Trade rule reform key to unlocking FDI and real asset investment
Reforming global trade rules will be critical not only for supporting developing economies, but also for restoring foreign direct investment (FDI) flows and enabling long-term investment in real assets.
UN Trade and Development (UNCTAD) has warned that rising protectionism, policy fragmentation and geopolitical tensions are undermining the predictability of the global trading system: conditions that are essential for cross-border investment decisions.
For investors in infrastructure, energy and industrial real estate, this uncertainty translates directly into higher risk. Long-term capital deployment — particularly into capital-intensive assets — relies heavily on stable trade frameworks, clear market access and consistent regulatory regimes.
UNCTAD highlights that developing countries have the most at stake. Trade is a key driver of industrialisation and economic diversification, but it is also closely linked to investment flows. International investment agreements and trade frameworks are widely used by governments to attract foreign capital and provide legal certainty to investors.
When these frameworks become fragmented or unpredictable, the impact on FDI can be immediate. Recent data already points to a slowdown in global investment, with trade tensions and policy uncertainty weighing on investor confidence and reducing capital flows into productive sectors such as infrastructure and energy.
This has direct implications for real assets. Sectors such as logistics, ports, manufacturing hubs and power generation depend on cross-border trade flows and supply chains. Any disruption to trade rules, or lack of clarity around them, can delay or derail investment decisions, particularly in emerging markets where risk premiums are already higher.
UNCTAD is therefore calling for reforms to strengthen the multilateral system and improve its inclusiveness. Key priorities include reducing non-tariff barriers, improving market access and aligning trade rules with development objectives.
The organisation also points to the growing importance of regional integration and South–South trade, which could provide alternative pathways for investment as global trade patterns shift. Stronger regional frameworks can help mitigate fragmentation risks and create more stable environments for investors.
Ultimately, the analysis underscores a structural link between trade policy and capital flows. Without reform, fragmentation risks further suppressing FDI, particularly into the infrastructure and industrial assets that underpin economic growth. With it, there is potential to channel significantly more investment into the real economy, especially in developing markets.
