FDI Flows to Developing Economies Drop to Lowest Level Since 2005

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A new World Bank study reveals that foreign direct investment (FDI) flows to developing economies have dropped to their lowest level since 2005, amid a global rise in barriers to trade and investment. “These obstacles pose a serious threat to global efforts to mobilize financing for development,” the World Bank stated on Monday.

In 2023, developing economies attracted only $435 billion in FDI, marking the lowest level in nearly two decades.

This downward trend mirrors a similar decline in FDI flows to high-income economies, which also fell to an unprecedented low—reaching just $336 billion in 2023, the weakest figure since 1996.

FDI inflows to developing economies represented only 2.3% of GDP in 2023, about half their peak level recorded in 2008.

According to the study, between 2012 and 2023, nearly two-thirds of FDI to developing countries went to just 10 nations. China alone accounted for almost one-third of the total, while Brazil and India received approximately 10% and 6%, respectively. The 26 poorest countries, by contrast, received a mere 2% of the overall FDI volume.

Moreover, nearly 90% of total FDI to developing economies originated from advanced economies—about half of which came from just two sources: the European Union and the United States.

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