For decades, foreign direct investment (FDI) was seen as the primary engine of development finance. But that’s changing, as FDI flows fall off and remittances surge worldwide.
According to the latest World Development Indicators (WDI) data, FDI has been in a long structural decline, while personal remittances, which include both employee compensation and personal transfers, have grown, quietly reshaping how money flows globally.
A recent World Bank report confirmed that FDI flows to developing economies have fallen to levels not seen since 2005. WDI shows that, after peaking worldwide in 2007 above $3 trillion in aggregate flows, FDI has trended downward since. In 2024, aggregate flows were just about $1 trillion, approximately the 2005 level. Meanwhile, between 2005 and 2024, global remittance inflows grew by 240 percent and outflows by 227 percent, reflecting decades of rising global labor mobility. The slight divergence between inflow and outflow aggregates is a known statistical artifact due to differences in national reporting methodologies, timing, and the distorting effect of investment routed through offshore financial centers.
The geography of FDI and remittances tells a compelling story. The world’s wealthiest economies remain the top FDI recipients. The United States, Singapore, Canada, and Germany have been consistent leaders throughout the time series. Among emerging economies, China’s trajectory stands out: its FDI inflows grew dramatically relative to peers like Brazil and India and reached historic high in 2021 at $344 billion. It fell sharply in 2024 and returned to around $43 billion—roughly the same level as in 2001. On the outflow side, China has moved in the opposite direction, with outflows rising steadily, placing it alongside the US as one of the primary sources of global FDI.
The geography of FDI and remittances tells a compelling story. The world’s wealthiest economies remain the top FDI recipients. The United States, Singapore, Canada, and Germany have been consistent leaders throughout the time series. Among emerging economies, China’s trajectory stands out: its FDI inflows grew dramatically relative to peers like Brazil and India and reached historic high in 2021 at $344 billion. It fell sharply in 2024 and returned to around $43 billion—roughly the same level as in 2001. On the outflow side, China has moved in the opposite direction, with outflows rising steadily, placing it alongside the US as one of the primary sources of global FDI.
For the world’s poorest countries, such as IDA-eligible economies, FDI inflows rose sharply in recent decades, from just $1.9 billion in 1990 to $66.3 billion in 2024, with a notable surge between 2003 and 2008. Despite gains in absolute terms, however, in relative terms these countries remain at the margins of global investment: IDA countries collectively received only 4.22 percent of total global FDI inflows in 2024. This matters because FDI does more than bring capital—it can create jobs, transfer technology, and build the productive capacity that sustains long-term growth. The gap between absolute gains and relative standing reflects a real constraint on development for IDA borrowers.
READ MORE: https://blogs.worldbank.org/en/opendata/tracking-the-changing-role-of-foreign-direct-investment-and-remi
