2% less foreign direct investment (FDI) came into the world in 2023 than it did in 2022. People in India, China, France, Australia, and the USA have seen big drops. The drop is different in each country. An important report from the UNCTAD called the 2024 World Investment Report talks in great detail about this trend.

Less FDI going to India

Indian FDI dropped a lot. Inflows went from $49 billion the year before to $28 billion the next year, a 43% drop. Because of this move, India fell from eighth in the world in terms of FDI in 2022 to fifteenth in 2023. Although India’s economy is getting worse, foreign investors still like to put their money into new construction and projects in the country.

Where does the drop in FDI come from?

UNCTAD says that multinational corporations (MNCs) became more careful in 2023, which led to an overall drop in FDI. Tensions in geopolitics, the fragmentation of the economy, strict industry policies, and the ongoing diversification of supply lines are some of the main things that are making this happen. This has made people less likely to spend and harmed the free flow of money between countries.

Effects on Certain Sectors

It’s been different for each industry because of the drop in FDI. The number of international mergers and acquisitions dropped by 46% and the number of foreign project loans dropped by 23%. Both of these are important for infrastructure. FDI is very important for developing countries like India, so this last trend is very important. Mergers and acquisitions are key to FDI. FDI to poor countries has gone down by 7%, to $867 billion. However, the drop has had different effects in different places. It was $4 billion in FDI that went to developing Asia, which is a drop of 8%. It is interesting to see that FDI has dropped in China, as well as in West and Central Asia.

Top 10 FDI Recipient Countries in 2023