International Trade and Investment

Exports as a percentage of GDP increased rapidly in the Tropics between 1990 and 2008, at which point a sharp decline (echoed globally) occurred due to the GFC. The decline in the Tropics was less severe than in the rest of the world. The decline in export income after 2011 is likely due to the falling commodity prices during this period, with the uptick between 2016 and 2017 reflecting recovery in these prices.

The GFC in 2008 not only led to a worldwide decline in exports, but also imports, as reduced demand from developed nations flowed through to demand for imports for the production process from exporting nations. Although imports may have been expected to increase with the falling commodity prices between 2011 and 2016,
the value of those imports declined.

Growth in FDI in the Tropics displayed less volatility than globally, with the GFC having a much smaller impact than in the rest of the world. Although as a proportion of GDP, FDI is more important in the Tropics than in the rest of the world, it accounted for just 32% of global FDI flows in 2017, up from 25% in 1990.

Currently, China is one of the largest drivers of FDI in the Tropics and thus it is likely there will be some impact from the COVID-19 pandemic on investment in the Tropics.