FDI in Figures
FDI is a crucial financing source for sustainable development, yet a combination of slow economic growth, energy price fluctuations, and policy-driven geoeconomic fragmentation has hindered FDI flows.
Published twice yearly, FDI in Figures analyses key developments and trends in global FDI flows using the most recent official FDI statistics. It also includes sections describing latest trends in cross-border mergers and acquisitions deals and announced greenfield investment projects.
Latest insights:
- Global FDI flows rebounded to USD 802 billion in the first half of 2024, but most of this was concentrated in the first quarter, and FDI flows actually dropped by 36% in the second quarter.
- FDI inflows to the OECD area increased by 80% but this this is mainly the result of upswings from large disinvestments in the Netherlands. Excluding FDI flows received by Luxembourg and the Netherlands, which highly fluctuated in recent years, OECD FDI flows were down by 14%.
- The United States was the leading FDI recipient worldwide, followed by Brazil and Mexico and the countries with the most FDI outflows were Unites States, China and Japan.Cross-border merger and acquisition activity went up by 16% in advanced economies over the first half of the year.
- Announced greenfield investment projects decreased in emerging markets and developing economies, hitting their lowest level in two years in the second quarter of 2024.
FDI Qualities Visualisation Platform
Beyond financing, the qualitative impact of FDI on sustainable development is important. Our FDI Qualities Indicators highlight both positive contributions and challenges.
Our new pilot platform allows analysis of foreign direct investment (FDI) and its effects on the low-carbon transition, job creation, human capital, gender equality, and innovation. Users can track these factors over time and benchmark their country against peers.
Productivity, innovation, and digital economy:
Foreign firms contribute to productivity, innovation and digitalisation, due to better access to capital, technology, and talent. In fact, foreign affiliates are 70% more productive than domestic firms, 80% more likely to invest in R&D, and 18% more likely to use digital payments.
Jobs and inclusion:
Greenfield investment is also an important source of employment. In 2023, it created 2.8 billion new jobs – 1.8 billion of which in emerging market and developing economies. Many of these jobs are for women: foreign firms employ 9% more women than domestic firms. Despite a productivity gap of 70%, however, foreign firms pay only 35% higher wages than domestic companies and are 12% less likely to have female top managers.
Energy efficiency and pollution:
On average, foreign firms are 70% more energy-efficient than domestic firms due to better access to energy-saving technologies. Yet, their carbon emissions per unit of output are 12% higher, especially in developing countries, where FDI often targets polluting sectors.
Green and digital transitions:
FDI is pivotal to the green and digital transitions, though it creates fewer jobs over time. Greenfield FDI in renewable energies rose from 1% of global greenfield FDI in 2003 to 26% in 2023, while digital industry FDI rose from 12% to 22%. However, due to this rapid global industry restructuring, the number of jobs created per dollar of FDI dropped by 17% over the past decade, raising questions over FDI’s long-term role in employment creation.
FDI Regulatory Restrictiveness Index
There are critical questions being raised about adjusting global investment policy principles, given the rise of inward-looking industrial policies, geoeconomic fragmentation, and national security considerations. An important consideration in this new environment is whether the global policy trend has turned against foreign investment.
The newly FDI Regulatory Restrictiveness Index (FDIRRI) offers insight on this question. By looking at statutory barriers to FDI in over 100 economies worldwide, it helps to provide an objective reality check on the question of whether rising protectionism is gaining currency in the FDI policy sphere.
Liberalisation progress:
Despite geopolitical tensions, there has been no reversal of FDI liberalisation progress made over past decades. Although the pace of liberalisation has slowed, policies across many countries have remained generally open to foreign investment. Concerns over security risks related to international investments have, nonetheless, grown, particularly in OECD countries. As a result, many governments have introduced or updated foreign investment screening policies to safeguard national security in the past 5 to 10 years. Although often discriminatory towards FDI and an important part of the regulatory landscape for foreign investors, these measures are not classified as restrictions within the FDIRRI framework. They are, however, monitored and reported for transparency purposes in the new FDIRRI – Regulatory Database.
Global variability:
Significant global variation in FDI restrictiveness persists. OECD countries are on average 3.2 times less restrictive than non-OECD nations. Countries in Asia, the Middle East, and Africa represent 96% of the most restrictive economies globally, showing also a greater potential for reforms.
Sectoral restrictions:
Agriculture and certain service sectors – such as real estate and transport – face the highest restrictions. In non-OECD countries, construction and distribution activities also see notable restrictions, while media and professional services remain relatively limited across both OECD and non-OECD economies.
