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Considering the complex interplay of foreign direct investment (FDI) trends, geopolitical factors, and sustainable development goals (SDGs) as highlighted in the 2024 World Investment Report, which of the following scenarios presents the most intricate challenge to achieving the SDGs in developing economies?
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U NI T E D NAT I O NS CO NFE R E N C E ON T R A D E A N D D E VE L OP M E N T
Investment facilitation
and digital government
2024
World
investment
report
2024
World
investment
report
U NI T E D NAT I O NS CO NFE R E N C E ON T R A D E A N D D E VE L OP M E N T
Investment facilitation
and digital government
Geneva, 2024
Mention of any firm or licensed process does not imply the endorsement of the United Nations.
This publication has been edited externally.
United Nations publication issued by UN Trade and Development.
UNCTAD/WIR/2024
ISBN 978-92-1-003134-9
PDF ISBN 978-92-1-358973-1
EPUB ISBN 978-92-1-358974-8
Print ISSN 1020-2218
Online ISSN 2225-1677
Sales no. E.24.II.D.11
World Investment Report 2024
Investment facilitation and digital government
iii
Preface
Investment is the fuel for sustainable development. Closing the SDG and climate financing
gap will require an estimated 500 billion of
international private finance per year, much of which would be in the form of foreign direct
investment.
But many developing countries are running on empty. Global and regional crises, trade tensions
and tighter financing conditions have had a chilling effect on foreign direct investment, which
remained subdued in 2023 for a second year in succession. Global flows of foreign direct
investment stagnated at
$1.3 trillion. Notably, foreign direct investment in new industrial and
infrastructure projects in developing countries declined, while new investment in sectors relevant
to the Sustainable Development Goals fell by more than 10 per cent.
Stagnant SDG investment and insufficient funding is severely hindering implementation of the
2030 Agenda and the SDGs, particularly in least developed countries. We need urgent action
to remove obstacles and provide a transparent, streamlined investment climate for sustainable
development.
This World Investment Report shows that the lacklustre financial flows to developing countries
are not due to a lack of investment policy efforts. Investment facilitation has become a prominent
feature of national policies and international agreements. Digital government solutions are
proliferating, aiding investors and strengthening governance and institutions.
But despite these efforts, finance is not flowing at sufficient scale, due to high interest rates and
geopolitical conditions. That means we must redouble our efforts.
I urge all decision makers to prioritize the mobilization of sustainable finance at scale. The SDG
Stimulus we have proposed is a practical and achievable means of delivering this. Our call for
reform and scaling up of multilateral development banks is intended to significantly increase the
crowding in of private investment.
I also encourage policymakers to prioritize strengthening investment governance in developing
countries, to ensure financial flows are directed towards the SDGs. UNCTAD’s recommendations
for the use of business facilitation and digital government to ease sustainable investment can
play an important part in achieving these goals.
António Guterres
Secretary-General of the United Nations
World Investment Report 2024
Investment facilitation and digital government
iv
Foreword
In a world grappling with global and regional crises, the delicate balance of foreign direct
investment (FDI) hangs precariously. This World Investment Report (WIR) serves as a stark
reminder that investment, the lifeblood of sustainable development, is not merely a statistic
but a lifeline for developing nations. It is the fuel that powers progress towards the
Sustainable Development Goals (SDGs) and the 2030 Agenda for Sustainable Development.
The challenges we face are multifaceted and interconnected. Geoeconomic fragmentation
is reshaping the landscape of global investment. Trade networks are fragmenting, regulatory
environments are diverging and international supply chains are being reconfigured. These
shifts create both obstacles and isolated opportunities, with some countries benefiting from
investments in global value chain-intensive manufacturing while others struggle to participate
in the global economy.
Overall, however, these trends are leading to a further deterioration of the international investment
landscape as seen from the developing world. Last year, FDI fell by more than 10 per cent
globally, and by 7 per cent in the developing world. International project finance, crucial for
infrastructure development, was particularly hard hit, falling by 26 per cent. Prospects for 2024
remain challenging, with weakening growth prospects and continuing trade and geopolitical
tensions.
Furthermore, the WIR reveals a crisis in SDG investment, with a more than 10 per cent decrease
in 2023. Two sectors, agrifood systems and water and sanitation, registered fewer internationally
financed projects in 2023 than in 2015, when the SDGs were adopted. This decline, driven by
tighter financing conditions and a slowdown in sustainable finance markets, underscores the
need for concerted action to steer investments towards projects that genuinely contribute to a
sustainable future.
Meanwhile, the mobilization of funds for SDG investment through sustainable finance products
in global capital markets is still growing but slowing down. Sustainable bonds showed marginal
growth in 2023, and new inflows in sustainable investment funds dropped by 60 per cent.
Greenwashing concerns are increasingly affecting investor demand. More broadly, policy action
is needed to mitigate the risk of a widening backlash against sustainable investment strategies.
The world needs a robust and credible sustainable finance industry, and no effort must be spared
to fortify it before it is too late.
But the way we do that must be carefully considered. Policymakers should be mindful of the
spillover effects of international sustainability reporting standards, particularly on small and
medium-sized enterprises (SMEs) in developing countries. These SMEs, the engines of inclusive
growth and job creation, are precisely the ones that need sustainable finance flows the most.
However they may struggle to meet increased disclosure requirements, potentially affecting their
market access and participation in global supply chains. Striking a balance between promoting
transparency and avoiding undue burdens on businesses will be crucial for a sustainable and
inclusive investment landscape.
Against this complex backdrop, the WIR underscores the importance of investment facilitation
and digital government as tools to attract and retain investment. By streamlining procedures,
enhancing transparency and leveraging digital tools such as online single windows, we can
World Investment Report 2024
Investment facilitation and digital government
v
foster a more conducive investment climate, particularly in developing countries. Furthermore,
the report emphasizes that digital business and investment facilitation is not merely a technical
solution; it is a stepping stone towards wider digital government implementation, which can
address underlying weaknesses in governance and institutions that often hinder investment and
impede progress towards sustainable development.
Investment facilitation, while essential, is not a panacea for the challenges facing global
investment flows. However, it is an undeniable prerequisite for fostering an environment conducive
to sustainable investment. The proliferation of digital solutions for investment facilitation, as
highlighted in this report, exemplifies the WIR’s commitment to providing tangible and actionable
policy recommendations even in the most challenging of times.
As we navigate the complexities of the 21st century, the WIR reminds us that investment is
not just about capital flows; it is about human potential, environmental stewardship and the
enduring pursuit of a more equitable and sustainable world. Let us embrace this vision with
renewed determination, recognizing that the choices we make today will shape the world we
leave behind for generations to come.
Rebeca Grynspan
Secretary General of UN Trade and Development
World Investment Report 2024
Investment facilitation and digital government
vi
Acknowledgements
The World Investment Report 2024 was prepared by a team at UNCTAD led by Richard Bolwijn.
UNCTAD team members included Dafina Atanasova, Vincent Beyer, Stephania Bonilla, Julien
Bornon, Bruno Casella, Joseph Clements, Mathilde Closset, Tiffany Grabski, Frank Grozel,
Natalia Guerra, Hamed El Kady, Anastasia Leskova, Massimo Meloni, Anthony Miller, Bita
Mortazavi, Abraham Negash, Yongfu Ouyang, Marios Pournaris, Ian Richards, Diana Rosert,
Amelia U. Santos-Paulino, Changbum Son, Astrit Sulstarova, Yihua Teng, Claudia Trentini and
Kee Hwee Wee.
Research support and inputs were provided by Ciman Araleh, Gregory Allan Auclair, Weijia Hu,
Oktawian Kuc, Corli Le Roux, Noé Michon, Elisa Navarra, Nelson Pérez, Lucas Ricardo, Lauren
Satterthwaite, Prachi Sharma, Kjartan Sorensen, Rick van der Maas and Vanina Vegezzi.
Comments and contributions were provided by colleagues in UNCTAD: Kiyoshi Adachi,
Rodrigo Carcamo, Marco Fugazza, Ebru Gökçe-Dessemond, Poul Hansen, Igor Paunovic,
Luisa Rodriguez, Mesut Saygili, Dawei Wang and Anida Yupari, as well as the Office of the
Secretary-General.
Statistical assistance was provided by Mohamed Chiraz Baly, Kerem Bayrakceken and Bradley
Boicourt. IT assistance was provided by Chrysanthi Kourti.
The manuscript was copy-edited by Lise Lingo. The design of the charts and infographics, and
the typesetting of the report were done by Maria Teresa Arrigoni and Matteo Oldani. Production
of the report was supported by Elisabeth Mareschal and Katia Vieu.
At various stages of the preparation of the theme chapter, including the peer review, brainstorming
meetings and discussions in the margin of the UNCTAD Investment and Enterprise Commission
meeting on Investment Facilitation for Sustainable Development, the team benefited from
comments and inputs received from external experts: Yasser Abbas, Isiaka Abdulqadir Imam,
Axel Berger, Alejandro Encinas Nájera, Najwa Halaseh, Archie Kariuki, Olga Lucia Lozano, Victor
Matassi, Ugo Panizza, Deniz Susar, Camilo Trigueros, Chhime Tshering, Ingmar Vali, Christian
Volpe Martincus, Dana Akram Abdallah Al Zoubi, and Juwang Zhu.
The team is grateful for advice, input and comments received from numerous officials in central
banks, national government agencies, international organizations and non-governmental
organizations.
World Investment Report 2024
Investment facilitation and digital government
vii
Explanatory notes
The terms country and economy as used in this report also refer, as appropriate, to territories
or areas. In addition, the designations of country and economy groupings are intended solely
for statistical or analytical convenience and do not necessarily express a judgement about the
stage of development reached by a particular country or area in the development process. The
major country and economic groupings used in this report follow the classification of the United
Nations Statistical Office:
•
Developed economies: the member countries of the OECD (other than Chile, Colombia,
Costa Rica, Mexico and Türkiye), European Union member countries that are not OECD
members (Bulgaria, Croatia, Cyprus, Malta and Romania) plus Albania, Andorra, Belarus,
Bermuda, Bosnia and Herzegovina, Liechtenstein, Monaco, Montenegro, North Macedonia,
the Republic of Moldova, the Russian Federation, San Marino, Serbia and Ukraine, plus the
territories of Faroe Islands, Gibraltar, Greenland, Guernsey and Jersey.
•
Developing economies: in general, all economies not specified above. For statistical
purposes, the data for China do not include those for Hong Kong Special Administrative
Region (Hong Kong SAR), Macao Special Administrative Region (Macao SAR) or Taiwan
Province of China.
Throughout the report, data on investment trends for the Netherlands refer only to the
Netherlands; information for Aruba, Curaçao and Sint Maarten is reported separately.
Methodological details on FDI and MNE statistics can be found on the report website (https://
unctad.org/topic/investment/world-investment-report).
The following symbols have been used in the tables:
•
Two dots (..) indicate that data are not available or are not separately reported. Rows in
tables have been omitted in those cases where no data are available for any of the elements
in the row.
•
A dash (–) indicates that the item is equal to zero or its value is negligible.
•
A blank in a table indicates that the item is not applicable, unless otherwise indicated.
•
A slash (/) between dates representing years, e.g., 2020/21, indicates a financial year.
•
Use of a dash (–) between dates representing years, e.g., 2020–2021, signifies the full period
involved, including the beginning and end years.
•
Reference to “dollars” ($) means United States dollars, unless otherwise indicated.
Annual rates of growth or change, unless otherwise stated, refer to annual compound rates.
Details and percentages in tables do not necessarily add to totals because of rounding.
World Investment Report 2024
Investment facilitation and digital government
viii
Abbreviations
AfCFTA
African Continental Free Trade Area
ASEAN
Association of Southeast Asian Nations
ASYCUDA
Automated System for Customs Data
AIFF
ASEAN Investment Facilitation Framework
BIT
bilateral investment treaty
CDP
Carbon Disclosure Project
CEPA
Comprehensive Economic Partnership
Agreement
COVID-19
coronavirus disease 2019
ECT
Energy Charter Treaty
EGDI
eGovernment Development Index
ESG
environmental, social and governance
EVs
electric vehicles
FDI
foreign direct investment
FTA
free trade agreement
GDP
gross domestic product
GER
Global Enterprise Registration
GHG
greenhouse gas
GSFO
Global Sustainable Finance Observatory
GVC
global value chain
ICC
International Chamber of Commerce
ICSID
International Centre for Settlement of Investment
Disputes
ICT
information and communications technology
IFD
Investment Facilitation for Development
IFRS
International Financial Reporting Standards
IIA
international investment agreement
IMF
International Monetary Fund
IPA
investment promotion agency
IPFSD
Investment Policy Framework for Sustainable
Development
ISDS
investor–State dispute settlement
ISSB
International Sustainability Standards Board
IT
Information technology
LDC
least developed country
LLDC
landlocked developing country
M&As
mergers and acquisitions
MNE
multinational enterprise
MSMEs
micro-, small and medium-sized enterprises
NAFTA
North American Free Trade Agreement
OECD
Organisation for Economic Co-operation and
Development
OFDI
outward FDI
OFIO
Office of the Foreign Investment Ombudsman
OHCHR
Office of the United Nations High Commissioner for
Human Rights
OIC
Organisation of Islamic Cooperation
PPF
public pension fund
PPP
public–private partnership
SDGs
Sustainable Development Goals
SEZ
special economic zone
SIDS
small island developing States
SIFA
sustainable investment facilitation framework
SMEs
small and medium-sized enterprises
SPAC
special purpose acquisition company
SWF
sovereign wealth fund
TIP
treaty with investment provision
TNI
Transnationality Index
UN DESA
United Nations Department of Economic and
Social Affairs
UNCITRAL
United Nations Commission on International
Trade Law
UNCTAD
United Nations Conference on Trade and
Development
UNEP
United Nations Environment Programme
UNIDROIT
International Institute for the Unification of Private
Law
UNODC
United Nations Office on Drugs and Crime
USMCA
United States–Mexico–Canada Agreement
WASH
water, sanitation and hygiene
WIR
World Investment Report
WTO
World Trade Organization
World Investment Report 2024
Investment facilitation and digital government
ix
Table of contents
Executive summary.
.......................................................................... xi
Chapter I
International investment trends.
....................................................... 1
A. Foreign direct investment......................................................... 3
1. Global trends.
................................................................................. 3
2. Trends by geography.
..................................................................... 5
3. Trends by project type and sector.
............................................... 21
B. Investment in the Sustainable Development Goals.
................ 29
C. International production.
......................................................... 34
1. Key indicators of international production.
................................... 34
2. Internationalization trends of the largest MNEs.
........................... 36
3. Shifting investment patterns among the top 100 MNEs.
.............. 38
Chapter II
Investment policy trends................................................................. 45
A. National investment policies................................................... 47
1. Overall trends.
.............................................................................. 47
2. Policy measures more favourable to investors.
............................ 50
3. Policy measures less favourable to investors.
.............................. 55
4. Outward foreign direct investment policies.................................. 60
B. International investment policies............................................ 65
1. Trends in international investment agreements............................ 65
2. Trends in investor–State dispute settlement.
................................ 73
Chapter III
Sustainable finance trends.
............................................................. 77
A. Sustainability-themed capital market products.
...................... 79
1. Sustainable bond markets........................................................... 79
2. Sustainable funds.
........................................................................ 85
B. Sovereign and public institutional investors.
........................... 88
1. Sustainability integration strategies and practices.
...................... 90
2. Sustainability disclosure.
.............................................................. 93
C. Policies, regulations and standards........................................ 96
World Investment Report 2024
Investment facilitation and digital government
x
ONLINE ONLY: Regional Trends
Africa
Developing Asia
Latin America and the Caribbean
Structurally weak, vulnerable and small economies:
Least developed countries (LDCs)
Landlocked developing countries (LLDCs)
Small island developing States (SIDS)
1. International sustainability reporting standards.
........................... 96
2. Policymaking at national and regional levels .
............................ 102
Chapter IV
Investment facilitation and digital government........................... 107
A. Introduction.
.......................................................................... 109
B. Progress on digital investment facilitation worldwide........... 113
1. The wider digital government context........................................ 113
2. The spread and quality of business portals.
............................... 115
3. Foreign investor-specific online procedures.
.............................. 119
4. Portal ownership and the role of IPAs........................................ 122
C. Facilitation in national and international investment policies.
125
1. National policies.
........................................................................ 125
2. International investment agreements......................................... 129
D. The impact of investment facilitation and digital government.134
E. From online business facilitation to digital government........ 140
1. The basic architecture of digital government services............... 140
2. Effective implementation.
........................................................... 142
3. Connecting with wider digital government................................. 145
F. Conclusions and policy implications.
..................................... 150
References..................................................................................... 153
Annex tables.
.................................................................................. 156
World Investment Report 2024
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xi
Executive summary
International investment trends
Global foreign direct investment (FDI) in 2023 decreased marginally, by 2 per cent, to $1.3 trillion.
This headline figure was affected by wild swings in financial flows through a small number of
European conduit economies; excluding the effect of these conduits, global FDI flows were more
than 10 per cent lower than in 2022.
The global environment for international investment remains challenging in 2024. Weakening
growth prospects, economic fracturing trends, trade and geopolitical tensions, industrial policies
and supply chain diversification are reshaping FDI patterns, causing some multinational enterprises
(MNEs) to adopt a cautious approach to overseas expansion. However, MNE profit levels remain
high, financing conditions are easing and increased greenfield project announcements in 2023
will positively affect FDI. Modest growth for the full year appears possible.
International project finance and cross-border mergers and acquisitions (M&As) were especially
weak in 2023. M&As, which mostly affect FDI in developed countries, fell by 46 per cent in value.
