In the statement, the Chief Economist highlighted that “it is no coincidence that FDI is reaching new lows at the same time public debt is hitting record levels” and added that “private investment must now drive economic growth, and FDI is one of the most productive forms of private investment.”
However, he lamented, “in recent years, governments have been busy erecting barriers to investment and trade when they should deliberately be tearing them down, so they will need to abandon this bad habit.”
According to the World Bank report, in 2023, the latest year for which data is available, the value of FDI received by developing economies, including all Lusophone countries except Portugal, was the lowest since 2005.
The downward trend in foreign investment flows also affects the richest economies, which received only $336 billion (€289 billion) in 2023, the lowest level since 1996.
In the statement, the World Bank emphasized the importance of the Conference on Financing for Development in Seville, from June 30 to July 3, to point out that public policies will be crucial in achieving these goals, in a context where economic growth has slowed, public debt has reached record levels, and external aid budgets have decreased.
The relaxation of investment restrictions will be a crucial first step, as this year, half of all FDI-related measures announced by governments in developing economies were restrictive measures — the highest proportion since 2010.
Among the priorities identified by the World Bank to reverse the slowdown in FDI in developing countries are easing restrictions, improving the attraction of foreign investment, expanding the economic benefits of FDI, and increasing global cooperation through measures that enable countries to work together to “accelerate policy initiatives that can help direct FDI flows to developing economies with the largest investment gaps.”
