The Rise of Digital FDI: Implications for Traditional Investment Models

Department of International Relations, Universitas Muhammadiyah Yogyakarta, Indonesia

Abstract

This paper explores the transformative impact of investments in Information and Communication Technology (ICT) on institutionalized democracy and foreign direct investment (FDI) in developing countries. Using content analysis of secondary data from academic and electronic sources, the research reveals that digital technologies have significantly changed the global business landscape. The rapid growth of digital technologies has changed the business landscape, and foreign direct investment (FDI) is no exception. The traditional model of FDI is evolving into digital foreign direct investment (DFDI), which focuses on intangible assets such as data, software and intellectual property. This shift has significant implications for host countries, investors and policymakers. This study explores the concept of DFDI, its benefits and challenges, and its potential to boost economic growth and competitiveness. The findings show that DFDI can improve efficiency and productivity, boost economic growth, and enhance a country’s ability to respond to global challenges. However, DFDI also raises new policy challenges, such as data protection and national security concerns. This research highlights the need for policymakers to adapt to the changing FDI landscape and develop strategies to attract and regulate FDI. This research contributes to the understanding of FDI and its implications, providing insights into the future of FDI.