International investment trends

Global foreign direct investment (FDI) declined by 11% in 2024 to $1.5 trillion when adjusted for conduit economies. Investment was uneven, with Europe facing sharp declines while North America saw increases. Developing country inflows were flat, though Africa and South-East Asia recorded rises. Ten economies received three-quarters of flows to developing countries.

Sectoral trends showed contraction in infrastructure and supply-chain intensive industries, but investment in digital sectors doubled, highlighting them as the only growth driver. Among the top 100 multinational enterprises (MNEs), technology firms now account for over 20% of revenues.

International project finance (IPF) fell by 27% in number and 26% in value of deals, with steep declines in Asia and renewable energy projects. Telecommunications infrastructure was a notable exception, with investment increasing in value despite fewer deals.

Investment policy trends

National investment policies in 2024 reflected both liberalisation and restriction. While some measures facilitated investment, others tightened controls, especially in sensitive industries. Internationally, new investment agreements increasingly incorporated provisions on digital trade and sustainability. However, investor–State dispute settlement cases continued to rise, with some involving digital sectors and highlighting tensions between regulatory space and investor protections.

Sustainable finance trends

Sustainability-themed capital market products expanded, with sustainable bonds and funds reaching new highs. However, concerns about credibility and standardisation persist. The carbon market remains fragmented, with volatility affecting investor confidence.

Institutional investors, including sovereign wealth funds and public pension funds, increased climate-related actions, though disclosure quality varies. International standard-setting bodies advanced new sustainability reporting requirements. Policymakers emphasised the need for regulatory predictability and capacity-building, especially in developing economies, to close gaps in sustainable finance.

International investment in the digital economy

The digital economy lacks a universally agreed definition; the report uses core, narrow and broad scopes to capture activities. It is expanding at an estimated 10–12% annual rate, outpacing global growth.

Digital MNEs dominate cross-border digital investment. The top 100 digital enterprises generated $3.3 trillion in sales, with the largest firms headquartered mainly in the United States, China, and other developed economies. Investment is shifting from platforms towards services and infrastructure, including data centres and cloud networks.

FDI trends in digital sectors show rapid growth, contrasting with stagnation in other industries. However, concentration in a few firms and economies raises risks of widening the digital divide.

Drivers and determinants include technological innovation, data governance, infrastructure availability, and human capital. Regions with strong policy frameworks and investment facilitation attracted more flows.

Development implications highlight both opportunities and risks. Investment can support technology transfer, local content creation, and innovation. Yet, lack of connectivity, infrastructure gaps, and skills shortages prevent many developing economies from fully benefiting.

Policies to leverage international investment in the digital economy

Countries are advised to shape enabling foundations through clear digital strategies aligned with national development plans, improve governance and regulatory certainty, and ensure adequate infrastructure. Stimulating investment requires targeted incentives, public–private partnerships, and innovative financing. Fostering impact calls for measures that expand local benefits, such as training and supplier development.

Policy recommendations and the way forward

The report recommends that governments:

• Adopt long-term national digital investment strategies aligned with industrial policy.
• Strengthen governance and regulatory frameworks to provide predictability and balance investor rights with sustainable development objectives.
• Expand digital infrastructure, particularly broadband and data centres, through PPPs and blended finance.
• Address enabling factors such as reliable energy, access to critical minerals, and digital literacy.
• Integrate sustainable development into investment agreements to reduce risks and support inclusive growth.
• The outlook for 2025 remains uncertain due to weak global economic conditions, but digital investment is expected to remain resilient and continue driving structural transformation.