Global FDI Hits US$1.6 Trillion: The Race for Development Impact

UNCTAD’s latest World Investment Report reveals a fragile but significant recovery in global FDI. Discover why AI infrastructure, strategic industries and development impact are redefining investment promotion.

The question is no longer how much investment moves across borders—it is what that investment builds.

The global investment landscape has entered a new phase. After two consecutive years of decline, foreign direct investment (FDI) recovered to US$1.6 trillion in 2025, marking a 6% increase and signalling renewed confidence in cross-border capital. Yet beneath the encouraging headline lies a more important story: the recovery is highly concentrated, increasingly strategic and delivering uneven development outcomes across the world’s economies.

For investment promotion agencies, destination organisations, MICE leaders, multinational corporations and institutional investors, the challenge is no longer simply attracting investment. It is attracting the right investment—capital that builds productive capacity, creates skilled employment, accelerates innovation and strengthens long-term competitiveness.

The findings from UN Trade and Development’s World Investment Report 2026 suggest that the global competition for FDI has fundamentally changed. Countries are no longer competing only for factories and headquarters; they are competing for artificial intelligence infrastructure, semiconductor ecosystems, critical minerals, digital services and the industries that will define the next generation of economic growth.

A global recovery—but not a balanced one

The recovery in global investment deserves cautious optimism.

Worldwide FDI reached US$1.6 trillion during 2025, ending two years of contraction. However, the benefits were distributed unevenly. Developed economies recorded an 11% increase in investment inflows, while developing economies grew by only 2%, reaching US$901 billion. Although developing countries still attracted more than half of global FDI, momentum was significantly stronger in advanced markets.

This divergence illustrates a widening investment gap. Capital is flowing towards countries with mature innovation ecosystems, sophisticated infrastructure and strong industrial policy, while many emerging economies continue to struggle to attract the high-value projects needed to accelerate productivity and income growth.

For economic development leaders, headline investment growth is becoming less meaningful than investment quality.

Concentration is reshaping the global investment map

One of UNCTAD’s most striking findings is the growing concentration of international capital.

The world’s 20 largest host economies attracted more than 80% of global FDI during 2025, reinforcing a trend towards larger, more strategic investment destinations. This concentration extends beyond geography into sectors and individual projects, with a relatively small number of megaprojects accounting for much of the increase in global investment values.

For smaller economies, this creates both opportunity and risk.

The opportunity lies in identifying specialised niches within global value chains rather than attempting to compete across every sector. The risk is being excluded from increasingly technology-intensive investment flows that favour countries with established industrial capabilities.

Investment promotion agencies must therefore become more targeted, building sector-specific propositions rather than broad promotional campaigns.

In the new FDI economy, competitive advantage belongs to destinations with clear strategic specialisation.

Artificial intelligence is driving the next investment cycle

Perhaps the defining investment story of 2025 was the extraordinary rise of digital infrastructure.

Strategic sectors—including AI infrastructure, semiconductors, critical minerals and energy-transition technologies—accounted for 44% of global greenfield investment values, compared with just 16% in 2020. The largest increase came from data centre developments, followed by oil and gas and semiconductor manufacturing.

This represents a profound structural shift.

Artificial intelligence is no longer simply a software industry; it has become one of the world’s largest infrastructure investment themes. Data centres, renewable electricity, high-capacity transmission networks and advanced computing facilities are emerging as critical assets underpinning future economic competitiveness.

For destination leaders, AI infrastructure creates an entirely new investment proposition centred on energy resilience, digital connectivity and engineering talent rather than traditional industrial incentives.

Developing economies face a widening strategic divide

Despite receiving the majority of global FDI, developing economies continue to attract relatively little investment into the industries generating the highest long-term value.

UNCTAD reports that low-income and lower-middle-income economies captured only around 10% of strategic-sector investment between 2020 and 2025, compared with more than 20% for other sectors. The implication is significant: many emerging economies remain heavily exposed to lower-value production while higher-value technology ecosystems concentrate elsewhere.

Regional performance also varied considerably.

• Developing Asia remained the world’s largest recipient, attracting US$644 billion.

• Latin America and the Caribbean recorded 14% growth to US$188 billion.

• Africa attracted approximately US$70 billion, remaining well above its long-term historical average despite declining from an exceptional 2024 performance.

• Least developed countries experienced 21% growth, yet still represented only 2.7% of global FDI.

The challenge is therefore not attracting more investment alone, but attracting investment capable of transforming industrial capability.

Governments are becoming more strategic investors

The report also highlights a significant policy evolution.

During 2025, governments introduced a record 229 investment policy measures. While most remained favourable towards investors, an increasing proportion were designed to channel capital into strategic industries, strengthen domestic supply chains and respond to economic security considerations.

Industrial policy has returned as a central component of investment promotion.

Countries are increasingly aligning incentives with national priorities including semiconductor manufacturing, clean energy, AI infrastructure, critical minerals and advanced manufacturing. Rather than competing exclusively on tax reductions, governments are combining infrastructure investment, workforce development, regulatory reform and innovation policy into integrated competitiveness strategies.

For institutional investors, this creates greater visibility around long-term policy direction, making strategic sectors more attractive for patient capital.

The next generation of investment destinations will be measured in gigawatts as much as GDP.

Investment promotion must evolve beyond marketing

The findings carry important implications for investment promotion organisations worldwide.

Traditional investment attraction focused on promotional campaigns, incentives and lead generation. The emerging investment landscape demands a broader mandate centred on investment facilitation, supplier development, workforce capability and ecosystem building.

UNCTAD argues that developing countries require realistic entry points into evolving global value chains through stronger infrastructure, skilled labour, regional market integration and investment partnerships that encourage technology transfer rather than simply capital inflows.

This shift also elevates the importance of business events.

International technology congresses, investment forums, semiconductor exhibitions and sustainability conferences increasingly function as investment attraction platforms where governments engage directly with multinational executives and institutional investors. For convention bureaux and destination organisations, MICE has become an essential instrument of economic development.

The outlook for 2026: Competition intensifies

Although global investment has returned to growth, UNCTAD warns that the outlook remains fragile.

Trade policy uncertainty, geopolitical tensions, armed conflict, elevated financing costs and economic fragmentation continue to influence corporate investment decisions. At the same time, competition for projects linked to AI, semiconductors, critical minerals and energy transition technologies is expected to intensify as governments pursue technological sovereignty and future sources of growth.

For investment promotion agencies, resilience will increasingly depend upon creating investment-ready ecosystems rather than isolated projects. For institutional investors, opportunity lies in destinations capable of combining policy stability, infrastructure, talent and innovation into scalable long-term investment platforms.

The recovery in global FDI is real. But its true significance will ultimately be measured not by the US$1.6 trillion that crossed borders in 2025, but by whether that capital creates stronger industries, better jobs and more inclusive economic development across the world.

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Editorial Attribution

This article is an independent news analysis for Investment & Destination Promotion, based on the World Investment Report 2026 published by UN Trade and Development (UNCTAD).

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Investment & Destination Promotion is a global leadership platform for investment promotion agencies, destination organisations, MICE leaders, institutional investors and C-suite executives, delivering strategic intelligence on foreign direct investment, economic development, tourism, business travel and the future of globally competitive destinations.