Developing countries move to entice more investment inflows

In the face of declining financial inflows, developing countries are enhancing their investment facilitation efforts.

Data compiled by UN Trade & Development and recapped in its World Investment Report 2024 includes the following findings:

In 2023, 86% of the investment policy measures taken by developing countries were more favourable to investors. In contrast, 57% of measures in developed countries were less favourable, with restrictions such as FDI screening mechanisms increasingly used to address national security concerns.

Globally, the number of investment policy measures in 2023 matched the five-year average, with about three-quarters favourable to investors. Investment facilitation reached a record 30% of all measures. Incentives targeted the services sector and renewable energy in particular.

In 2023, 29 new international investment agreements (IIAs) were concluded, with less than half being traditional bilateral treaties. Reform of older IIAs remains slow, with about half of global FDI still governed by non-reformed treaties, increasing the risk of investor-state dispute settlement (ISDS) cases. This is higher for developing countries (two-thirds) and least developed countries (LDCs) (three-quarters).

Only 16% of global FDI stock is covered by new-generation IIAs. The total ISDS case count reached 1,332, with 60 new arbitrations in 2023. About 70% of new cases were against developing countries, including three LDCs, with claims mostly in the construction, manufacturing and extractive sectors.

Image Titanx114 – This file is updated version of the map created by Allice Hunter, CC BY 4.0, https://commons.wikimedia.org/w/index.php?curid=147683308

developing countries investment