Project finance, important for infrastructure investment, was down 26 per cent. Tighter financing
conditions, investor uncertainty, volatility in financial markets and – for M&As – tighter regulatory
scrutiny were the principal causes of the decline.
Greenfield investment project announcements provided a bright spot. Project numbers increased
by 2 per cent, with the growth concentrated in manufacturing, interrupting a decade-long trend
of gradual decline in the sector. Furthermore, growth was concentrated in developing countries,
where the number of projects was up by 15 per cent. In developed countries new project
announcements were down 6 per cent.
In developed countries, the 2023 trend was strongly affected by MNE financial transactions,
partly caused by moves to implement a minimum tax on the largest MNEs. FDI flows in Europe
jumped from negative $106 billion in 2022 to positive 867 billion, mainly due to an 8 per
cent decrease in developing Asia. Flows fell by 3 per cent in Africa and by 1 per cent in Latin
America and the Caribbean. The number of international project finance deals fell by a quarter.
Greenfield project announcements in developing countries increased by more than 1,000, but
these projects were highly concentrated; South-East Asia accounted for almost half, West Asia
for a quarter and Africa registered a small increase, while Latin America and the Caribbean
attracted fewer projects.
•
FDI inflows to Africa declined by 3 per cent in 2023 to $53 billion. Greenfield announcements
included several megaprojects, including the largest announcement worldwide – a green
hydrogen project in Mauritania. International project finance fell by a quarter in number of
deals and by half in value, negatively affecting prospects for infrastructure investment.
•
FDI in developing Asia fell by 8 per cent to $621 billion. China, the second largest FDI
recipient in the world, saw a rare decline in inflows. Sizeable declines were recorded in India
and in West and Central Asia. Only South-East Asia held steady. Industrial investment in
World Investment Report 2024
Investment facilitation and digital government
xii
Asia remains buoyant, as shown by greenfield announcements, but the global downturn in
project finance also affected the region.
•
Flows to Latin America and the Caribbean were down 1 per cent, at $193 billion. The number
of international project finance and greenfield investment announcements fell, but the value
of the latter increased because of large projects in commodity sectors and critical minerals,
as well as in renewable energy, green hydrogen and green ammonia.
•
FDI flows to the structurally weak and vulnerable economies increased. FDI inflows to the
least developed countries (LDCs) rose to $31 billion, or 2.4 per cent of global FDI flows.
Landlocked developing countries and small island developing States also saw increased
FDI. In all three groups, FDI remains concentrated among a few countries. International
project finance is relatively more important in the poorest countries, which are therefore
disproportionally affected by the global downturn in this form of investment.
Industry trends showed lower investment in the infrastructure and digital economy sectors, but
strong growth in the global value chain-intensive sectors of manufacturing and critical minerals.
Weak project finance markets negatively affected infrastructure investment, and digital economy
sectors continued their slowdown after the boom ended in 2022. Global value chain-intensive
sectors, including the automotive, electronics and machinery industries, grew strongly, showing
the effect of supply chain restructuring pressures. In critical minerals extraction and processing,
investment project numbers and values nearly doubled.
Global economic fracturing trends are affecting the investment strategies of manufacturing
MNEs. The investment behaviour of the top 100 non-financial MNEs shows that, since 2019, the
geographical distribution of manufacturing projects, especially in strategic sectors, has shifted
towards locations closer to major MNE home markets in Europe and the United States. West
Asia, North Africa and Central America are emerging as strategic locations for manufacturing
MNEs.
International investment in sectors relevant for the Sustainable Development Goals in developing
countries declined in 2023. Growth in greenfield project announcements, especially in renewable
energy, power and transportation, pushed up the numbers. In value terms, Goals investment
in developing countries fell because of the downturn in international project finance, used for
larger projects in infrastructure sectors. Project numbers in agrifood systems and in water and
sanitation were lower than they were in 2015 when the Goals were adopted. Goals investment is
also unequally distributed. The shares of global Goals investment projects attracted by Africa and
by Latin America and the Caribbean are smaller than their shares in all projects. Only developing
Asia attracts above-average Goals investment.
Investment policy trends
The number of investment policy measures adopted in 2023 was 25 per cent lower than in
2022 but still in line with the five-year average. Most measures, 72 per cent, were favourable to
investors. The overall balance between favourable measures (liberalization, promotion, facilitation)
and less favourable ones (restrictions on entry and operation) was unchanged.
Developing countries mostly aim to promote and facilitate investment, whereas developed
countries lean towards more restrictive measures. In developing countries, 86 per cent of
measures were favourable to investors. In developed countries, 57 per cent of measures were
less favourable to investors. Most of these concerned restrictions to address national security
concerns.
Investment facilitation and incentives were the main types of measures favourable to investors
in both developed and developing countries. Facilitation measures reached almost 40 per cent
World Investment Report 2024
Investment facilitation and digital government
xiii
of favourable measures and 30 per cent of all measures – a record. For incentives, the services
sector and renewable energy were the primary focus in 2023.
Heightened caution towards foreign investments in critical sectors persisted in 2023. The
introduction or expansion of FDI screening mechanisms accounted for nearly half of the measures
less favourable to investors. Four additional countries implemented FDI screening in 2023, with
several more expected to follow in 2024. Countries that conduct FDI screening now account
for over half of global FDI flows and three quarters of FDI stock.
FDI restrictions also increasingly affect outward FDI. Outward FDI policies have evolved over
the past decade, reflecting the growing importance of both sustainability and geopolitical
considerations in shaping investment policies.
In 2023, countries and regions concluded 29 new international investment agreements (IIAs).
Traditional bilateral investment treaties accounted for fewer than half of the new treaties; most
were broad economic agreements with investment provisions.
Efforts to reform the IIA regime are continuing. New treaties tend to include features aimed at
safeguarding the right to regulate and they increasingly cover a broader range of issues, including
investment facilitation. The recent finalization of the Investment Facilitation for Development
Agreement by participating members of the World Trade Organization may provide further
impetus for this trend.
Reform of the stock of old-generation IIAs continues to be slow. About half of the global stock
of FDI is still covered by IIAs that have not been reformed, which expose countries to higher
risk of investor–State dispute settlement cases. This share is about two thirds for developing
countries and closer to three quarters for LDCs. Only 16 per cent of global FDI stock is today
covered by a new-generation IIA; reform efforts have so far had a limited effect on mitigating the
risk of ISDS, especially in the poorest countries.
The total ISDS case count reached 1,332, with 60 new arbitrations initiated in 2023. About
70 per cent of new cases were brought against developing countries, including three LDCs.
International investors in the construction, manufacturing and extractive sectors accounted for
over half of the claims in 2023.
UNCTAD continues to play a leading role in facilitating IIA reform. It launched the Multi-Stakeholder
Platform for IIA Reform during the UNCTAD World Investment Forum to chart the way forward
towards an investment regime that puts sustainable development at its core.
Sustainable finance trends
The sustainable finance market continues to grow, but there are clear signs of a slowdown. In
2023, the value of sustainable investment products, encompassing bonds and funds, increased
by 20 per cent to more than 872 billion, bringing
the outstanding value of the market to more than 161 billion in 2022 to $63 billion in 2023. In
the principal markets, funds in Europe lost growth momentum and those in the United States
saw significant net outflows, exceeding those of the broader fund market.
Greenwashing poses the most significant challenge to the sustainable fund market. The average
net exposure of green funds to climate-positive assets (low-carbon assets minus fossil fuels) is
World Investment Report 2024
Investment facilitation and digital government
xiv
only about 20 per cent, and fewer than 5 per cent of these funds are free from oil and gas assets.
Further systemic efforts are needed to tackle greenwashing, including well-defined product
standards, robust sustainability disclosures, external auditing and third-party ratings.
Institutional investors made progress on sustainability reporting, but significant gaps remain.
In 2023, 58 of the top 100 sovereign wealth and public pension funds monitored by UNCTAD
reported on their sustainability performance, up from 55 in 2022. Only a quarter of reporting
funds used third-party verification.
Institutional investors are not moving fast enough to reorient portfolios. Most reporting funds
have set out strategies to address climate change. However, only one in three have set a target
for fossil fuel divestment and investment in renewables.
Governments in both developed and developing economies are accelerating sustainable finance
policymaking. In 2023, 35 economies tracked by UNCTAD, covering the world’s largest financial
markets, introduced 94 new measures and initiatives, up from 63 in 2022. Policy measures
mostly concerned disclosure rules, new national strategies, frameworks and guidelines, and
(financial) sector- and product-specific requirements.
Developing countries are becoming increasingly active in sustainable finance policymaking. They
accounted for about 60 per cent of new policy measures in 2023. These measures were mostly
concentrated in the largest developing economies or financial centres. Developing countries
as a group continue to face challenges in leveraging sustainable finance, as evidenced by the
persistently low sustainable investment flows.
International standards will have significant spillover effects. The new disclosure standards issued
by the International Sustainability Standards Board and the European Union will affect firms
based outside the main financial markets for which they were primarily developed. Companies in
developing countries that are part of the supply chains of firms in those markets will face greater
pressure to meet higher sustainability standards, and compliance may become a prerequisite
for market access.
A key policy challenge is to avoid widening resistance to sustainable investment strategies in
financial markets and – more broadly – to sustainability and disclosure requirements. In the
United States, 17 states have passed legislation prohibiting fund managers from considering
environmental, social and governance factors in their investment decisions or prohibiting states
from contracting with asset managers that exclude certain industries, such as fossil fuels, from
their portfolios. For firms worldwide, the complexity and compliance costs associated with
sustainability reporting are a growing concern.
Investment facilitation and digital government
Investment facilitation has emerged as a top priority for investment policymakers worldwide.
Since the publication of the UNCTAD Global Action Menu on Investment Facilitation in 2016,
an international agreement on investment facilitation for development has been negotiated,
facilitation has become a mainstay in regional and bilateral trade and investment agreements,
and national implementation efforts have proliferated.
Business and investment facilitation have become central to both private sector development
and FDI attraction in developing countries. Making it easier to establish and operate a business
not only attracts foreign investors but also improves the business environment for local firms,
supporting the formalization and growth of micro, small and medium-sized enterprises.
World Investment Report 2024
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At the core of facilitation efforts are information provision, transparent rules and regulations, and
streamlined administrative procedures. Because these elements revolve around information and
procedures, digitalization is central to their effective implementation.
Business and investment facilitation have thus led to a wave of digital government initiatives,
including information portals and online single windows. Such initiatives now make up a
significant share of national investment policy measures monitored by UNCTAD; modern IIAs
also increasingly encourage digitalization to implement commitments.
The number of digital facilitation tools has grown significantly in recent years, and their quality
has improved. UNCTAD data show that the number of national government information portals
for business and investor registration in developing countries increased from 82 in 2016 to 124;
in developed countries, it increased from 43 to 48. In developing countries, the number of online
single windows – which allow for multiple procedures to be carried out online – increased from
13 to 67 in the same period; in developed countries it increased from 12 to 28. The quality of
portals has also improved, with some in LDCs rivaling those in developed countries, showing
that leapfrogging opportunities exist.
Challenges remain in building, maintaining and enhancing digital platforms. Despite progress,
issues such as outdated information, portal closures and “single window dressing” persist.
Continuous updates, clear ownership and adequate resources are essential for the long-term
success of digital facilitation platforms. Technical support for developing countries is important;
the highest-rated portals in LDCs often were created through development assistance.
Digital government tools can have a positive impact on FDI attraction. On average, for each
additional point in the quality of digital business and investment facilitation portals (in the rating
methodology of the UNCTAD Global Enterprise Registration initiative), developing countries
gain about 8 per cent more FDI. This effect is not automatic; it is part of the impact of broader
investment climate improvements.
Digital business and investment facilitation also boosts formalization and inclusivity. Countries
that implement digital single windows see substantial increases in small business registrations.
Many new businesses are established by women, young entrepreneurs and populations outside
urban centres, indicating that platforms improve access to services, even in countries with a
significant digital divide.
Governments should adopt a comprehensive approach to digital investment facilitation, avoiding
dedicated processes for investment procedures. Progressively incorporating all mandatory
procedures for business establishment, such as business registration, tax and social security,
and operating licenses, helps capture economies of scale and scope and ensures that benefits
extend to all firms, foreign and domestic, large and small.
Digital business and investment facilitation can be a stepping stone for wider implementation
of digital government. Because the basic architecture of digital government solutions is
fundamentally the same across many types of services, platforms can gradually extend
beyond the core mandatory procedures for investor entry and business establishment. Other
administrative procedures affecting business operations may be sector specific or cover policy
areas ranging from the environment to health and safety, labour and social issues.
Business and investment facilitation provides a bottom-up avenue to digital government
development. Such an approach, starting from basic services for business – usually the first
government services to be digitized – and gradually expanding to adjacent policy areas can
begin in one or a very few public sector entities, does not necessarily depend on major legislative
interventions, is relatively low cost, and adds immediate value to users and revenue-generating
potential for government.
World Investment Report 2024
Investment facilitation and digital government
xvi
Such a bottom-up approach provides a valuable complementary route for developing countries.
The prevailing guidance on digital government implementation favours a top-down approach
based on a national strategy and supported by a digital government authority. Although central
steering is necessary to push enabling legislation, budget support and stakeholder engagement,
it can lead to lengthy and complex programmes that are often too costly for developing countries
to pursue. Online single windows for businesses and investors can add value quickly and cheaply,
and gradually expand coverage of services and institutions.
Wider implementation of digital government is a natural complement to investment policy. Online
information and streamlined processes alone cannot bring the sea change in investment potential
that is needed in many developing countries. Surveys of investors and investment promotion
agencies consistently show that weaknesses in governance and institutions are among the
most important challenges in attracting foreign investment. Digital government, by increasing
transparency, improving efficiency and reducing corruption, helps address those weaknesses
and support investment for sustainable development objectives.
The digital tools for business and investment facilitation included in the UNCTAD Digital
Government Platform are operational in more than 60 countries. Looking ahead, UNCTAD
will continue to support developing countries and – in collaboration with other international
organizations – look for opportunities to maximize the benefits of digital government for the
promotion of investment in sustainable and inclusive development.
Chapter I
International
investment
trends
2022
2023
-2%
Europe
North America
Africa
Developing Asia
Latin America and
the Caribbean
16
361
53
621
193
Regions
FDI value (Billions of dollars)
Growth rates
Greenfeld
projects
FDI
International
project
fnance
..
-5%
-3%
-8
-1%
-8%
0
+7%
+22%
-4%
-25%
-6%
-26%
-25%
-30%
FDI
value
Growth
rates
464
867
31
Developed
Developing
LDCs
Greenfeld projects
(mostly industry)
FDI
International project
fnance (mostly
infrastructure)
Income groups
+9%
-6%
-21%
-7%
+15%
-26%
+17%
+51%
-32%
Infrastructure
Renewable energy
WASH
Agrifood systems
Health and education
+8%
-5%
-17%
+13%
+6%
Infrastructure
GVC-intensive industries
Semiconductors
Digital economy
Extractives
0%
+27%
-1%
-46%
-9%
Greenfeld projects
(Number)
Cross-border M&As
(Value)
Industries
(Project numbers)
SDG sectors
(Developing economies, project numbers)
International project fnance
(Number)
FDI
(Value)
2022
2023
-23%
2022
2023
+2%
2022
2023
-46%
Chapter I
International investment trends
3
A. Foreign direct investment
Global foreign direct investment (FDI) flows declined in 2023.
Investor uncertainty about the state of the economy and the
potential impact of economic fracturing trends affected flows
in both developed and developing economies. Tighter financial
conditions depressed international project finance deals and
cross-border mergers and acquisitions (M&As). Greenfield project
announcements increased, potentially signalling better prospects
going forward. Combining these trends with stabilizing costs of
finance makes expectations for 2024 moderately positive.
1. Global trends
FDI flows in 2023 amounted to $1.33
trillion, 2 per cent less than in 2022. The
headline number was affected by wild
swings in a small number of European
conduit economies. Excluding the
effect of these conduits, global inflows
declined by more than 10 per cent.
FDI inflows to developing economies, which
have been robust over the past few years,
declined by 7 per cent in 2023. Flows to
developed economies, net of conduits,
fell by 15 per cent. They were affected
by corporate financial reconfigurations
– driven in part by moves to introduce a
global minimum tax for large multinational
enterprises (MNEs) – and by a big drop
in the value of cross-border M&As.
M&As, which especially affect FDI in
developed countries, ended 2023 at
just over half the value seen in 2022.
International project finance was also
weak, with both the number and the value
of deals down by about a quarter. Tighter
financing conditions, investor uncertainty,
volatility in financial markets and – for
M&As – greater regulatory scrutiny were
the principal causes of the decline.
Conversely, greenfield project
announcements increased marginally,
in both number and value terms. The
growth was largely due to increased
announcements in manufacturing industries,
in a break with a decade-long trend of
gradual decline in the sector. Manufacturing
project announcements by Chinese
firms were a big contributing factor. The
gains in greenfield investment occurred
only in developing countries, where the
number of projects announced was up
by 15 per cent (table I.1). In developed
countries, in contrast, new project
announcements were down 6 per cent.
Diverging movements in greenfield projects
and international project finance deals
reflect the different drivers of investment
in international production and industry
(greenfield), on the one hand, and
infrastructure industries (project finance) on
the other. They also reflect the sensitivity of
different investor pools to current financial
conditions. MNEs have realized large
profits over the past few years (figure I.1),
boosting their capacity to finance asset
expansions, which also explains the rising
greenfield numbers. Project finance is
World Investment Report 2024
Investment facilitation and digital government
4
Figure I.1
The profits of the largest multinational enterprises remain high
Profits and profitability level of the largest firms
Profts (Billions of dollars)
Proftability (Percentage)
1 000
2 000
3 000
4 000
9
6
3
2016
2015
2018
2019
2017
2020
2021
2023
2022
Source: UNCTAD, based on data from Refinitiv.
