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Domestic economies need more domestic fixed capital investments

capital investments and M&A around the world

To gain an edge, an economy must not follow beaten paths. The next technological revolution requires moving at a fast pace in new directions – and this cannot be realized without entrepreneurs and financing:

Financing available through domestic investors must nurture local talent and support innovative projects on the longer terms (as priority). The cost of capital should be low and the concentration of domestic capital must be on native opportunities (instead of being single-minded about making a quick buck on investments that had matured or had been at the declining life cycle overseas).

History proves that investors (and Nations) who financed overseas projects and had little to do with supporting domestic economies fall behind – Such was the case of Britain in the 1870s which pioneered the industrial revolution but lost its leadership to the USA and Germany due to a low capital investment rate at home – the UK hasn’t recovered since.

In the 56 years between 1873 and 1929, Britain invested an average 6.7% of its GNP in fixed assets at home while the U.S. and Germany invested 16.7% and 12.5% respectively to become the industrial powerhouses they both are today.

Between 2010 and 2019, two Arab countries invested more capital overseas than they did nationally by a factor of 14x and 38x respectively.