ups with unsustainable business models, Nikolay Storonsky, co-founder and CEO of digital bank Revolut, told fDi.
The perception of widely available capital, combined with strong political support for investment in strategic sectors related to energy transition and tech sovereignty, has also unleashed high levels of opportunistic thinking in the investor community, particularly in emerging sectors. Green hydrogen stands out among them. A stellar number of very ambitious green hydrogen projects have been announced throughout 2022 in places or by companies with little track record when it comes to putting together such major endeavours. The technology itself has yet to prove the concept. There is no commercial-scale green hydrogen plant currently up and running anywhere in the world.
The role of mega projects, regardless of their degree of feasibility, is also arguable from an economic development perspective. There is plenty of space for local authorities to rethink the way they engage with global value chains and major multinationals without necessarily attracting big ticket investments, as LSE professor Riccardo Crescenzi and International Growth Centre's economist Oliver Harman argue in their recent book “Harnessing Global Value Chains for regional development”. In this perspective, the reality check I expect boosterism to face in 2023 will only help policy-makers and FDI professionals refocus and refine their investment promotion efforts.
So here you have one resolution and one prediction for 2023. What are yours?
Jacopo Dettoni is the editor of fDi.
This article first appeared in the December 2022/January 2023 print edition of fDi Intelligence. View a digital edition of the magazine here.