Notes: Covers 4,388 MNEs for which data were available for every year in the range. Profitability calculated as
the ratio of net income to total sales.
Value
(Billions of dollars)
Number
Economic grouping
Type of investment
2022
2023
Growth (%)
2022
2023
Growth (%)
Developed economies
Greenfield projects
687
631
-8
11 112
10 435
-6
International project finance
728
562
-23
1 720
1 357
-21
Cross-border M&As
599
302
-50
6 710
5 862
-13
Developing economies
Greenfield projects
622
749
20
6 949
8 007
15
International project finance
573
396
-31
1 138
839
-26
Cross-border M&As
107
76
-29
1 053
855
-19
Table I.1
Announced greenfield projects, international project finance deals and
cross-border M&As
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and
Refinitiv.
Abbreviations: M&As = mergers and acquisitions.
Chapter I
International investment trends
5
more dependent on institutional investors
and on debt financing, both of which are
more sensitive to capital costs and financial
market trends. Higher interest rates may also
lead governments to delay large projects
as they wait for more favourable terms.
The global environment for international
business and cross-border investment
remains challenging in 2024. Economic
growth is expected to slow (table I.2).
Global economic fracturing trends,
trade and geopolitical tensions,
industrial policies affecting strategic and
manufacturing sectors, and moves by
corporates to diversify supply chains
are reshaping international production
and FDI patterns. These trends are
causing some MNEs to adopt a cautious
approach to overseas expansion.
Nevertheless, profit levels of the largest
MNEs remain high, which will continue
to be reflected in reinvested earnings – a
significant component of FDI. Furthermore,
financing conditions are easing after a
period of high interest rates, which could
support renewed growth of international
project finance. The market for M&As
is expected to recover, although cross-
border transactions may take longer to
react. The growth in greenfield project
announcements in 2023 will also affect FDI
flows as projects are realized over time.
Overall, although early indicators for the
first quarter of 2024 are still weak, modest
growth for the full year appears possible.
Variable
2021
2022
2023
2024a
Gross domestic product
6.2
3.0
2.7
2.6
Trade in goods
10.0
3.8
-0.6
2.0
Gross fixed capital formation
7.4
-2.9
1.3
2.8
Foreign direct investment
64.7
-16.4
-1.8
Memorandum:
Foreign direct investment value
(Trillions of dollars)
1.6
1.4
1.3
Table I.2
Growth rates of global gross domestic product, gross fixed capital
formation, trade and foreign direct investment
(Percentage)
Sources: UNCTAD for foreign direct investment, gross domestic product and trade, and IMF for gross fixed
capital formation.
a Forecast.
2. Trends by geography
a. FDI inflows
In developed economies, financial
transactions by MNEs led to volatility in
FDI. Including the effect of conduit flows,
the headline number for FDI inflows shows
an increase of 9 per cent (net of conduits,
FDI declined by 15 per cent) (figure I.2).
Developed countries accounted for 35
per cent of global FDI flows. Their share
has been in gradual decline. The first
time that they registered less than half
of global flows was as recent as 2019.
Nevertheless, developed economies still
attract the majority of greenfield projects
and international project finance deals.
World Investment Report 2024
Investment facilitation and digital government
6
Inflows to Europe shifted dramatically,
from -16 billion in
2023. Several economies, including Ireland,
Luxembourg, the Netherlands, Switzerland
and the United Kingdom of Great Britain and
Northern Ireland, reported large negative
numbers when the 2022 and 2023 inflows
are taken into consideration together. Lower
negative flows in 2023 had a net positive
effect on FDI flows of about $180 billion.
Excluding these countries, inflows to the
rest of Europe declined by 14 per cent.
FDI inflows to North America fell, as did
those to most other developed countries.
All developed regions experienced a
sharp downturn in M&A activity, with the
value of cross-border M&As dropping
by $300 billion in 2023. The number
of greenfield project announcements
decreased by 6 per cent in developed
economies and the number of project
finance deals fell by 21 per cent (table I.3).
FDI flows to developing economies
decreased by 7 per cent, to $867 billion,
or 65 per cent of global flows. Developing
Asia, the largest FDI recipient, experienced
an 8 per cent decline in inflows, driving the
overall result. Inflows to Africa dropped
by 3 per cent, while in Latin America
and the Caribbean they remained flat.
Figure I.2
Foreign direct investment declined in most regions
Inflows by economic grouping and region
(Billions of dollars and percentage change)
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).
2023
1 332
464
16
361
867
1 356
426
-106
379
930
53
54
World
Developed
economies
Europe
North America
Developing
economies
Africa
Per cent
-2
+9
..
-5
-7
-3
7
193
196
Latin America and
the Caribbean
-1
7
621
678
Asia
-8
2022
Chapter I
International investment trends
7
In contrast, inflows to least developed
countries (LDCs) increased; their share in
global FDI grew from 2 to 2.4 per cent.
Greenfield investment in developing
countries was a bright spot in 2023, with the
number of announcements increasing by 15
per cent and values climbing by 20 per cent.
This partially offset declines in international
project finance deals, which fell by 26 per
cent in number and 31 per cent in value.
The overall number of greenfield projects
increased by 2 per cent (table I.3). Among
developed regions, the number of greenfield
projects held only in North America, which
was less affected by the downturn in project
finance deals as well. In other developed
regions, greenfield project numbers were
lower. In contrast, almost all developing
regions saw growth in greenfield projects.
Table I.3
Number of announced greenfield projects and international project
finance deals, by economic grouping and region
(Number and percentage)
Announced greenfield projects
International project finance deals
Region/economic grouping
2021
2022
2023
Growth,
2022–2023
(%)
2021
2022
2023
Growth,
2022–2023
(%)
World
15 514
18 061
18 442
2
2 500
2 858
2 196
-23
Developed economies
10 438
11 112
10 435
-6
1 496
1 720
1 357
-21
Europe
7 545
7 676
7 041
-8
899
1 121
840
-25
European Union
5 913
5 990
5 419
-10
637
833
671
-19
Other Europe
1 632
1 686
1 622
-4
262
288
169
-41
North America
2 084
2 491
2 499
0
372
398
376
-6
Other developed countries
809
945
895
-5
225
201
141
-30
Developing economies
5 076
6 949
8 007
15
1 004
1 138
839
-26
Africa
558
775
830
7
138
178
132
-26
Asia
3 275
4 749
5 798
22
489
624
469
-25
Central Asia
53
49
158
222
24
19
18
-5
East Asia
713
597
703
18
90
95
42
-56
South-East Asia
861
1 103
1 568
42
157
237
135
-43
South Asia
512
1 093
1 167
7
150
223
180
-19
West Asia
1 136
1 907
2 202
15
68
50
94
88
Latin America and the
Caribbean
1 241
1 417
1 366
-4
370
334
235
-30
Oceania
2
8
13
63
7
2
3
50
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and
Refinitiv.
World Investment Report 2024
Investment facilitation and digital government
8
The recent pickup in greenfield
announcements in developing countries
follows a long period of sluggishness
and signals a potential recovery (figure
I.3). Developing countries accounted for
almost half of all announcements at the
start of the last decade, but their share
had gradually fallen to one third by 2020.
However, developing regions have regained
momentum over the past few years and
the number of projects has grown rapidly
following the pandemic, almost doubling
from their recent nadir. Developing
countries now account for 43 per cent
of greenfield project announcements.
FDI inflows declined for most reporting
economies. About two thirds of developed
economies saw declines and about half
of developing ones. The United States of
America remained the largest FDI recipient,
accounting for almost a quarter of the global
total (figure I.4). China and Hong Kong,
China account for a further 21 per cent.
Among the top 20 host economies, the
largest absolute drops were registered in
France, Australia, China, the United States
and India, in that order. Only Singapore
registered a significant gain. The United
States was the top destination for both
greenfield projects and international project
finance deals. India and the United Kingdom
also appear in the top five destinations
for both kinds of FDI. The United Arab
Emirates gained two places in the ranking
of top destinations for greenfield projects,
after entering the top five in 2022.
Figure I.3
Greenfield projects in developing economies are regaining lost ground
Announcements by economic grouping
(Number and percentage)
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com).
Developed
Developing
Share, developing (per cent)
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
47
33
43
Chapter I
International investment trends
9
Figure I.4
Inflows declined in more than half of the top 20 recipients
Foreign direct investment inflows, top 20 host economies
(Billions of dollars)
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics) and based on information from The
Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv.
2023
2022
Top fve recipients by number of projects
Greenfeld project announcements
United States (1)
311
332
China (2)
163
189
Singapore (3)
160
141
Hong Kong, China (4)
113
110
France (5)
42
76
Brazil (6)
66
73
Australia (7)
30
63
India (8)
28
49
Canada (9)
50
46
Spain (10)
36
45
Sweden (11)
29
45
Mexico (12)
36
36
Japan (13)
21
34
Poland (15)
29
31
Germany (17)
37
27
Indonesia (18)
22
25
United Arab Emirates (21)
31
23
Chile (26)
21
17
Argentina (27)
23
15
Belgium (31)
23
12
(x) = 2022 ranking
United States
United Arab Emirates
United Kingdom
India
Germany
2 152
1 323
1 184
1 058
1 036
International project fnance deals
United States
India
Italy
Spain
United Kingdom
334
163
116
107
104
World Investment Report 2024
Investment facilitation and digital government
10
i. Developed economies
FDI flows to developed countries increased
by 9 per cent in 2023, to $464 billion.
However, large fluctuations and negative
FDI realizations in several European
countries with significant conduit FDI flows
over the past two years complicate the
picture (figure I.5). Moves to implement
a minimum tax on large MNEs in 2024
coincided with a wave of corporate financial
restructurings and divestments. Net of the
effect of conduit flows, FDI in developed
countries was down by about 15 per cent.
In the United States, FDI inflows declined
by 6 per cent to $311 billion, with a sharp
reduction in cross-border M&As, which
fell by 40 per cent to $81 billion – half
of the average over the past 10 years.
Lower deal values in the information
and communication technology (ICT)
sector explained much of the decline.
FDI in Canada increased by 9 per cent
to $50 billion, but FDI in other developed
countries, including Australia, Japan and
the Republic of Korea, dropped sharply.
In 2023, the value of M&A sales in
developed countries declined by 50 per
cent to $302 billion. Most transactions
were concentrated in a small group of
countries. Almost half of the M&A targets
were based in the United States and
the United Kingdom. Germany, Canada,
Switzerland and France accounted for
an additional 30 per cent of deal values.
Among the top 10 cross-border M&A
transactions, 6 involved acquisitions by
investor groups, either with the intent to list
companies publicly through special-purpose
acquisition company (SPAC) transactions
or as part of private equity deals. The
financial nature of these deals illustrates
the importance that financing conditions
have for cross-border M&A trends.
Figure I.5
Foreign direct investment inflows turned negative in parts of Europe due
to financial restructurings
Inflows to developed economies
(Billions of dollars and percentage change)
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).
2023
464
59
-42
361
87
426
-85
-21
379
154
Developed
economies
Other
Europe
European
Union
North America
Other developed
countries
Per cent
+9
..
..
-5
-44
2022
Chapter I
International investment trends
11
The value of greenfield announcements
in developed economies fell by 8 per
cent. Notably, after a period of very high
investment, ICT saw a significant drop
in project numbers. Conversely, project
numbers in most other sectors increased,
particularly in energy and gas supply,
which rose by more than half. The largest
greenfield projects are illustrative of
major trends in international investment.
Five projects of the top ten relate to
semiconductor and electronics production,
reflecting efforts to diversify or de-risk
supply chains and to promote domestic
production; firms based in Taiwan Province
of China were the main investors in three of
these projects. Four projects pertained to
renewable energy, three of them in battery
production. Canada and Japan emerged
as top destinations for the largest projects,
accounting for 5 of the 10 largest.
The downturn in international project
finance deals was widespread across
most developed economies and industries.
However, about 80 per cent of the total
drop in deal values was attributed to just
three sectors: industrial real estate, power
and telecommunication. Renewable energy,
typically the largest sector, registered a
small gain of 2 per cent, with deal values
reaching nearly 562 billion. The 10 largest international
project finance deals in developed
economies accounted for more than 20
per cent of the total value of all deals. Most
of these were in the energy sector, which
is capital-intensive. The top three deals
related to renewable energy production,
but deals for oil and gas projects were also
significant, constituting another 3 of the
top 10. Australia emerged as the second
largest destination for project finance
deals, by value, after the United States.
ii. Developing economies
FDI inflows to developing economies
decreased by 7 per cent in 2023,
mainly owing to a rare downturn in Asia.
Despite this decline, FDI remained the
leading source of external financing
for developing economies, accounting
for 44 per cent of total financial
inflows in 2023, with remittances,
development assistance and portfolio
investment flows making up the rest.
Although the number and value of
announced greenfield projects increased,
these gains were offset by a sharp drop in
project finance deals, with their value falling
by almost $200 billion compared with 2022.
Cross-border M&A sales typically represent
a much smaller share of FDI in developing
countries than in developed ones. Still,
the value of M&A sales in developing
economies in 2023 dropped by $31 billion
(to $76 billion), which explains about half of
the overall decline in FDI inflows. Despite
the drop, several large transactions took
place. The largest M&A sale in 2023
was a $23 billion stock swap between a
Vietnamese electric vehicle maker and a
United States-based SPAC. Singapore
also registered several multibillion-dollar
M&A sales, including SPAC transactions.
Most of the growth in greenfield projects
in developing economies was in
manufacturing, in terms of both project
values and numbers. Over the past
two decades, project numbers in the
manufacturing sector have gradually
declined and the services sector has
become more prominent. The increase in
2023 was a welcome break in the trend,
given the importance of manufacturing
projects for economic growth, industrial
development and the participation of
developing countries in global value chains
(GVCs). In particular, the automotive
sector registered strong growth. Notable
projects included a 9 billion
joint venture to establish a battery supply
chain in Indonesia and a 5 billion were announced; in 2023,
there were no deals of this magnitude.
(a) Africa
FDI inflows to Africa declined by 3 per
cent in 2023, to $53 billion (figure I.6).
The number and value of project finance
deals fell, while outcomes for greenfield
announcements were mixed across
countries. Cross-border M&A sales, which
accounted for about 15 per cent of FDI
inflows to Africa in recent years, remained
flat at $8.5 billion. European investors
remain the largest holders of FDI stock in
Africa, holding three of the top four spots
(the Netherlands at 58 billion, the United States at 46 billion).
The value of greenfield projects announced
in Africa fell to 196 billion
in 2022. However, most countries registered
increases in project numbers, with the
overall number of project announcements
in the region rising by 7 per cent to more
than 800. If executed, these projects could
generate an additional 200,000 jobs in the
region. The largest year-to-year increases
in project value were in chemicals (to 7.6 billion), while
Figure I.6
Foreign direct investment to most regions in Africa declined
Inflows to Africa
(Billions of dollars and percentage change)
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).
2023
53
13
13
6
11
7
54
15
13
7
12
9
7
Africa
North Africa
West Africa
Central Africa
East Africa
Southern Africa
Per cent
-3
-12
-1
-17
-3
+22
2022
Chapter I
International investment trends
13
project values for electricity and gas supply
projects dropped by 5 billion. The largest greenfield
announcement for any country in 2023 was
a green hydrogen project in Mauritania,
expected to generate $34 billion in
investment (several multiples of the country’s
gross domestic product). Several other large
hydrogen projects were also announced:
The Suez Canal Economic Zone completed
agreements for green ammonia and
green hydrogen projects in Egypt totalling
$10.8 billion. Three energy producers
separately announced green hydrogen
projects in South Africa totalling 6.4 billion electric vehicle
battery manufacturing facility in Morocco.
The estimated value of international project
finance deals in Africa declined by 50 per
cent in 2023, to 4 billion
in Egypt, and another group is planning
a 10.8 billion in project
finance for wind and solar electricity
production, with the largest projects located
in Egypt, South Africa and Zimbabwe.
The African Continental Free Trade
Agreement (AfCFTA) Investment Protocol
adopted in 2023 is expected to contribute
to growing intraregional FDI. The share
of intraregional projects, though still
relatively low, is higher in services and
selected manufacturing industries (with
20 per cent of projects by investors from
Africa) than in resource-based processing
industries (with only 13 per cent of
projects originating from the region). This
indicates the pool of investors undertaking
projects within the region is large for some
sectors. Also, there is an opportunity
to expand intraregional investment in
processing industries as part of the
general drive to increase value addition.
(b) Developing Asia
FDI flows to developing Asia receded in
2023 but remained elevated, at $621 billion
(figure I.7). The region was by far the largest
recipient of FDI, accounting for nearly one
half of global inflows. East and South-
East Asia were the main recipients. Flows
declined in East Asia, with a significant drop
in China breaking a decade-long growth
trend. In South-East Asia, inflows remained
stable as a result of robust economic growth
and extensive GVC linkages. The decline in
flows to West Asia was moderate, whereas
South and Central Asia registered sizeable
declines, especially in India and Kazakhstan.
M&A sales, which usually constitute 10
to 15 per cent of FDI in developing Asia,
declined by almost $30 billion in 2023 to
11 billion. In addition,
a consortium of European and Indonesian
companies is developing a 57 billion. Saudi Arabia, Türkiye
and the United Arab Emirates all saw higher
numbers of deals. Elsewhere in Asia, most
countries registered lower numbers. An
important trend in the region as a whole was
the decline in international project finance in
renewable energy (along with most industrial
sectors) and the increase in petrochemicals.
