Industry Investment Rating - The report highlights a broadly downward trend in FDI into emerging markets and developing economies (EMDEs) over the past decade, with FDI inflows into developing countries falling by 3% between 2014-18 and 2019-23 [63][64] - The FDI-to-GDP ratio for developing countries dropped to 1.7% in 2019-23, the lowest in decades [63][64] - Greenfield FDI, however, has shown resilience, with announcements reaching nearly 750billionin2023,thehighestannuallevelonrecord[70]CoreIndustryInsights−TheglobalFDIlandscapeisincreasinglyshapedbynear−shoring,friend−shoring,andreshoring,drivenbygeopoliticalconsiderations,supplychainresilience,andmarketaccess[61][73]−USFDIflowsintoMexicorosefrom34 billion in 2014-18 to 45billionin2019−23,reflectingashifttowardsshortersupplychainsandlessgeopoliticaluncertainty[78]−ChinesecompaniesareredirectingFDItothird−countrymanufacturinghubslikeVietnam,Mexico,andMalaysiatopreserveaccesstoWesternmarkets[78]Chapter1:TrendsinFDIinDevelopingCountries−Upper−middle−incomeeconomiesdominateFDIinflows,accountingforover7530 billion in 2023 [201][202] - Reinvested earnings in developing countries have risen, accounting for over 60% of total FDI in 2021 and 2022, signaling confidence in host economies [206][207] Chapter 2: Near-Shoring, Friend-Shoring, and FDI Relocations - Over 80% of investment promotion agencies (IPAs) believe FDI relocations will significantly impact their countries, with 86% of developing country IPAs expecting friend-shoring to be an important trend [79][80] - Chinese FDI to Vietnam, Mexico, and Malaysia surged, with investments in computer manufacturing increasing 13-fold in 2023 compared to 2022 [78] - The MIGA-WAIPA survey indicates that geopolitical and economic risks, particularly supply chain disruptions and Russia's invasion of Ukraine, are top concerns for FDI [43][84] Chapter 3: Political Risk Insurance (PRI) Trends - The ratio of PRI issuance to FDI flows into developing countries has declined, with only 7% of FDI covered by PRI in 2020-23 [87][89] - Public sector PRI providers, particularly export credit agencies, dominate the market, while multilateral providers like MIGA have doubled their issuance share, focusing on riskier environments [89][90] - Claims related to transfer and convertibility risks, as well as political violence, have increased post-pandemic, though the PRI industry retains sufficient capacity to handle these risks [90][91]
