Global Trends in Foreign Direct Investments

According to the Global Investment Report 2023, the total foreign direct investment (FDI) inflows have slumped once again by 12% to $1.3 trillion in 2022. This is a major setback as FDI inflows had smartly bounced back by 58% in 2021 after declining by close to half during the 2020 pandemic. In fact, global FDI inflows in 2022 were around one-fifth lower than in 2017. The sharp volatility in FDI inflows, with investments even declining in three of the last five years, has reduced the average growth rate to a measly 1% during the period. The setbacks to globalisation after the global financial crisis have clearly been a dampener on international investments.

However, the brunt of the fall in FDI inflows was on the developed economies. Their inflows declined by more than a third to $375 billion. But inflows to the developing countries increased marginally by 4% to $916 billion. This is in line with the recent trends that show an acceleration in the FDI inflows to developing countries. Numbers show that between 2017 and 2022, the volume of FDI inflows into the developed countries declined by almost two-thirds to just 29% of the total global inflows.