(c) Latin America and the Caribbean
In 2023, FDI in Latin America and the
Caribbean remained stable, totalling $193
billion (figure I.8). There was considerable
heterogeneity across countries. In South
America, FDI in Argentina, Chile and Guyana
accelerated. This offset lower values in
Brazil and Peru. Brazil remains the largest
recipient in South America. In Central
America, Mexico accounted for the bulk of
foreign investment, with stable FDI inflows.
In the Caribbean, the Dominican Republic
continued its growth trend, with inflows
rising 7 per cent year on year. M&A sales,
which typically account for only a small share
of FDI in Latin America and the Caribbean,
declined by $4 billion in 2023, to 1 billion were
undertaken by MNEs based in the region.
The global slowdown in international project
finance deals affected most subregions
and countries in Latin America and the
Caribbean. Among major FDI recipients,
only Chile posted higher project numbers
than in 2022. The downturn affected
several industries, with renewable energy
among the worst affected: there were
40 per cent fewer deals and a 31 billion, or 2.4
per cent of global FDI flows (figure I.9).
Comparing that with the LDC share
in the world population of 14 per cent
implies large disparities in per capita
terms. The same is true of landlocked
developing countries (LLDCs), which
accounted for 7 per cent of the global
population but only 1.8 per cent of FDI.
Figure I.8
Foreign direct investment to Latin America and the Caribbean remained
stable
Inflows to Latin America and the Caribbean
(Billions of dollars and percentage change)
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).
2023
2022
193
143
47
4
196
146
46
4
Latin America and
the Caribbean
South America
Central America
Caribbean
Per cent
-1
-2
+1
+6
World Investment Report 2024
Investment facilitation and digital government
16
Although project finance deals are a
small share of all FDI, the typical project
financed is large. An analysis comparing
the relative contribution of greenfield
projects, M&As and project finance deals
to total announcement values over the
past 10 years shows that LDCs and
LLDCs are relatively more dependent
on international project finance than are
other developing economies, in terms
of both numbers and values. For this
reason, they are more exposed to the
recent downturn in project finance deals.
(e) Least developed countries
FDI to the 45 LDCs increased 17 per cent
in 2023, to 34 billion green hydrogen project
in Mauritania. Excluding this outlier,
announced greenfield project values rose
by 51 per cent, to 14
billion – a significant drop compared with
previous years. Over the past decade,
the number of project finance deals has
gradually increased, while the number
of announced greenfield projects has
declined (figure I.11). Some 32 per cent
of international investment projects in
LDCs were initiated using project finance
in 2022, compared with less than 15 per
cent in other developing countries. As a
consequence, although the 2023 downturn
in project finance affected all countries,
LDCs were among the worst affected.
Figure I.10
The composition of financial flows to least developed countries differs
from that of flows to other developing economies
Shares across categories of external financial flows, 2023
(Percentage)
Sources: UNCTAD FDI/MNE database (www.unctad.org/fdistatistics), IMF balance-of-payments statistics,
World Bank KNOMAD (Global Knowledge Partnership on Migration and Development) database and OECD.
20
40
60
80
100
44
11
12
34
20
39
41
Foreign direct investment
Remittances
Developing economies
LDCs
Foreign portfolio investment
Offcial development assistance
World Investment Report 2024
Investment facilitation and digital government
18
(f) Landlocked developing countries
FDI inflows to the 32 landlocked developing
countries (LLDCs) rose by 3 per cent
in 2023, to 20 billion (with 20 billion, in large part because of
a single 1.4 billion onshore wind farm and battery
energy storage system. The Uzbekistan
Government awarded contracts for
several solar projects, which are expected
to generate 3.7 billion. In addition, the
value of deals in renewables increased by
24 per cent to 2 billion expansion in Zambia and
a 8.3
billion in 2023 – about 0.6 per cent of
global FDI. Divestments and the resulting
negative inflows in several countries
affected outcomes in 2022 more than in
2023. Putting these cases aside, actual
growth in 2023 was about 10 per cent. The
Dominican Republic accounted for more
than half of FDI inflows to SIDS in 2023.
Greenfield project announcements were
up for most SIDS. There were strong gains
for the transportation and storage sector,
with project values up by 930 billion in 2023, with a large
drop in project numbers as well (down 33
per cent). Volatility in some sectors reflects
unusually high investment in 2022 as project
backlogs resolved following the pandemic.
The number of international project finance
deals in SIDS increased by 18 per cent in
2023, and their value also increased strongly.
With the small number of deals (49 from
2021 to 2023), a few large deals caused
major fluctuations. Three distinct investment
streams explained most deals: renewable
energy, leisure and hospitality, and oil and
gas (along with petrochemicals). Maldives
accounts for most projects in the hospitality
sector. Other projects were more distributed.
b. FDI outflows
In 2023, FDI flows from developed
economies increased by 4 per cent to
$1.1 trillion. As with FDI inflows, corporate
restructurings in Europe affected FDI
outflows. Several investment-hub countries
with significant conduit FDI reported large
negative outflows, albeit less negative
than in 2022 (i.e. a net positive gain).
Excluding the effect of these conduits, global
outflows were about 10 per cent lower.
The United States and Japan were the
home countries of the largest investors.
Outward FDI increased by 10 per cent from
the United States and by 14 per cent from
Japan, going against the overall trend for
developed countries. Outward investment
from European countries fell by 11 per cent
(excluding five conduit countries). Germany,
Sweden and Spain are home to large
outward investors, and outflows declined
from all three (figure I.12). Conversely,
FDI outflows from France, another top
home country for investors, increased by
about one third. Looking at the 20 largest
economies by outward FDI flows, those in
Asia now account for almost half (9 total),
with the relative ranks of India and Taiwan
Province of China both rising in 2023.
The value of cross-border M&As originating
from developed countries dropped by 53
per cent in 2023 due, in part, to tighter
financial conditions. The downturn was
general across developed economies,
including in Europe, Australia, Canada and
the United States. Results for greenfield
projects were more heterogeneous.
MNEs based in North America reduced
their number of projects by 18 per cent.
Numbers were flat in Europe but increased
for other developed economies.
FDI outflows from developing economies
slowed by 11 per cent in 2023, to $491
billion. The decrease was general across
most regions, except South-East Asia.
Prospects appear stronger, as greenfield
projects announced by MNEs based in
developing countries increased by 23
percent in number and by 35 per cent in
value. The value of cross-border M&As
originating from developing countries –
which amount to only about one quarter
of those originating in developed countries
– was resilient, increasing by 25 per cent.
In large part, these results were driven by
a rebound in activity by Chinese MNEs.
World Investment Report 2024
Investment facilitation and digital government
20
Figure I.12
Nine economies in Asia are among the top 20 home economies of
outflows
Foreign direct investment outflows, top 20 home economies
(Billions of dollars)
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).
Note: Negative outflows result from divestments and the repayment of intracompany loans.
2023
2022
(x) = 2022 ranking
184
162
Japan (3)
148
163
China (2)
105
-74
Switzerland (157)
104
106
Hong Kong, China (6)
101
146
Germany (4)
90
83
Canada (8)
72
53
France (11)
63
52
Singapore (12)
47
62
Sweden (10)
35
66
Republic of Korea (9)
30
43
Spain (13)
30
32
Brazil (15)
29
12
Russian Federation (29)
25
16
Taiwan Province of China (22)
22
25
United Arab Emirates (17)
21
25
Malta (18)
16
27
Saudi Arabia (16)
15
6
Denmark (36)
13
15
India (23)
404
366
United States (1)
Chapter I
International investment trends
21
The number of greenfield projects
announced by Chinese MNEs almost
doubled compared with 2022, explaining
half of the total increase for developing
countries. In part, this doubling reflects the
project backlog following the pandemic, but
investment patterns also changed in 2023.
Most of the increase in projects announced
by Chinese MNEs were in South-East
Asia and concentrated in manufacturing
industries, particularly computers,
electrical equipment, motor vehicles and
other transport. The number of greenfield
projects by Chinese MNEs in developed
economies was stable, at a relatively low
level compared with earlier years. Other
developing countries also contributed
to the rise in greenfield announcements.
Greenfield project numbers increased by
21 per cent for MNEs based in Africa and
by 18 per cent for those in developing Asia
(excluding China). The number of greenfield
projects announced by MNEs in Latin
America and Caribbean fell 19 per cent.
3. Trends by project type and sector
Greenfield project announcements –
mostly concentrated in industrial sectors
– increased in both value and number in
2023 (figure I.13). The increase in value
followed already strong growth in 2022,
fuelled by a few very large announcements,
including in renewable energy projects.
Values in both years ended well above the
average for the last decade. Project finance
– mostly in infrastructure sectors – declined.
Greenfeld projects
International project fnance deals
Cross-border M&As
2014
2016
2018
2020
2022
0
5 000
10 000
15 000
20 000
6 717
18 442
2 196
2014
2016
2018
2020
2022
0
200
400
600
800
1 000
1 200
1 400
1 600
a. Value (Billions of dollars)
b. Number
Figure I.13
Announced greenfield projects have regained momentum in recent years
Types of investment projects
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and
Refinitiv.
Abbreviations: M&As = mergers and acquisitions.
World Investment Report 2024
Investment facilitation and digital government
22
Infrastructure projects have a significant debt
component and are thus more sensitive to
interest rate changes. Total values remained
high compared with the average before
2021, when international project finance
took off. Fewer deals in services, particularly
in the ICT sector, explain a large part of
the drop in cross-border M&A values.
a. Project types
i. Greenfield investment
The overall increase in greenfield
announcements was powered by
a significant rise in the number of
manufacturing projects (table I.4). This
marked a notable departure from the
long-term decline in manufacturing share.
Supply chain diversification pressures
explained much of the increase, with most
GVC-intensive sectors registering growth.
Announcements of manufacturing projects
by Chinese investors in South-East Asia
accounted for one third of the total increase.
The announced value of greenfield projects
rose by 5 per cent to $1.4 trillion – the
highest level ever recorded – again mostly
due to the expansion of manufacturing
projects among developing economies.
The automotive, metals, petroleum, and
chemicals sectors all expanded. Only the
ICT sector registered lower project numbers
and values, after a period of unusually
rapid growth between 2020 and 2022.
ii. International project finance
In 2023, the number of international project
finance deals declined by 26 per cent to
$958 billion (table I.5). Nevertheless, project
finance deals have grown over the past 10
Table I.4
Announced greenfield projects by sector and top industries
Sector/industry
Value
(Billions of dollars)
Growth (%)
Number
Growth (%)
2022
2023
2022
2023
Total
1 309
1 380
5
18 061
18 442
2
Primary
108
66
-39
128
149
16
Manufacturing
485
611
26
6 142
7 521
22
Services
715
703
-2
11 791
10 772
-9
Top 10 industries in value terms
Energy and gas supply
381
365
-4
586
879
50
Electronics and electrical equipment
215
183
-15
1 200
1 408
17
Information and communication
129
110
-14
5 131
3 339
-35
Automotive
61
91
50
729
977
34
Construction
69
72
4
218
358
64
Basic metal and metal products
49
70
42
241
336
39
Transportation and storage
57
69
20
997
1 306
31
Extractive industries
107
65
-40
97
117
21
Coke and refined petroleum
18
58
216
41
78
90
Chemicals
27
57
111
488
590
21
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com).
Chapter I
International investment trends
23
years and are well above their 2015 nadir
of $400 billion. Following a boom in 2022,
the number and value of announcements
in industrial real estate fell sharply, though
they remain at historically high levels. The
average cost of debt has substantially
increased. The most common reference
rates for deals all increased sharply over
the course of 2022 and early 2023.
International project finance deals in
renewable energy – the biggest sector –
also declined, with a 12 per cent drop in
announced values in 2023. This mostly
occurred in developing countries, where
declines in oil and gas and in transport
infrastructure were also severe. Both the
number and the value of public–private
partnership announcements fell in 2023,
further contributing to the decline. Over
the past 10 years, the value of such
announcements averaged about $65 billion,
whereas in 2023 the total was $6 billion.
Similarly, their share in the number of total
project finance deals averaged about 5 per
cent but fell to less than 1 per cent in 2023.
iii. Cross-border mergers and
acquisitions
Cross-border M&A sales were down by 46
per cent (table I.6). This decline primarily
derives from the services sector, where
values dropped by more than half and
numbers fell by one fifth. A significant part
of the decline in services occurred in the
ICT sector, which experienced a boom
during the pandemic. Both the number
and the value of cross-border M&As in
manufacturing remained flat. M&A values
for the primary sector also normalized after
quintupling in 2022. The number of M&A
sales decreased across all major industries
except for extraction and automobiles.
The $23 billion reverse merger of VinFast
Auto in Viet Nam with a SPAC based in
the United States accounts for a large part
of the uptick in the automobile sector.
Table I.5
International project finance deals by top industries
Industry
Value
(Billions of dollars)
Growth (%)
Number
Growth (%)
2022
2023
2022
2023
Total
1 301
958
-26
2 858
2 196
-23
Top 10 industries by number
Renewable energy
418
368
-12
1 454
1 177
-19
Industrial real estate
266
146
-45
308
231
-25
Power
134
79
-41
193
149
-23
Residential/commercial real estate
67
43
-36
228
129
-43
Telecommunication
119
82
-31
140
111
-21
Oil and gas
93
72
-22
114
103
-10
Transport infrastructure
52
33
-36
111
81
-27
Petrochemicals
69
59
-15
83
77
-7
Mining
42
47
11
88
51
-42
Water and sewerage
18
12
-37
35
27
-23
Source: UNCTAD, based on data from Refinitiv.
World Investment Report 2024
Investment facilitation and digital government
24
Several factors explain the drop in
M&A activity overall, including tight
financial conditions and uncertainty in
financial markets. Greater scrutiny from
antitrust bodies and foreign investment
regulators also affected M&As in the
United States, the biggest market.
b. Selected industries
i. Infrastructure
International project finance is the main
funding source for infrastructure industries,
and the decline in the value and number of
project finance deals in 2023 affected this
sector in particular (table I.7). The number of
announced greenfield infrastructure projects
rose, driven by renewables. However, across
infrastructure industries, the drop in the
value of project finance deals outweighed
the gains in greenfield project values.
Most infrastructure projects were in
renewable energy, constituting more
than 45 per cent of announcements and
accounting for 65 per cent of estimated
project outlays. Both the number of projects
and the total project value have grown
rapidly in this category, from fewer than
700 announcements in 2015 to more
than 2,000 in 2023. There is evidence that
investors switch between project finance
and greenfield FDI as financial conditions
change. When debt finance is costlier and
project finance is below trend, greenfield
project announcements tend to increase.
Table I.6
Net cross-border M&A sales by sector and top industries
Sector/industry
Value
(Billions of dollars)
Growth (%)
Number
Growth (%)
2022
2023
2022
2023
Total
707
378
-46
7 763
6 717
-13
Primary
122
36
-71
389
505
30
Manufacturing
142
141
-1
1 406
1 431
2
Services
442
201
-54
5 968
4 781
-20
Top 10 industries in value terms
Information and communication
166
67
-60
1 799
1 432
-20
Extractive industries
121
33
-73
216
400
85
Chemicals
15
32
108
147
132
-10
Pharmaceuticals
36
31
-12
169
129
-24
Automotive
8
31
273
59
62
5
Professional services
23
29
25
730
594
-19
Utilities
18
18
-5
279
229
-18
Trade
27
17
-35
592
523
-12
Food, beverages and tobacco
21
13
-41
157
156
-1
Finance and insurance
88
12
-87
602
539
-10
Source: UNCTAD, based on data from Refinitiv.
Chapter I
International investment trends
25
ii. Global value chain-intensive
industries
GVC-intensive industries registered a
significant increase in investment projects
(table I.8). Greenfield project announcements
for the automotive, machinery and textile
sectors were all up. Project values for
semiconductors declined, but mainly
after exceptionally high numbers in 2021
and 2022 as MNEs responded to global
semiconductor shortages and concerns
about supply chain bottlenecks. In the
automotive sector, growth is driven
by strong demand for hybrid and fully
electric vehicles, and by several new
firms entering global markets. The GVCs
needed to build electric vehicles (EVs) are
also spurring new investment in mining,
processing and battery production.
A recent UNCTAD analysis examines how
economic fracturing is affecting international
production in GVCs (UNCTAD, 2024d).
Since the 2010s, GVCs have undergone
significant restructuring, partially reversing
the earlier trend towards offshoring. This
shift has been driven by several factors,
including technological advancements,
policy changes, sustainability concerns and
Table I.7
Investment project announcements in infrastructure
(Millions of dollars, number and percentage)
Industry
Announced greenfield projects
International project finance deals
2021
2022
2023
Growth,
2022–2023
(%)
2021
2022
2023
Growth,
2022–2023
(%)
Infrastructure industries
Value
265 712
497 837
506 811
2
848 256
722 677
562 380
-22
Number of projects
2 179
2 377
2 775
17
1 724
1 898
1 518
-20
Powera
Value
6 538
8 775
13 537
54
199 493
134 319
78 977
-41
Number of projects
50
52
70
35
154
193
149
-23
Renewable energy
Value
141 198
372 441
352 883
-5
506 693
417 889
367 815
-12
Number of projects
515
560
859
53
1 355
1 454
1 177
-19
Transportb
Value
36 579
53 335
68 421
28
61 549
51 959
33 229
-36
Number of projects
763
988
1 298
31
105
111
81
-27
Telecommunicationc
Value
81 397
63 287
71 970
14
80 521
118 511
82 359
-31
Number of projects
851
777
548
-29
110
140
111
-21
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and
Refinitiv.
a Excluding renewable energy.
b Transport services for greenfield projects and transport infrastructure for project finance.
c Including information services activities.
