Foreign Direct Investment in Developing Countries Hits 18-Year Low

Strategic Insights -

Foreign direct investment (FDI) in developing countries reached its lowest level in 18 years in 2023, with a total of $435 billion, a sharp decline from the previous year. This significant drop in FDI, which is crucial for economic growth, job creation, and meeting development goals, has been attributed to rising barriers to trade and investment. According to the World Bank, governments have been building walls around trade and investment, hindering the flow of capital into poorer nations.

Key Takeaways:

  • FDI in developing countries fell to $435 billion in 2023, the lowest level since 2005, with a significant drop from previous years.
  • As a percentage of GDP, FDI in these countries was only 2.3% last year, nearly half of what it was in 2008.
  • Public debt in developing countries is rising to record levels, while investment is falling, according to Indermit Gill, chief economist at the World Bank.
  • International treaties, a key driver of investment, have slowed down sharply, with only 380 new investment treaties signed between 2010 and 2024.
  • FDI remains concentrated in just a few countries, with China, India, and Brazil receiving nearly half of all such investment between 2012 and 2023.
  • The world's 26 poorest countries received just 2% of total FDI over the same period, highlighting the inequality in FDI distribution.

Statistics:

  • FDI in developing countries was $435 billion in 2023, a 18-year low.
  • FDI as a percentage of GDP in developing countries was 2.3% in 2023.
  • Public debt in developing countries is rising to record levels.
  • 380 new investment treaties were signed between 2010 and 2024, compared to 870 treaties in the previous decade.
  • China, India, and Brazil received nearly 50% of all FDI into developing countries between 2012 and 2023.
  • The world's 26 poorest countries received 2% of total FDI over the same period.

Sources:

  • "Foreign Direct Investment in Developing Countries Falls to 18-Year Low, Says World Bank Report" (no date)
  • Indermit Gill, chief economist at the World Bank (no date)
  • Ayhan Kose, deputy chief economist at the World Bank (no date)
  • World Bank report (2023)