The global economy is predicted to decelerate by 4.1% in 2022, with inflation already rising by 3.18% and unemployment rates at a record high worldwide. This statistic reveals the effect of COVID-19, inflation, policy uncertainty, rising inequality, and security problems on the global economy at the same time.
However, world leaders and multinational corporations have begun looking at how digital investments can help global economies.
Digital Investments And The Global Economy
Digital investment combines automated economic and business control functions with a human touch, allowing individuals and companies to save and invest in stocks, shares, investment funds, cryptocurrencies, and much more.
When it comes to investing, many people prefer to stick to the traditional way of doing it. With the advancement of technology, companies and individuals are opening up to the possibilities of digital investing, primarily because it is easily accessible and straightforward to the general public.
Today, internet channels account for roughly 30-35% of investment product searches, compared to family and friends, word-of-mouth, and other sources. Investment businesses now need to improve their digital marketing capabilities to gain their clients' attention and consideration at the outset of their investment journeys.
COVID-19 has revolutionised the way we live and work almost instantly. Due to this, analysts find it challenging to keep up with the impact on economies, industries, and businesses. However, we know that this crisis is hastening an already rapid trend toward digitalisation.
Digital services are increasingly important, infiltrating an expanding range of sectors and activities, from virtual meetings to automated factories, online orders to drone deliveries, and cross-border investments. Businesses that are more digitally nimble can better respond to the ongoing crisis, while others are swiftly upgrading their skills in response to challenges to their business models.
Increasing Investment In Digital Businesses
Companies worldwide are adapting to digital investments through Foreign Direct Investment (FDI). Foreign direct investment (FDI) is a type of cross-border investment. An investor from one country has a long-term stake in and significant influence over a company from another country.
There is substantial evidence that foreign direct investment (FDI) can contribute technology, know-how, jobs, and growth to a country. It is also frequently an essential source of funding for underdeveloped countries. Digital businesses, like traditional businesses, invest abroad to be closer to customers, have access to local knowledge, expand into new markets, and more.
A slew of new business models has emerged due to the digital economy. Without the internet, the longevity industry, social media, the platform economy, cloud computing and data centres would not exist.
Different policies and regulations are necessary to attract foreign direct investment into the digital economy, as digital firms have different business models from brick-and-mortar companies. Governments that encourage such innovative business models to establish an atmosphere that encourages digital enterprises to thrive and actively promote their digital economy are more likely to attract investment.
Creating A Favorable Environment For Digital Infrastructure Investment
In addition to new business models, the digital revolution can alter existing business practices. Local businesses can leverage various digital services to overcome physical boundaries, streamline supply and value chains, and provide quick delivery of goods and services. Policies and procedures that encourage digital elements to conduct business are a prerequisite for obtaining such investment.
The development and growth of the digital economy require an underlying solid digital infrastructure. A supportive regulatory environment that stimulates investment in payment processors is required to attract investment in digital infrastructure — as such, attracting foreign investment in digital infrastructure can assist local businesses. For instance, Avenir Growth Capital and Visa invested in Flutterwave and Interswitch infrastructure, transforming them into unicorns overnight.