World Investment Report 2024
Investment facilitation and digital government
26
supply chain resilience needs. Robotics
and automation are reducing the share of
labour in total production costs, enabling
the reshoring of production processes.
Rising trade and investment interventionism
is evident, along with a shift towards
regional economic cooperation. Large-scale
public interventions, such as the Inflation
Reduction Act of the United States and
the Recovery and Resilience Facility of the
European Commission, are reshaping the
FDI landscape with numerous incentives
for investment in targeted industries. Finally,
sustainability concerns, including carbon
border adjustments, are also likely to affect
trade flows and investment decisions.
iii. Digital industries
Following the pandemic, digital industries
expanded rapidly. In 2023, the number of
greenfield project announcements returned
to close to pre-pandemic levels (table I.9).
The number of greenfield projects fell by
half. Declines were general across all digital
industry subgroups. The introduction of
advanced large language models over the
past two years has led firms in some digital
industries to pause investment as they
adjust to the new technology. Developing
countries that rely on offshore digital services
(e.g. call centres or software programming)
face the growing risk that automation could
harm prospects for new investment projects.
Table I.8
Announced greenfield projects in global value chain-intensive industries
(Millions of dollars, number and percentage)
Industry
2021
2022
2023
Growth,
2022–2023 (%)
Global value chain-intensive industries
Value
255 426
302 371
314 039
4
Number of projects
3 264
3 505
4 441
27
Electronics and electrical equipment
Value
192 678
214 518
182 574
-15
Number of projects
1 116
1 200
1 408
17
Semiconductors
Value
125 161
109 478
55 231
-50
Number of projects
114
142
140
-1
Automotive
Value
40 846
60 567
90 979
50
Number of projects
725
729
977
34
Machinery and equipment
Value
9 490
14 815
23 424
58
Number of projects
656
751
985
31
Textiles, clothing and leather
Value
12 411
12 470
17 062
37
Number of projects
767
825
1 071
30
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com).
Chapter I
International investment trends
27
Digitalization is also a factor in reshaping
GVCs. Along with the growth of services, the
growth of digital industries is transforming
manufacturing. Data-driven tools allow
for real-time analysis and optimization of
maintenance and logistics. E-commerce
platforms blur the line between physical
products and services, facilitating the
sale of both and often bundling them
together. Finally, digital technologies
enable the remote provision of service,
reducing the need for a physical presence
close to manufacturing facilities or
final sales points. These factors have
increased the share of services activities
within manufacturing, and lead to more
asset-light international investment.
iv. Extractive sectors and critical
minerals
Greenfield project announcements in
mining and critical minerals (including
processing) increased significantly in 2023
(table I.10), doubling in both their number
and their value. The growth in investment
in critical minerals for the energy transition
and the decline in new investment in oil
and gas extraction show how climate
goals are reshaping investment patterns.
One third of greenfield projects in critical
minerals were invested in by Chinese firms,
mostly for the extraction, processing and
production of materials for the battery supply
chain. Australia, the Republic of Korea,
Table I.9
Greenfield project announcements in digital industries
(Millions of dollars, number and percentage)
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com).
Note: For the classification of digital industries see WIR 2017 (UNCTAD, 2017).
2021
2022
2023
Growth,
2022–2023 (%)
Digital industries
Value
33 035
34 518
20 382
-41
Number of projects
378
344
187
-46
Digital content
Value
2 084
515
121
-77
Number of projects
44
37
12
-68
Digital solutions
Value
3 090
3 842
2 262
-41
Number of projects
48
61
51
-16
E-commerce
Value
25 229
23 935
17 178
-28
Number of projects
232
190
102
-46
Internet platforms
Value
2 632
6 226
822
-87
Number of projects
54
56
22
-61
World Investment Report 2024
Investment facilitation and digital government
28
Canada and the United Kingdom were
other important investor home countries.
The United States, Indonesia and Canada
attracted the most projects overall. The
highest project values were in Indonesia,
Chile and the United States, in that
order. Three quarters of projects were in
developing countries; about half were in
processing or production of materials.
Ten projects were announced in LDCs,
two of which including a processing
or manufacturing component.
International project finance in the extractive
sector is generally deployed for larger
projects. The average estimated value of
these projects in 2023 was close to 500 million for greenfield
projects. The highest total values of
international project finance deals were
announced in Chile, Indonesia, Zambia,
Botswana and Argentina, in that order.
Table I.10
Investment project announcements in extractives and critical minerals
(Millions of dollars and percentage)
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and
Refinitiv.
Announced greenfield projects
International project finance deals
2021
2022
2023
Growth,
2022–2023
(%)
2021
2022
2023
Growth,
2022–2023
(%)
Extractive industries
Value
12 655
107 256
64 589
-40
242 825
134 906
118 652
-12
Number of projects
61
97
117
21
246
202
154
-24
Oil and gas
Value
6 112
89 567
25 850
-71
198 306
92 756
72 072
-22
Number of projects
23
58
47
-19
124
114
103
-10
Mining
Value
6 542
17 689
38 740
119
44 519
42 150
46 580
11
Number of projects
38
39
70
79
122
88
51
-42
Memorandum:
Critical minerals
(including processing)
Value
13 106
30 396
57 964
91
19 553
24 430
23 230
-5
Number of projects
56
61
114
87
28
27
28
4
Chapter I
International investment trends
29
B. Investment in the Sustainable
Development Goals
The drop in international project finance will exacerbate the
4 trillion, from $2.5 trillion in
2015 (UNCTAD, 2023f). Between 2015
and 2023, the overall number of projects
in Goals-relevant sectors grew about 4 per
cent annually, outpacing overall growth in
numbers of deals (at 3 per cent). However,
these gains occurred in just a few Goals-
relevant sectors, mainly infrastructure and
renewable energy (table I.11). Furthermore,
investment has been unequal across
countries and LDCs still account for only a
small share of Goals-relevant investment.
Table I.11
Developing countries: investment in sectors relevant to the Sustainable
Development Goals
(Number and percentage)
2015
2022
2023
Growth,
2015–2023 (%)
Growth,
2022–2023 (%)
Infrastructurea
730
945
1 022
40
8
Renewable energy
372
687
655
76
-5
Water, sanitation and
hygiene (WASH)
32
36
30
-6
-17
Agrifood systemsb
368
305
346
-6
13
Health and education
277
317
337
22
6
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com) and
Refinitiv.
a Including transport infrastructure, power generation and distribution (except renewables) and
telecommunication.
b Including agricultural production and processes; fertilizers, pesticides and other chemicals; research and
development; and technology.
World Investment Report 2024
Investment facilitation and digital government
30
Most Goals-relevant investment is
in infrastructure sectors, which were
heavily exposed to the global decline in
international project finance in 2023. This
had a significant negative effect on total
Goals investment flows. International
project finance deals in Goals-relevant
sectors in developing economies fell by
36 per cent in value and 28 per cent in
number (table I.12). Declines in renewable
energy, power generation and transport
infrastructure were the main contributors.
Collectively, the value of project finance
deals in these sectors fell by almost $100
billion compared with 2022, marking the
second consecutive year of declines.
Table I.12
Sectors relevant to the Sustainable Development Goals: announced
international project finance deals in developing economies
(Millions of dollars, number and percentage)
Goals-relevant sector
Developing economies
Least developed countries
2021
2022
2023
Growth,
2022–2023
(%)
2021
2022
2023
Growth,
2022–2023
(%)
Total
Value
442 629
313 161
200 064
-36
55 102
26 742
14 154
-47
Number of projects
641
724
524
-28
55
55
36
-35
Powera
Value
145 722
63 548
40 632
-36
42 148
4 764
766
-84
Number of projects
60
67
50
-25
6
8
1
-88
Renewable energy
Value
217 440
175 502
121 623
-31
7 800
11 849
10 078
-15
Number of projects
443
500
378
-24
34
31
28
-10
Transport infrastructure
Value
29 408
28 514
8 858
-69
3 637
5 103
..
..
Number of projects
58
58
26
-55
7
5
..
..
Telecommunicationb
Value
25 013
21 009
14 356
-32
749
320
2 367
639
Number of projects
38
43
35
-19
3
2
4
100
Water, sanitation and hygiene (WASH)
Value
11 947
14 475
9 942
-31
179
2 458
522
-79
Number of projects
16
21
19
-10
2
5
1
-80
Food and agriculture
Value
9 678
7 452
2 974
-60
..
2 231
421
..
Number of projects
12
22
11
-50
..
3
2
..
Health
Value
2 253
1 300
1 678
29
..
16
..
..
Number of projects
6
5
5
0
..
1
..
..
Education
Value
1 167
1 360
..
..
589
..
..
..
Number of projects
8
8
..
..
3
..
..
..
Source: UNCTAD, based on data from Refinitiv.
a Excluding renewable energy.
b Including information services activities.
Chapter I
International investment trends
31
Greenfield investment provided some
counterweight, as the value of cross-
border greenfield project announcements
for Goals-relevant sectors grew by 14 per
cent in 2023 (table I.13). Project numbers
increased even more, to 19 per cent. Still,
a few sectors explain most of the growth.
Transport services accounted for about one
half of the increase in project numbers and
values. Renewable energy accounted for
about one quarter. At the same time, the
estimated value of international investment in
agrifood, health and education, and WASH
(water, sanitation and hygiene) declined
compared with 2022. Raising investment
in these sectors is key to achieving the
Goals, and the needs are substantial.
Table I.13
Sectors relevant to the Sustainable Development Goals: announced
greenfield projects in developing economies
(Millions of dollars, number and percentage)
Goals-relevant sector
Developing economies
Least developed countries
2021
2022
2023
Growth,
2022–2023
(%)
2021
2022
2023
Growth,
2022–2023
(%)
Total
Value
126 820
261 481
297 746
14
10 147
9 437
49 157
421
Number of projects
1 312
1 566
1 866
19
73
66
91
38
Powera
Value
4 173
4 080
7 155
75
2 000
1 865
671
-64
Number of projects
20
17
29
71
1
3
1
-67
Renewable energy
Value
56 040
176 342
183 327
4
4 809
4 824
41 614
763
Number of projects
149
187
277
48
13
13
24
85
Transport services
Value
14 438
23 347
39 730
70
436
776
4 849
525
Number of projects
275
435
599
38
22
18
31
72
Telecommunicationb
Value
29 441
25 672
39 502
54
2 018
917
1 359
48
Number of projects
295
325
283
-13
20
12
13
8
Water, sanitation and hygiene (WASH)
Value
4 127
1 619
1 208
-25
136
139
75
-46
Number of projects
19
15
11
-27
1
1
1
0
Food and agriculture
Value
11 900
19 829
17 041
-14
426
739
437
-41
Number of projects
275
283
335
18
7
14
14
0
Health
Value
5 679
9 668
8 866
-8
187
171
109
-36
Number of projects
194
207
227
10
3
4
3
-25
Education
Value
1 021
925
916
-1
136
7
44
535
Number of projects
85
97
105
8
6
1
4
300
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com).
a Excluding renewable energy.
b Including information services activities.
World Investment Report 2024
Investment facilitation and digital government
32
LDCs accounted for only a small share
of Goals-relevant investment among
developing countries. The combined value
of Goals-relevant greenfield investment
and international project finance deals in
developing countries reached 63 billion went to LDCs
(about 13 per cent). A $34 billion green
hydrogen project in Mauritania accounted
for more than half the total. The downturn in
project finance deals also disproportionately
affected LDCs and the number of projects
fell by 35 per cent compared to 2022. Still,
a few Goals-relevant sectors performed
well: renewable energy saw net gains in
project values and numbers in LDCs, as
did telecommunication, where numbers
and values increased for both greenfield
investment and project finance deals.
The distribution of Goals investment across
developing regions is also unequal; only
developing Asia attracts above-average
greenfield projects and international
project finance in Goals-relevant sectors
– the share of the region in the global
number of Goals projects was higher in
2023 than its share in all projects (figure
I.14). Other developing regions not only
attract less investment overall, but even
lower levels of Goals investment.
Africa remains one of the most underserved
regions and its share of international
investment projects is low. However, it has
attracted sizeable investment in power,
infrastructure and renewable energy; over
the last three years, it accounted for about
30 per cent, on average, of all Goals-
relevant investment values in developing
countries. In 2023, the region’s share was
only slightly lower (27 per cent). Yet there is
less progress in other Goals-relevant sectors
in Africa. This is particularly true for health
(about 5 per cent of total value in developing
countries), but also for more capital-intensive
sectors such as telecommunication and
transport (about 15 per cent for each).
Figure I.14
Only developing Asia attracts above-average investment for the
Sustainable Development Goals
Shares in numbers of investment projects, by region and economic grouping
(Percentage)
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and
Refinitiv.
Note: Shares are calculated by sector.
Share in total projects
Share in Goals projects
5.4
25.4
4.8
30.4
2.2
1.6
9.6
7.8
Africa
Developing Asia
Latin America and
the Caribbean
Least developed
countries
Chapter I
International investment trends
33
WIR 2023 identified gaps of $500 billion
in annual investment for WASH and 1.2 billion
in developing countries, and only one
announcement in LDCs. Project finance
and public–private partnerships are more
important in WASH, but there were large
declines in the value of WASH-related
international project finance deals in 2023,
including public–private partnerships,
with only one deal among LDCs.
World Investment Report 2024
Investment facilitation and digital government
34
C. International production
International production continues to expand, but investment
patterns and GVCs are shifting under the influence of economic
fracturing trends. The overall transnationality of the top 100 MNEs
still increased marginally in 2023. However, they are beginning
to alter their international footprint, bringing strategic activities
closer to home and considering options to de-risk supply chains.
1. Key indicators of international production
Despite the lacklustre growth of international
investment in the last decade, international
production through the networks of MNEs
remains an important part of the globalized
economy (table I.14). The value of FDI
flows is about 5 per cent of gross fixed
capital formation, production of foreign
affiliates as a share of global output is
more than 6 per cent, and the sales of
foreign affiliates are higher than the value of
global exports, confirming the importance
of FDI as a modality to reach overseas
markets. Furthermore, the global production
networks of MNEs are estimated to govern
about 80 per cent of global trade.
However, significant changes in the global
economy are reshaping international
production networks and GVCs. A recent
UNCTAD report on global economic
fracturing and shifting FDI patterns
(UNCTAD, 2024d) identifies several key
trends. First, it shows three types of
divergence. The growth of FDI and GVCs
has lost pace with GDP and trade – their
growth paths have disconnected. There
is a widening gap in investment trends
between the manufacturing and services
sectors. And investment patterns in China
have delinked from the rest of the world.
Second, it points out that, in recent years,
geopolitical differences and global crises
have led to a transition from divergence
to fracturing. This leads to more volatile
investment patterns and shifting home-
and host-country relationships, and it
causes geopolitical factors to become
increasingly important in investment
decisions, at times overriding economic
considerations. Third, it shows that the
sustainability imperative and the drive to
stimulate investment in the Sustainable
Development Goals are opening up new
opportunities for investment-driven industrial
development, particularly in environmental
technologies. However, it also shows that
these opportunities are available to only a
small group of countries with larger markets.
In many smaller developing countries,
and especially LDCs, marginalization
and vulnerability continue to grow.
Chapter I
International investment trends
35
Table I.14
Selected indicators of foreign direct investment and international
production
(Billions of dollars at current prices and number)
Sources: UNCTAD, FDI/MNE database, IMF (2024), information from The Financial Times, fDi Markets (www.
fDimarkets.com) and Refinitiv.
Notes: Not included are the value of worldwide sales by foreign affiliates associated with their parent firms
through non-equity relationships and the value of sales of parent firms themselves. Worldwide sales, gross
product, total assets, exports and employment of foreign affiliates are estimated by extrapolating worldwide
data of foreign affiliates of MNEs from countries for which data are avaiable, on the basis of three-year average
shares of those countries in worldwide outward FDI stock.
Abbreviations: FDI = foreign direct investment, M&As = mergers and acquisitions.
a Based on data from 168 countries for income on inward FDI and 142 countries for income on outward FDI in
2023, in both cases representing more than 90 per cent of global inward and outward stocks.
b Calculated only for countries with both FDI income and stock data. The stock is measured in book value.
Item
1990
2005–2007
(average)
2020
2021
2022
2023
FDI inflows
205
1 415
985
1 622
1 356
1 332
FDI outflows
244
1 464
780
1 882
1 575
1 551
FDI inward stock
2 196
14 573
41 893
47 156
44 375
49 131
FDI outward stock
2 255
15 296
40 718
43 386
40 570
44 381
Income on inward FDIa
82
1 123
2 173
2 883
3 002
2 498
Rate of return on inward FDIb
5.4
9.6
6.8
8.2
8.2
6.0
Income on outward FDIa
128
1 235
1 954
2 857
2 923
2 516
Rate of return on outward FDIb
8.4
10.7
5.8
7.7
7.8
6.4
Announced greenfield projects
..
..
641
830
1 309
1 380
International project finance deals
..
..
585
1 440
1 301
958
Cross-border M&As
98
729
475
737
707
378
Sales of foreign affiliates
4 801
19 758
31 298
33 194
..
..
Value added (product) of foreign affiliates
1 074
4 662
6 547
7 030
..
..
Total assets of foreign affiliates
4 649
47 065
97 467
91 386
..
..
Employment by foreign affiliates (thousands)
20 449
49 780
82 405
74 402
..
