Foreign Direct Investment in Developing Economies Hits Historic Low Amid Rising Barriers

Foreign Direct Investment in Developing Economies Hits Historic Low Amid Rising Barriers
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The World Bank reported Monday that foreign direct investment (FDI) to emerging economies plummeted to $435 billion in 2023—the lowest level since 2005—due to mounting global trade and investment barriers, Anadolu Agency reported. These trends, the Bank warned, pose serious challenges to financing development.

Investment in advanced economies also suffered, falling to $336 billion, the lowest since 1996. FDI inflows to developing nations amounted to just 2.3% of their GDP in 2023, nearly half the share recorded in 2008.

The World Bank highlighted a decline in international investment and trade agreements as contributing factors. Only 380 investment treaties were enacted between 2010 and 2024—just one-third of the number signed in the 1990s. Trade agreements also fell sharply, averaging only six annually in the 2020s.

FDI remains heavily concentrated, with ten countries—led by China, Brazil, and India—absorbing two-thirds of investment flows to emerging economies from 2012 to 2023.

The Bank urged policy reforms and global cooperation to reverse the trend. “FDI is plumbing new lows just as public debt hits record highs,” noted Chief Economist Indermit Gill. “This decline demands bold action.”