Global FDI Flows Plummet to Lowest Level Since 2005 Amid Rising Trade and Investment Barriers

New research from the World Bank reveals that foreign direct investment (FDI) flows into developing economies have reached the lowest level since 2005, posing a significant threat to global efforts to mobilize financing for development. In 2023, developing economies received just $435 billion in FDI, a share of their GDP of only 2.3 percent, which is half the number during the peak year of 2008.

Key Takeaways:

• The sharp drop in FDI to developing economies is a result of public policy, with governments erecting barriers to investment and trade instead of taking them down, according to Indermit Gill, the World Bank Group's Chief Economist and Senior Vice President.
• In 2023, the global trend in FDI flows showed a significant slowdown, with high-income economies receiving just $336 billion in FDI, the lowest level since 1996.
• Easing investment restrictions is crucial, as half of all FDI-related measures announced by governments in developing economies in 2025 have been restrictive measures, the highest share since 2010.
• Investment treaties tend to boost FDI flows between signatory states by over 40 percent, and countries that are more open to trade tend to receive more FDI.
• FDI accounted for roughly half of the external financing flows received by developing economies in 2023, with 74 developing economies experiencing a 0.3 percent increase in real GDP after three years for a 10 percent increase in FDI inflows.
• FDI tends to be concentrated in the largest economies, with China receiving nearly a third of the total and Brazil and India receiving roughly 10 percent and 6 percent respectively.
• The World Bank identifies three policy priorities for developing economies: redouble efforts to attract FDI, amplify the economic benefits of FDI, and advance global cooperation.

Statistics:

• Foreign direct investment (FDI) flows into developing economies reached $435 billion in 2023, the lowest level since 2005.
• High-income economies received just $336 billion in FDI in 2023, the lowest level since 1996.
• FDI inflows to developing economies in 2023 were just 2.3 percent of their GDP, about half the number during the peak year of 2008.
• FDI accounted for roughly half of the external financing flows received by developing economies in 2023.
• The 26 poorest countries received barely 2 percent of the total FDI flows between 2012 and 2023.

Sources:

• World Bank
• World Bank Group
• World Bank Group's Chief Economist and Senior Vice President, Indermit Gill
• World Bank Group's Deputy Chief Economist and Director of the Prospects Group, M. Ayhan Kose
• World Bank's research on foreign direct investment (FDI)
• World Bank's report on the Conference on Financing for Development
• International institutions, civil society organizations, and the private sector.