..
Memorandum:
Gross domestic product
22 612
52 680
84 961
96 488
100 135
104 476
Gross fixed capital formation
5 838
12 482
22 055
25 270
26 142
27 161
Charges for the use of intellectual property,
receipts
31
191
507
615
590
460
World Investment Report 2024
Investment facilitation and digital government
36
2. Internationalization trends of the largest MNEs
The average transnationality index of the
top 100 non-financial MNEs – the weight of
their overseas assets, sales, and employees
in their global operations – increased
marginally in 2023 (table I.15). This increase
was driven by MNEs in the automotive
industry, where the transition to EVs and
new technologies attracted more foreign
investment. Falling revenues in other sectors
and several MNEs’ divestments in the
Russian Federation held back the index.
The 12 car producers in the top 100
significantly expanded their international
Table I.15
Internationalization levels of top 100 MNEs increased marginally in 2023
Internationalization statistics of 100 largest non-financial MNEs, worldwide and from
developing economies
Source: UNCTAD.
Notes: Data refer to fiscal year results reported between 1 April of the base year and 31 March of the following
year. Complete 2023 data for the 100 largest MNEs from developing economies are not yet available.
Abbreviations: MNEs = multinational enterprises, TNI = Transnationality Index.
a Revised results
b Preliminary results.
Variable
100 largest MNEs, global
100 largest MNEs,
developing economies
2021a
2022a
Growth,
2021–2022
(%)
2023b
Growth,
2022–2023
(%)
2021a
2022
Growth
(%)
Assets (Billions of dollars)
Foreign
10 449
10 127
-3.1
10 230
1.0
2 953
2 896
-1.9
Domestic
8 902
10 566
18.7
10 665
0.9
7 054
8 694
23.3
Total
19 351
20 693
6.9
20 895
1.0
10 007
11 590
15.8
Foreign as share of total (%)
54
49
49
30
25
Sales (Billions of dollars)
Foreign
6 703
7 438
11.0
6 965
-6.4
2 272
2 490
9.6
Domestic
4 949
6 744
36.3
6 596
-2.2
4 094
5 523
34.9
Total
11 651
14 182
21.7
13 562
-4.4
6 366
8 013
25.9
Foreign as share of total (%)
58
52
51
36
31
Employment (Thousands)
Foreign
8 998
9 096
1.1
9 553
5.0
4 064
4 150
2.1
Domestic
11 102
11 316
1.9
10 606
-6.3
9 265
9 665
4.3
Total
20 100
20 413
1.6
20 159
-1.2
13 328
13 815
3.7
Foreign as share of total (%)
45
45
47
30
30
Unweighted average TNI
62
61
62
48
46
Median TNI
63
63
66
47
45
Chapter I
International investment trends
37
networks, focusing on the United States
and China, the two largest EV markets.
Since passage of the Inflation Reduction
Act of 2022 in the United States, top
automotive MNEs have announced
greenfield projects in the EV and battery
supply chain amounting to nearly 1.5 billion in Chinese
EV start-up Leapmotor, and Volkswagen
invested $1 billion in Horizon Robotics, a
Beijing-based manufacturer of electronic
components, to strengthen its position in
the autonomous driving and EV markets.
The number of technology MNEs in the
top global rankings remained steady at
14 companies, with S&P Global (United
States) entering the list as Legend Holdings
(China) exited. S&P Global bolstered its
capabilities by merging with IHS Markit
(United Kingdom) in a $43 billion transaction.
Key trends driving investment in the
technology industry are the competition
to acquire expertise in artificial intelligence
and machine learning and to consolidate
market presence across neighbouring
industries, resulting in more deals. While
most of these deals occurred within
home economies, larger ones implied an
increase in foreign assets. The $75 billion
acquisition of video game maker Activision
Blizzard by Microsoft (both United States)
led to a 22 per cent increase in Microsoft’s
foreign assets. Not all technology MNEs
have expanded their foreign operations.
Apple (United States) scaled down its
operations in China, diversifying its supply
chain. SAP (Germany) divested its stake in
Qualtrics (United States) of approximately
$12 billion to focus on its core services.
In 2023, the pharmaceutical industry saw
a modest expansion of its international
footprint, with 10 MNEs driving growth
through strategic acquisitions. Similar to
developments in the technology sector,
many of these transactions occurred
within the United States but significantly
influenced the international profile of the
acquiring companies. For instance, the 7.1 billion
acquisition of Telavant (United States) by
Roche (Switzerland) reinforced the position
of Roche in the United States market.
The internationalization rate of the remaining
21 manufacturing MNEs in the top 100 (light
and heavy industry) remained stable. British
American Tobacco (United Kingdom)
reduced its foreign assets by 20 per cent,
while Philip Morris International (United
States) bolstered its global presence with
a 1.9 billion.
In the extractive industries, most of the
15 MNEs in the top 100 held back from
pursuing large-scale international investment
in 2023. Notable exceptions were Rio Tinto
and Shell (both United Kingdom), which
actively engaged in strategic acquisitions
and new ventures. Rio Tinto finalized the
acquisition of copper and nickel miner
Turquoise Hill (Canada) for nearly 1.5
billion. The latter part of 2023 and early 2024
saw several more announcements from
mining companies about deals intended
to boost investment in critical minerals.
The telecommunication sector saw
significant portfolio shifts in foreign
assets. Vodafone (United Kingdom) exited
markets in Ghana and Hungary and sold
its operations in Italy. Deutsche Telekom
Supply chain
restructuring
is affecting the
international
footprint of
technology
MNEs
World Investment Report 2024
Investment facilitation and digital government
38
(Germany) and Orange (France) focused
on expansion in more profitable regions,
including North America, Africa and the
Middle East. The utilities sector experienced
several reconfigurations that affected its
internationalization rate. EDF (France) was
fully nationalized, and Enel (Italy) continued
strategic divestments, generating $1.3 billion
from the sale of its business in Romania.
Among construction companies, Vinci
(France) moved up the ranking of the top
100 with strategic expansions in airport
concessions and energy ventures. A.P
.
Møller–Maersk (Denmark) exited the ranking
after reshuffling operations in East Asia.
Finally, the ranking of the top 100 MNEs
was also affected by divestments or
exits from the Russian Federation. OMV
(Austria) dropped out of the ranking after
suffering losses due to the expropriation
of its stake in the Yuzhno-Russkoye oil
and gas field. Between 2022 and 2023,
MNEs in the ranking made 36 significant
divestments from the Russian Federation,
with the largest write-downs and charges
concentrated among MNEs in the oil
and gas and extractive industries.
Emerging-economy MNEs favoured
greenfield investment over equity
acquisitions. TSMC (Taiwan Province of
China), CATL (China) and Zijin Mining Group
(China) – in that order by investment size –
announced large-scale projects in developed
economies. Starting in 2021, TSMC has
launched greenfield projects first in the
United States, then in Japan and Germany.
In 2020 CATL invested over $5 billion in
Indonesia and almost 5 billion in Serbia and
expanded its global footprint by developing
mines in Argentina and Kazakhstan.
3. Shifting investment patterns among the top 100 MNEs
UNCTAD recently published a diagnostic
of 10 major trends in global FDI patterns,
examining the effects of long-term structural
changes in international production and
the more recent pressures caused by
economic fracturing (box I.1). This section
looks at how the trends observed in that
diagnostic are reflected in the investment
behaviours of the top 100 MNEs.
The main drivers of the structural
changes in FDI patterns are technological
developments, most visible in high-
technology industries; sustainability
trends, evident in intense investment
activity in environmental technologies
and critical minerals; the push for supply
chain resilience, which affects most GVC-
intensive industries; and geopolitical and
trade tensions, felt across all strategic
sectors. These sectors include industries
such as high-technology, semiconductors,
pharmaceuticals, instruments and machinery
manufacturing, environmental technologies
and other activities deemed essential for
the future competitiveness of countries
and which therefore play a key role in their
industrial and trade policies (IMF, 2023).
Over the last 10 years, two thirds of
greenfield investment by the top 100 MNEs
related to setting up services subsidiaries
(figure I.15). Even within manufacturing
sectors often considered strategic such
as automotive and pharmaceuticals, more
than half of the greenfield projects focused
on establishing sales and marketing offices,
support and technical services centres, or
other professional services, thus making
these projects less sensitive. The effects of
fracturing are mostly seen in the remaining
projects, in physical manufacturing activities.
The deceleration of global FDI after 2010
is also reflected in the decreasing total
number of deals and projects undertaken
by top MNEs. The number of greenfield
projects announced in the last five years
(2019–2023) was about 10 per cent
lower than in the preceding five years
(2014–2018). While the overall number
of projects has declined, notable shifts in
their regional distribution have emerged.
Critical
minerals are
driving major
cross-border
investment
deals among
top MNEs
Chapter I
International investment trends
39
Trend 1: Long-term FDI stagnation
The long-term trend in cross-border investment shows that a slowdown in global FDI started in about 2010. It no
longer keeps pace with global trade and GDP
. Trade within global value chains (GVCs) also slowed, confirming
the close link between FDI and GVCs.
Trend 2: The increasing weight of services
The overall stagnation in FDI conceals sectoral differences. Cross-border investment in services flourishes while
manufacturing lags. This reflects a global shift towards more services-centric and asset-light investment.
Trend 3: The deglobalization of manufacturing (from an FDI perspective)
Manufacturing FDI, stagnant for two decades, showed negative growth after the outbreak of the COVID-19
pandemic. Although global manufacturing activity and investment remain robust, their international component is
shrinking, suggesting a trend towards deglobalization.
Trend 4: The growing ends of the smile curve
The transition from manufacturing to services is part of a broader change in the role of FDI in global value creation.
Cross-border investment is moving from the centre to the two ends of the “smile” curve, most notably towards
services in business and information and communication technology upstream and in marketing downstream.
Trend 5: Convergence of sectoral patterns across regions
All regions are feeling the effects of the transition towards services-oriented, asset-light FDI. Consequently, traditional
differences in sectoral patterns between developed and developing regions are increasingly blurring.
Trend 6: The diminishing role of FDI in China
The regional rebalancing of global FDI has been significantly influenced by the declining share of China as a recipient
country. Despite waning interest from multinational corporations in initiating investment projects in China, the
country continues to maintain a dominant position in global manufacturing and trade, signifying a transformation
in its global production model.
Trend 7: Unstable investment relationships
Heightened geopolitical tensions are exacerbating the volatility of investment sources and destinations, and the
susceptibility of traditional investment links to disruptions. Instability in investment relationships limits the capacity
of developing countries to strategically capitalize on diversification opportunities arising from shifts in investment
patterns.
Trend 8: Fracturing along geopolitical lines
Geopolitical differences are causing a fracturing trend in global FDI, with the reduction in investment between
geopolitically distant countries highlighting the significant influence of such differences on investors’ location
choices, overshadowing traditional determinants of FDI.
Trend 9: The sustainability imperative driving new FDI sectors
FDI in environmental technologies stands out as the main pocket of growth outside services. Since 2010, while
manufacturing investment stagnated across all industries, the number of greenfield projects along the entire value
chain of environmental technologies sectors has increased steadily.
Trend 10: The increasing concentration of FDI and marginalization of developing countries
Amid historical shifts and economic fracturing, the share of greenfield projects in smaller developing countries
and least developed countries is diminishing. This trend exacerbates the marginalization and vulnerability of those
countries, as FDI becomes increasingly concentrated in developed and emerging economies.
Source: UNCTAD (2024d).
Box I.1
Global economic fracturing and shifting FDI patterns: 10 major trends
World Investment Report 2024
Investment facilitation and digital government
40
Until 2018, manufacturing projects were
predominantly directed towards developing
economies, with East Asia and South-East
Asia being key destinations. In services,
however, more than a third of projects
were concentrated in Europe. Within the
manufacturing sector, strategic projects
– often involving high-value activities
– were relatively more concentrated in
developed economies and East Asia.
Since 2019, the geographical distribution of
manufacturing projects has shifted towards
locations closer to MNE home markets,
especially in strategic sectors (figure I.16).
Europe and North America have emerged
as primary destinations – unsurprisingly,
considering that the majority of MNEs in
the ranking are from the United States (19),
Europe (53) and Japan (10) – with Central
America (including Mexico), North Africa,
and West and Central Asia also gaining
traction. This trend reflects a strategic pivot
towards regionalization and nearshoring,
driven by the need to enhance supply chain
resilience and reduce geopolitical risks.
Figure I.15
Manufacturing activities represent about one third of projects by top 100
multinational enterprises
Greenfield projects, by type and industry, 2014–2023
Source: UNCTAD, based on information from the Financial Times, fDi Markets (www.fDimarkets.com).
Notes: Refers to the ranking of top 100 multinational enterprises in WIR 2023. Manufacturing includes
several activities normally classified as services but physical asset-heavy in nature, in the construction,
electricity, extraction and infrastructure segments. Strategic manufacturing includes activities in environmental
technologies, explaining their presence in extractive industries and utilities. “Services” includes all remaining
services-related business activities and services activities in typical manufacturing industries (e.g. sales offices
of car manufacturers).
0%
20%
40%
60%
80%
100%
Strategic manufacturing
Other manufacturing
Services
Automotives
Sector
Number of
enterprises
Number of
projects
Pharmaceuticals
Heavy industry
Extractives
Technology
Utilities
Trade
Light industry
Transport and logistics
Telecommunication
Other
Total
48
52
12
1 826
9
527
9
1 035
16
1 035
14
2 720
11
835
6
491
9
769
4
798
6
761
4
256
100
10 787
43
57
41
13
46
9
49
42
9
91
7 65
28
19
3
2
1
79
56
42
99
100
27
15
58
18
15
66
Chapter I
International investment trends
41
Figure I.16
Manufacturing projects by top 100 multinational enterprises moved
closer to headquarters
Shares of selected regions/subregions in types of manufacturing projects, difference
between 2019–2023 and 2014–2018
(Percentage points)
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com).
Notes: Refers to the ranking of top 100 multinational enterprises in WIR 2023. Manufacturing includes several
activities normally classified as services but physical asset-heavy in nature, in the construction, electricity,
extraction and infrastructure segments. Caribbean economies are included in Central America. Other regions
and subregions (developed Asia and Oceania) are not included as there were no significant changes in the
share of projects attracted.
Strategic manufacturing
Non-strategic manufacturing
Africa
East Asia
South-East Asia
South Asia
West and Central Asia
Europe
Central America
South America
North America
-8
-6
-4
-2
0
2
4
6
8
10
12
14
0.3
-5
-5
-2
-4
-7
-2
-3
0.2
-0.1
7
13
1
-5
-0.3
4
3
5
World Investment Report 2024
Investment facilitation and digital government
42
In contrast, the number of strategic
manufacturing projects in East Asia
decreased. Among the top MNEs, the
largest manufacturing investors in China
include the electronics company Hon
Hai Precision Industry (Taiwan Province
of China), the chemicals company BASF
(Germany) and a range of car manufacturers
such as Toyota (Japan), Volkswagen and
BMW (both Germany) and Samsung
Electronics (Republic of Korea). These
companies have historically maintained
significant manufacturing operations in
China. However, since 2019 they have
halved their greenfield investment in the
country in favour of partnerships with local
manufacturers, especially in the EV market.
Among these companies, Hon Hai
Precision Industry and Samsung Electronics
have reassessed their manufacturing
footprint in China because of trade
tensions. A significant portion of their
products, especially chips and high-
technology electronics, are produced in
fabrication plants in China and exported
to the United States. Hon Hai reduced its
greenfield projects in China from 23 to 6,
while Samsung reduced its from 9 to 1.
Both companies have started investing
in new manufacturing facilities in their
home markets and in other countries
such as Viet Nam, India and Mexico
– in order of investment size. Hon Hai
Precision Industry tripled the number of
manufacturing projects in Viet Nam.
The share of strategic manufacturing
investment in Central America has
increased. Manufacturers in the automotive
industry, such as Robert Bosch (Germany),
Toyota Motor (Japan) and Volkswagen
(Germany), have chosen to invest in Mexico,
largely for its proximity to the United
States and its market access under the
United States–Mexico–Canada Agreement
(USMCA). MNEs in the pharmaceutical and
medical instrument industries, including
Bayer (Germany), Medtronic (Ireland) and
Johnson & Johnson (United States), have
targeted Costa Rica for investment projects.
North Africa and West and Central Asia
have also emerged as strategic locations
for manufacturing MNEs, offering proximity
to both European and Asian markets. In
North Africa, Morocco and Egypt stand out
as key investment destinations. Morocco
has attracted projects by automotive MNEs
including Stellantis (Italy) and Renault
(France). Egypt has attracted not only
automotive MNEs such as BMW and Robert
Bosch (both Germany) and Nissan (Japan)
but also pharmaceutical companies such
as GlaxoSmithKline (United Kingdom) and
electronics producers such as Samsung
Electronics (Republic of Korea). In West
and Central Asia, Türkiye attracted the
largest share of manufacturing projects.
The decreasing share of manufacturing
projects in South-East and South Asia might
seem counterintuitive. However, the top 100
MNEs had already established a significant
presence in ASEAN by the early 2010s.
This is the case, for example, for the two
leading investors in manufacturing MNEs in
South-East Asia: Toyota Motors (Japan) and
Samsung (Republic of Korea). From 2011 to
2013, Toyota announced 23 manufacturing
projects in South-East Asia. This number
declined to 13 projects during 2014–2019
and dropped farther to only 5 projects
since then. Similarly, Samsung experienced
a peak of 10 projects in South-East Asia
during 2014–2019, but this number fell to
4 projects in the following years. Of the top
manufacturing investors in South-East Asia,
only Hon Hai Precision Industry (Taiwan
Province of China) started reconfiguring its
supply chain in the last five years, increasing
its number of projects in the region from
3 during 2011–2019 to 12 since then.
Greenfield projects in services activities
have also shifted closer to home economies
(figure I.17) with one notable exception.
Over the last 10 years, about 10 per cent
of services projects have been aimed at
establishing regional headquarters and
back-office functions. MNEs from Europe
and North America have increasingly
established regional headquarters
throughout developing Asia, particularly
Investment
projects by
top 100 MNEs
in strategic
manufacturing
sectors are
moving closer
to home
Chapter I
International investment trends
43
Figure I.17
Top multinational enterprises are establishing regional headquarters
closer to key markets
Shares of selected regions/subregions in types of services projects, difference between
2019–2023 and 2014–2018
(Percentage points)
Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com).
Notes: Projects aimed at setting up headquarters include the following business activities: headquarters,
business services, shared and technical services. Caribbean economies are included in Central America. Other
regions (developed Asia and Oceania) are not displayed as there were no significant changes in the share of
projects attracted.
Headquarters and back offce functions
All other services
Africa
East Asia
South-East Asia
South Asia
West and Central Asia
Europe
Central America
South America
North America
-6
-4
-2
0
2
4
6
8
2.2
-1.6
2.7
-5.4
-5.5
-3.4
-4.7
-3.4
-0.4
1.5
6.5
6.3
1
-0.4
-0.1
2.3
0.8
-0.4
World Investment Report 2024
Investment facilitation and digital government
44
in East Asia. These regional hubs provide
essential services and can help mitigate
risks to local operations from geopolitical
and trade tensions as well as supply chain
disruptions. Specifically for investment in
large markets, many MNEs are establishing
almost autonomous subsidiaries that
produce for the domestic rather than
the global market. For example, the
pharmaceutical MNE AstraZeneca (United
Kingdom) announced five projects in China
to set up headquarter offices and back-office
functions. Its business there would become
a legal entity listed in Hong Kong, China
or Shanghai and controlled by the MNE.
Consistent with the global FDI slowdown
and similar to the trend observed in
greenfield investment, the number of
equity acquisitions since 2019 also
decreased, by a little more than 10 per
cent. M&As often respond to different
drivers than greenfield investment.
Importantly, acquisitions can be subject
to screening and approval procedures.
M&A deals traditionally are more prevalent
in developed economies, and this
concentration has only increased in the
last five years, particularly for MNEs in
strategic industries. Trends in M&As are
consistent with those seen in greenfield
projects. MNEs have decreased their shares
of equity acquisitions in manufacturing
companies in East Asian economies.
However, the value of deals in the subregion
has increased, driven largely by significant
investment in the automotive sector,
targeting Chinese producers. Although
the number of transactions has fallen,
their strategic importance and associated
financial commitment have risen.
Divestment trends among the top 100 MNEs
do not reveal any clear relocation strategy.
On the contrary, the number of divestments
from China has decreased since 2019,
indicating that MNEs recognize the strategic
importance of maintaining a presence in
the world’s second-largest economy, not
only to tap into its large market but also to
benefit from its advanced manufacturing
capabilities and extensive supply chains.
Regional
headquarters
functions are
proliferating
to increase
regional
autonomy and
mitigate risks
Chapter II
Investment policy
trends
FDI stock covered by old-generation IIAs
Not covered
New-generation
Old-generation
Developed
Developing
Least developed
71%
65%
46%
137
national
measures
Key trends: facilitation and entry restrictions on the rise
Less favourable measures by type
Old-generation agreements cover half of global foreign direct investment
stock – with greater exposure for developing countries
Developing countries continue to prioritize investment attraction
Share of measures more favourable to investors
Developed countries
Developing countries
43%
86%
68%
32%
Treatment and
operation
Entry restrictions
More favourable measures by type
Countries with FDI screening
39%
33%
Incentives
14%
12%
2%
Promotion
Liberalization
Other
Facilitation
2014
2023
+141%
17
41
2023 agreements address new investment governance issues, yet old-generation
ones persist, raising the risk of investor–State disputes
Commitments in 2023 IIAs
Global FDI stock: IIA coverage
Parties involved in 2023 cases
2023 cases: top sectors
16
15
Protection
14
9
Facilitation
Liberalization
Cooperation
75%
30%
25%
70%
Developing
Developed
Respondent
Claimant
Construction
Oil, gas, coal, mining
Manufacturing
12
10
10
60
new ISDS
cases
29
IIAs signed
49%
16%
35%
Chapter II
Investment policy trends
3
A. National investment policies
1. Overall trends
The number of investment policy measures adopted in 2023
remained consistent with the five-year average, despite declining
by 25 per cent compared with 2022. In developing countries,
most measures aimed at promoting and facilitating investment.
Developed countries continued to introduce restrictive measures
to address national security concerns related to investment.
In 2023, 73 countries introduced a total
of 137 policy measures affecting foreign
direct investment (FDI), a 25 per cent
decrease from 2022 but in line with the
five-year average (figure II.1). The majority
— 72 per cent — were favourable to
investors (70 per cent in 2022) (box II.1).
This confirms a return to the pre-pandemic
distribution between policy measures
more and less favourable to investors.
Figure II.1
Lower numbers of new investment policy measures in 2023
Nature of measures, worldwide
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
50
100
150
200
2022
2021
2023
2019
2018
2020
2016
2015
2014
2017
58
17
15
88
16
15
88
24
27
99
23
22
69
29
18
67
20
20
79
50
30
63
41
13
123
53
7
99
38
90
119
139
144
116
107
159
117
183
137
More favourable
Less favourable
Neutral/indeterminate
World Investment Report 2024
Investment facilitation and digital government
4
The analysis of national investment policy trends in this chapter is based on official measures affecting FDI
adopted by United Nations Member States, as compiled in the UNCTAD Investment Policy Monitor database.
These encompass measures explicitly targeting FDI (FDI-specific), as well as general investment measures
with a clear impact on foreign investment (FDI-related).
The measures are either reported directly to UNCTAD by Member States through annual surveys or identified
by UNCTAD researchers through publicly accessible sources (such as government websites and specialized
policy databases). The analysis excludes restrictive economic measures that affect investment.
The classification of measures as more or less favourable is based solely on their potential impact on
investors. The types of measures included in each category are described in box table II.1.1. When a measure
– for example, the adoption of an investment promotion strategy – contains more than one component,
such as incentives and facilitation, these components are analysed separately. This classification does not
reflect any value judgement by UNCTAD on the merit or suitability of the measure.
Box table II.1.1
Classification of measures
Source: UNCTAD.
Abbreviations: FDI = foreign direct investment, SEZ = special economic zone.
Category
Type of measure
More favourable
Liberalization
Privatization
Lifting of entry restrictions (e.g. opening of sectors to FDI) and entry conditions (e.g. minimum
capital requirement)
Removal (total or partial) of FDI screening or approval mechanisms
Other (e.g. liberalization of land access)
Facilitation
Streamlining of investment procedures (e.g. one-stop shops)
Greater transparency of investment-related laws and procedures (e.g. information portals)
Services by investment promotion agencies and other entities to assist investors (e.g. linkages
programmes, investor visa facilitation and alternative dispute resolution mechanisms)
Promotion
Establishment of investment promotion agencies or other institutions with a remit as investment
promoters
Adoption of investment promotion strategy and plans
Public–private partnership initiatives, auctions and concessions
Outward FDI promotion initiatives
Incentives
Tax and financial incentives for investment
Other incentives (e.g. citizenship by investment programmes)
SEZ-related incentives
Other
Enhanced investor treatment and protection guarantees
Easing of labour or migration regulations concerning foreign hires and key personnel
Removal of operational restrictions on investment (e.g. local content requirements)
Less favourable
Entry
Entry restrictions (e.g. total and partial ban on FDI in specific sectors)
Entry conditions (e.g. minimum investment threshold, joint venture requirements or State
participation in strategic sector)
Introduction or expansion of screening mechanisms for national security
Treatment and operation
Foreign exchange restrictions
Restrictions on foreign hires and key personnel
Removal or reduction of investment incentives
Post-establishment local content requirements or prioritization of national companies in procurement
Other measures reducing guarantees for investment treatment and protection
Restrictions on outward FDI
Box II.1
Methodology for analysing national investment policy trends
Chapter II
Investment policy trends
5
Significant differences persist between
developing and developed countries (figure
II.2). Developing countries continue to
prioritize investment attraction as part of
their economic development strategies.
The proportion of policies more favourable
to investors in developing countries has
remained stable at well above 80 per
cent since 2014, except for a low point
registered during the pandemic. In 2023,
86 per cent of the measures adopted by
developing countries were favourable to
investors. Initiatives to promote and facilitate
investment by simplifying or streamlining
administrative processes and introducing
incentive schemes were among the
measures most frequently adopted (see
section A.2). In contrast, in developed
countries, policies more favourable to
investors, which represented between
half and two thirds of the total in the mid-
2010s, started to decline in importance
well before the pandemic. They reached an
all-time low of 17 per cent in 2020 and have
since stabilized at about 40 per cent of the
total. In 2023, measures less favourable to
investors adopted by developed countries
made up two thirds of the world total.
Many of these policies related directly or
indirectly to national security concerns
regarding foreign ownership of critical
infrastructure, core technologies, or other
sensitive assets (see section A.3).
African countries were the most active in
adopting new investment policy measures
in 2023, followed closely by developing
countries in Asia. Africa and developing Asia
also produced the highest share of policy
measures more favourable to investors.
Among developed regions, Europe led
in the adoption of new investment policy
measures, despite a decrease compared
with 2022. Most new measures were less
favourable to investors. The number of
new investment policy measures in North
America and other developed regions also
declined significantly. Three quarters of them
were less favourable to investors (figure II.3).
Figure II.2
Developing countries continue prioritizing investment attraction
Share of policy measures more favourable to investors in total measures
(Percentage)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
0
10
20
30
40
50
60
70
80
90
Developing
countries
86
World
72
Developed
countries
43
World Investment Report 2024
Investment facilitation and digital government
6
2. Policy measures more favourable to investors
In 2023, investment facilitation measures and incentives remained
the primary components of investment attraction initiatives in
developed and developing countries. Facilitation measures reached
a record 39 per cent of the measures favourable to investors.
Over the last decade, the investment
policy landscape has evolved significantly,
with noticeable shifts not only in the
distribution between measures more
and less favourable to investors but
also in their composition (figure II.4).
A marked change has been the diminishing
prominence of liberalization measures,
especially following the pandemic. In the
period from 2014 to 2019, liberalization
measures constituted approximately 40
per cent of the total – peaking at 44 per
cent in 2018. Yet from 2020 to 2022, they
represented less than a quarter and in 2023
further declined to a mere 12 per cent.
In contrast, the weight of investment
incentives has increased significantly since
the pandemic. Prior to 2020, measures
related to the introduction of incentives
represented about a quarter of all favourable
measures. They have since grown to over
a third of favourable measures, indicating
a strategic pivot towards using incentives
as a tool to foster investment. This trend is
occurring despite ongoing international tax
reforms that should make fiscal incentives
a less effective tool for the attraction of FDI
from large multinational enterprises (MNEs).
Investment facilitation and investment
promotion measures also display a
notable upward trend since the pandemic.
Together with incentives, they were all
complementary components of country
efforts to promote economic recovery and
resilience. In 2023, investment facilitation
and investment promotion initiatives reached
record shares of 39 and 14 per cent of
all favourable measures, respectively.
Investment promotion measures were fuelled
Figure II.3
Africa and developing Asia adopted the most investment policy
measures in 2023
Nature of measures by region, 2023
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
More favourable
Less favourable
Africa
Developing Asia
Europe
Latin America and the Caribbean
Other developed countries
34
4
33
4
16
19
14
5
2 6
Chapter II
Investment policy trends
7
Figure II.4
Investment policy shifts from liberalization to facilitation
Measures more favourable to investors by category
(Percentage)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
20
40
60
80
100
2014
2015
2017
2019
2021
2023
2016
2018
2020
2022
23
26
39
5
7
24
23
39
6
8
31
19
39
7
4
33
23
34
5
5
24
28
36
7
5
24
35
23
8
10
25
34
23
10
8
28
38
16
12
6
39
33
12
14
2
Facilitation
Incentives
Liberalization
Promotion
Other
23
26
44
2
5
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
Figure II.5
Investment facilitation is important across regions
Measures more favourable to investors by category and region, 2014–2023
(Percentage)
50
100
29
41
16
8
6
29
18
37
8
8
26
40
19
13
2
26
32
30
6
6
Africa
Developing Asia
Latin America and
the Caribbean
countries
Developed
Facilitation
Incentives
Liberalization
Promotion
Other
by an increase in the adoption of
new investment promotion strategies
and the creation of new investment
promotion agencies (IPAs).
The regional breakdown of policy measures
more favourable to investors adopted in the
last decade reveals important differences
(figure II.5). In Africa and in Latin America
World Investment Report 2024
Investment facilitation and digital government
8
and the Caribbean, incentives were the
most common policy initiative, accounting
for approximately 40 per cent of all
measures in both regions. In contrast, Asia
favoured liberalization, which accounted
for 37 per cent of the measures, notably
higher than in Africa (16 per cent) and in
Latin America and the Caribbean (19 per
cent). Investment facilitation measures
consistently represented more than a
quarter of the total across all regions. This
underscores the widespread recognition
of investment facilitation as a cornerstone
of investment attraction efforts globally.
a. Facilitation
In 2023, investment facilitation measures
reached a peak, constituting 39 per cent
of the policy measures more favourable
to investors implemented by countries
worldwide, 45 per cent of the measures
adopted by developed countries and 38 per
cent of those adopted by developing ones.
Investment facilitation measures fall into
three main categories: transparency,
streamlining and facilitation services.
Transparency measures aim at improving
the clarity and accessibility of laws and
procedures related to investment. They
made up 21 per cent (12) of the facilitation
measures in 2023. Streamlining measures
encompass initiatives designed to enhance
the efficiency of procedures related to
investments. They accounted for almost
1 Accessible at https://investmentpolicy.unctad.org/investment-policy-monitor.
half (27) of the facilitation measures.
Facilitation services are provided by
IPAs, special economic zones or other
administrative entities. They constituted
28 per cent (16) of the total (figure II.6).
The introduction of single windows for
investment figured prominently among
the facilitation measures adopted in 2023.
For instance, Egypt introduced a single-
approval system for investment projects,
encompassing various licences and
permits relevant to investment activities.
(Unless indicated otherwise, all examples
provided in this section, including additional
information and links to official sources,
can be found in the UNCTAD Investment
Policy Monitor database).1 The General
Authority for Investment and Free Zones
also announced plans to launch an online
platform for company establishment.
Uruguay introduced an online single
window for investment, integrating various
services related to company establishment
and operation. Uzbekistan established a
physical one-stop shop to assist investors
upon entry and facilitate visa processes.
Transparency measures included the
introduction of information portals for foreign
investors. Jordan and Mexico, for example,
unveiled platforms providing detailed
investment procedures, opportunities
and incentives. Additional measures
involved initiatives to clarify investment-
related procedures. For instance, the
Figure II.6
Streamlining of administrative procedures is top priority
Investment facilitation measures by category, 2023
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
Streamlining
Other
27
Transparency
12
Facilitation services
16
2
Investment
facilitation
measures
hit record
high (39%)
Chapter II
Investment policy trends
9
Kingdom of the Netherlands and the United
Kingdom issued guidance on the approval
processes of their FDI screening regimes.
Facilitation services ranged from
assistance in obtaining specific permits
to comprehensive support for foreign
investors. Chile implemented a multi-
agency cooperation agreement involving
the Foreign Investment Promotion Agency,
the National Immigration Service and
the Economic Development Agency
to streamline visa services for foreign
investors and skilled professionals. Malaysia
introduced a dedicated visa facilitation
service for strategic investors identified by
the Malaysian Investment Development
Authority. Uzbekistan introduced the
position of “investment managers” within
the Ministry of Investments, Industry and
Trade, to provide dedicated support to
investors throughout the project life cycle,
from resolving land acquisition issues
to securing necessary permits. The rise
in investment facilitation initiatives is
discussed in greater detail in chapter IV.
b. Incentives
The introduction or expansion of investment
incentives represented one third of the policy
measures more favourable to investors in
2023 in both developed and developing
countries. Although the number of new
incentives decreased in comparison with
2022, it remained significantly higher than
the average for the decade. Investment
incentive measures encompass tax and
financial incentives, including incentives
related to special economic zones,
alongside other types, such as infrastructure
facilities or visa and work permits (e.g.
citizenship-by-investment programmes).
Approximately 50 per cent of the sector-
specific incentives introduced in 2023
aimed at promoting investment in the
services sector, followed by manufacturing
and agriculture (figure II.7). This confirms a
growing focus on promoting investment in
services, illustrated by the increase in the
share of new incentives for the services
sector from 35 per cent of non-industry-
specific incentives in 2014–2018 to 46 per
cent in 2019–2023. New incentives for
manufacturing and agriculture remained
stable at 31 per cent and 15 per cent,
respectively. New incentives for extractive
industries declined from 19 per cent in
2014–2018 to 9 per cent in 2019–2023.
As in 2022, the push for renewable energy
investment stood out as the primary
focus of new incentives enacted in 2023.
Italy, Nigeria and South Africa adopted a
range of fiscal and non-fiscal incentives
aimed at encouraging investments in
renewable energy. Canada and Egypt
introduced an investment tax credit and
other fiscal incentives focused specifically
on the promotion of green hydrogen.
New incentives in manufacturing also
aimed to support clean technologies,
as well as high-tech manufacturing. For
instance, France introduced a tax credit
for producing batteries, solar panels, wind
turbines and heat pumps. The United
Figure II.7
Sector-specific incentives primarily target services
Incentive schemes by sector, 2023
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
Agriculture
4
Manufacturing
11
Services
16
Cross-industry
27
Renewable
energy: key
target of
incentives
in 2023
World Investment Report 2024
Investment facilitation and digital government
10
Kingdom established new green freeports
offering several fiscal incentives for
advanced manufacturing and the production
of renewable energy equipment. Israel
offered a tax credit in the high-technology
sector. Mexico launched incentives
for nearshoring in semiconductors,
electromobility and medical devices.
c. Promotion
Investment promotion measures
accounted for 14 per cent of all
measures more favourable to investors
in 2023. They included the formulation
of new national investment policies
and investment promotion strategies,
the establishment or strengthening
of investment promotion institutions
and the adoption of public–private
partnership (PPP) initiatives (figure II.8).
In recent years, several countries have
adopted national investment policy
documents to emphasize investment-
related priorities and introduce measures
to improve investment attraction. Notable
examples include Kenya in 2019, Jamaica
in 2020, El Salvador and New Zealand
in 2021 and Australia in 2022. In 2023,
Nigeria and Pakistan also introduced
national investment policies. Both outlined
comprehensive frameworks for regulating
and promoting investments, identifying
target sectors for investment attraction
and enhancing the coordination among
various entities involved in investment
promotion at different levels of Government.
The national investment policies of both
Kenya and Nigeria were prepared with
technical assistance from UNCTAD.
Enhancing the coordination and
effectiveness of investment promotion
activities was also the key objective
behind the creation or strengthening of
investment promotion institutions in 2023.
In Botswana, for instance, four investment-
related institutions were merged into the
Botswana Investment and Trade Centre.
Egypt established a Supreme Council
for Investments under the chairmanship
of the country’s president. Papua New
Guinea passed reforms to strengthen
the Investment Promotion Authority,
including through improved inter-agency
coordination on investment matters.
In addition, several investor targeting
strategies were implemented in 2023.
Jordan introduced the Investment
Promotion Strategy for 2023–2026,
entrusting all international promotion
activities to specialized marketing
agencies charged with identifying potential
investors and conducting focused
campaigns in select countries. China
launched the Invest in China initiative,
targeting foreign investment from specific
countries. Costa Rica debuted an FDI
strategy aimed at attracting investment
beyond the capital’s metropolitan area.
Efforts to foster investment through
PPPs were undertaken by Ecuador,
Ethiopia, Kenya, Peru and the Russian
Federation. Ecuador rolled out a new
PPP framework, and Ethiopia introduced
a mechanism for direct PPP negotiations
with foreign firms. Kenya encouraged
the development and operation of port
infrastructure through PPPs. Peru made
land access easier for PPP investors. The
Russian Federation strengthened its PPP
Figure II.8
Adoption of new strategies leads investment promotion efforts
Measures by type, 2023
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
Investment promotion institutions
4
Public–private partnership initiatives
5
Investment promotion strategies
11
National
investment
policies on
the rise
Chapter II
Investment policy trends
11
framework to reduce investment risks and
initiated an electronic tender process.
d. Liberalization
Liberalization initiatives accounted for 12
per cent of all measures more favourable to
investors in 2023. All of them were adopted
by developing countries. The removal of FDI
entry restrictions and conditions represented
the majority of liberalization measures,
followed by the removal of restrictions on
foreign exchange, privatization initiatives
and liberalization of land access (figure II.9).
As in the case of incentives, though most
measures were cross-sectoral, sector-
specific liberalization initiatives concerned
primarily services. For instance, Ethiopia
allowed foreign investment in digital payment
systems. India permitted foreign lawyers
and law firms to “practice foreign law
within the country” (i.e. to advise clients
on the international elements of mergers
and acquisitions or appear as arbitrators).
Nigeria opened its electricity sector to
FDI at the state level, granting each state
the authority to create an independent
electricity market within its jurisdiction.
Figure II.9
Most liberalization measures lifted entry restrictions
Liberalization measures by type, 2023
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
Privatizing
2
Easing access to land
1
Relaxing foreign exchange restrictions
3
Easing entry conditions
3
Lifting entry restrictions
8
3. Policy measures less favourable to investors
Heightened caution towards foreign investments in critical sectors
persisted in 2023. New or expanded FDI screening mechanisms
accounted for nearly half of the measures less favourable to
investors (45 per cent). Four additional countries implemented FDI
screening in 2023, and several others will follow in 2024.
A series of global crises, including the
pandemic, have intensified geopolitical
tensions, disrupted global supply chains
and raised food and energy prices. This
has led to greater caution towards foreign
investment in sectors that are essential for
national and economic security, prompting
many countries, particularly developed
ones, to tighten regulations on foreign
investment. FDI-specific restrictions, which
accounted for the minority of measures
unfavourable to investors a decade ago,
have since represented about 60 per
cent of the total number of measures,
with peaks of more than 80 per cent
during the pandemic (figure II.10).
World Investment Report 2024
Investment facilitation and digital government
12
FDI entry restrictions represented the
majority of the measures less favourable
to investors over the last decade.
These primarily involved the adoption
of investment screening mechanisms in
developed regions, especially Europe.
Other entry-related measures adopted by
both developed and developing countries
included primarily restrictions on foreign
ownership of land and limitations on foreign
investment in strategic sectors (e.g. financial
services, mining, media or transport).
Tax-related measures, e.g. the removal
or reduction of investment incentives,
accounted for the bulk of treatment and
operation measures affecting FDI.
a. Investment screening for
national security
Nearly half of the investment policy
measures less favourable to investors
adopted in the last decade concerned
investment screening for national security.
As documented in recent World Investment
Reports and in a dedicated issue of the
Investment Policy Monitor (UNCTAD,
2023d), screening has been the largest
category among all less favourable
measures adopted by countries since
2017, except in 2022, when tax measures
predominated (UNCTAD, 2023f). In 2023,
this trend persisted, with investment
Figure II.10
Entry restrictions remain prominent
Policy measures less favourable to investors by category
(Percentage)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
2014
2016
2018
2020
2022
2023
2021
2019
2017
2015
20
40
60
80
100
23
18
59
50
12
38
42
25
21
12
48
17
13
22
49
10
10
31
55
10
35
80
2
4
14
61
20
7
12
36
6
9
49
52
8
16
24
FDI entry
FDI treatment and operation
General investment entry
General investment treatment and operation
Chapter II
Investment policy trends
13
Figure II.11
Screening regimes continue to expand
Countries introducing or expanding security-related investment screening
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024.
5
10
15
20
25
30
35
40
45
2006
1995–
2005
2008
2010
2012
2014
2016
2018
2020
2022
2023
2021
2019
2017
2015
2013
2011
2009
2007
3
2
1
1
3
1
1
1
1
4
4
3
2
4
1
5
3
5
17
5
12
5
13
2
11
4
Expands screening
Introduces screening
Cumulative number of countries with screening
1
screening accounting for 45 per cent of all
measures less favourable to investors.
New FDI screening regimes were
implemented in Belgium, Estonia,
Luxembourg and Sweden, bringing the total
number of countries with comprehensive
FDI screening regimes to 41 (figure II.11).
Of these, 26 are in Europe. Collectively,
countries that conduct FDI screening for
national security now represent more
than half of global FDI flows and three
quarters of FDI stock. As in previous
years, countries continued to address
vulnerabilities in their existing FDI screening
mechanisms by covering a broader range
of transactions to improve the detection
of potential risks related to FDI.
Only a limited number of countries report
on their screening mechanisms. Table
II.1 displays data compiled by UNCTAD
from country surveys and official sources.
UNCTAD has previously pointed out the
lack of a standardized methodology for
collecting data on screened projects,
highlighting the variety in metrics and
reporting periods employed by various
screening authorities (UNCTAD, 2023f).
Despite these methodological differences,
discernible trends emerge. In the majority
of countries for which historical data are
available, there has been an uptick in the
number of projects subject to review.
The rejection rate remains low, at less
than 1 per cent in most countries.
Transactions that underwent screening for
national security concerned a variety of
sectors, including defence and security,
energy and utilities, critical infrastructure,
automotives, financial services, health
care and pharmaceuticals, electronics and
semiconductors, media, communication and
Internet services, and metals and mining.
The growing number of cases screened
by authorities across several jurisdictions
inevitably signifies a growing burden
on administrative resources and
World Investment Report 2024
Investment facilitation and digital government
14
Table II.1
Screened investment projects on the rise but low rejection rates
Source: UNCTAD, based on official sources and country inputs.
a The total number of cases screened by the end of the period may include cases carried over from previous
periods, depending on the methodology employed by each country.
b For Germany, the number of projects modified or authorized with conditions includes prohibitions, side
conditions, public legal contracts and administrative orders.
c In the United Kingdom, the review mechanism applies equally to domestic and foreign parties. The cumulative
number of cases is subject to continuous adjustment as a result of verification processes, which may result in
discrepancies with case numbers reported in previous years.
Country
Period
Screeneda
Authorized
Modified or authorized
with conditions
Rejected
Withdrawn
Australia
4/2020–3/2021
..
28
4
..
..
7/2021–6/2022
..
75
39
..
..
7/2022–6/2023
..
100
18
..
..
Belgium
7/2023–12/2023
32
26
..
0
..
Canada
2022
35
24
0
3
8
2023
27
16
0
0
3
Czechia
2022
13
7
0
0
3
2023
28
20
0
0
1
Finland
2019
15
..
..
0
..
2020
15
..
..
0
..
2021
32
..
..
0
..
2022
34
..
..
0
1
2023
39
..
..
0
0
France
2021
328
57
67
..
..
2022
325
61
70
..
..
Germanyb
2019
106
..
12
..
..
2020
160
..
12
..
..
2021
306
..
14
..
..
2022
306
..
12
..
..
2023
257
..
10
..
..
Italy
2019
83
39
13
0
..
2020
342
135
40
2
..
2021
496
183
26
3
1
2022
608
242
18
4
3
Malta
2021
81
2
6
2
0
2022
22
0
10
1
3
2023
20
1
2
0
3
Spain
2019
6
6
0
0
0
2020
37
34
3
0
1
2021
57
51
6
0
1
2022
78
67
9
1
1
2023
108
94
10
0
4
United Kingdomc
1/2022–3/2022
209
3
0
0
..
4/2022–3/2023
776
757
9
5
11
United States
2019
231
..
28
2
12
2020
313
..
16
2
9
2021
436
..
26
0
11
2022
440
..
46
1
20
Chapter II
Investment policy trends
15
case management. In response, in
2023, some countries established
procedures such as pre-authorization
and consultation (e.g. Denmark and
Spain). Others introduced fees for FDI
screening (e.g. Germany and Romania).
The trend towards the adoption of FDI
screening regimes will continue in the
coming years. The screening regimes of
Bulgaria and Singapore entered into force
in March 2024. The regime in Ireland is
expected to become operational before
the end of the year. The European Union
has also put forward a reform proposal
aimed at revising the current framework.2
It emphasizes the need for all member
States to adopt ex ante screening
mechanisms and suggests extending
the scope of the screening regimes to
cover intra-European Union transactions
controlled by foreign investors.
Bilateral initiatives also play a role in the
expansion of FDI screening. They focus
predominantly on establishing formal or
informal mechanisms for exchanging
information relating to national security
and investment. In December 2023,
Mexico and the United States signed a
memorandum of intent to create a bilateral
working group for regular exchanges of
information.3 The United States and the
European Union have created a working
group on investment screening to promote
best practices and develop a holistic policy
approach to addressing risks pertaining
to specific sensitive technologies.4
b. Other entry-related measures
Other types of entry restrictions on
investment accounted for 23 per cent of
the measures less favourable to investors
2 European Commission, 2024, Proposal for a regulation of the European Parliament and of the Council on
the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European
Parliament and of the Council, COM(2024 23 final, 2024/0017 (COD), https://circabc.europa.eu/ui/
group/aac710a0-4eb3-493e-a12a-e988b442a72a/library/f5091d46-475f-45d0-9813-7d2a7537bc1f/
details?download=true.
3 United States, Department of the Treasury, 2023, Secretary of the Treasury Janet L. Yellen and Mexico’s
Secretary of Finance and Public Credit Rogelio Ramírez de la O announce intent to establish bilateral working
group on foreign investment review, 7 December. See https://home.treasury.gov/news/press-releases/jy1965.
4 European Commission, Working Group 8 – Investment Screening, Part of EU–US Trade and Technology
Council, https://futurium.ec.europa.eu/en/EU-US-TTC/wg8.
in 2023, with a significant emphasis on
enhancing State control over extractive
industries. Key examples included
the National Lithium Strategy in Chile,
mandating State majority ownership
throughout the lithium production cycle,
and the revised Mining Code of Mali,
granting the State a 10 per cent stake in
new mining ventures. Mining law reforms
in Mexico tightened concession conditions
and removed the expropriation rights of
concessionaires for mining exploitation.
Panama introduced a moratorium on
new metallic mineral concessions.
Concerns regarding foreign investors’
ownership of certain types of property
also prompted various countries to enact
new prohibitions. Canada, for instance,
restricted the purchase of residential
properties by foreign investors. The Russian
Federation limited foreign ownership of
news aggregators, and the United States
imposed restrictions on foreign acquisition
of agricultural and forest properties, as
well as land or property near military
installations and critical infrastructure.
c. Investor treatment and
operation
The remaining one third of policy measures
less favourable to investors in 2023 (12
measures) comprised various treatment
and operation provisions adopted by both
developing and developed countries that
aimed to address a diverse array of specific
policy concerns. The extractive sector
was often affected by these measures. For
instance, Chad nationalized the assets of
Esso Exploration and Production Chad,
and Mali abolished several tax incentives
previously available to mining companies.
Countries with
FDI screening
represent more
than half of
global FDI
flows, three
quarters of
FDI stock
World Investment Report 2024
Investment facilitation and digital government
16
In line with the recent trend towards more
stringent controls on outbound investment,
three countries introduced measures to
address concerns directly related to outward
FDI (OFDI). South Africa established an
approval requirement for transfers abroad
of capital funds in amounts greater than R1
million per year (approximately $50,000)
and increased related documentation
requirements. Spain expanded the
mandatory reporting of OFDI to encompass
new types of transactions. The United
States introduced outbound investment
controls on certain transactions relating to
national security technologies and products.
From near the end of 2023 into the early
months of 2024, at least 26 countries,
primarily developed economies in Europe,
5 Based on data from OECD Pillar Two Country Tracker and Pillar Two Navigator, available at oecdpillars.com.
enacted laws to implement the global
minimum tax as outlined in the Pillar II
reform of the Organisation for Economic
Co-operation and Development (OECD).5
Known as the Global Anti-Base Erosion
Model Rules, the objective is to ensure
that MNEs contribute a minimum amount
of tax on earnings within each operating
country (UNCTAD, 2023f). The reform
targets multinationals with annual revenues
above €750 million, enabling jurisdictions
to levy a top-up tax to achieve a minimum
effective rate of 15 per cent on income taxed
below this threshold. These developments
are not captured in the Investment
Policy Monitor database because of its
methodological specifications (see box II.1).
4. Outward foreign direct investment policies
The global landscape of OFDI promotion, facilitation and
regulation has undergone substantial changes since the early
2000s. These changes reflect the evolving patterns of global
investment and production, the sharpening focus on sustainability
and the heightened geopolitical tensions and gradual shift from
liberalization to regulation that have characterized FDI policies
over the past decade.
a. Promotion and facilitation of
outward investment
As highlighted in a recent issue of the
Investment Policy Monitor (UNCTAD,
2024b), OFDI promotion and facilitation
policies have been a significant component
of economic strategies of developed
countries for several decades. At least
31 of them (79 per cent of the total
tracked) have adopted initiatives to
promote outbound investment. Support
for companies that are investing abroad
typically serves two main objectives: the
development and internationalization of
domestic businesses, particularly small
and medium-sized enterprises (SMEs), and
the promotion of international cooperation
and development efforts. The number of
developing countries that have adopted
OFDI promotion mechanisms has expanded
in line with their expanding role as sources of
investment. At least 19 developing countries
(14 per cent) have established formal
mechanisms to promote OFDI, including 11
countries in Asia, 6 in Africa, and 2 in Latin
America and the Caribbean (figure II.12).
Four principal types of direct promotion
instruments to support OFDI exist: fiscal and
Chapter II
Investment policy trends
17
financial support, investment guarantees,
investment facilitation services and direct
capital participation. Facilitation services
are the most widespread, adopted by 23
per cent of countries globally, including 64
per cent of developed countries and 11
per cent of developing countries. These
services may include providing advisory
assistance, supporting participation in
international events, coordinating economic
missions abroad, connecting with partners
in the host country, training, and preparing
feasibility and country risk analyses.
Fiscal or financial support encompasses
loans, grants and tax incentives for
companies that venture into OFDI. Loans
are usually provided by home-country
export promotion agencies, development
banks or similar institutions. They generally
offer better conditions than market
standards or support projects that might
otherwise struggle to secure private
financing. This type of support is common
in developed countries (62 per cent) but
rare in developing countries (10 per cent).
Foreign investment insurance or guarantees
secure some level of political risk protection
for domestic firms investing in more
unpredictable and volatile markets. They are
offered by 18 per cent of countries globally
– 67 per cent of developed countries and
5 per cent of developing countries.
Direct capital participation through State-
sponsored programmes is offered in 49
per cent of developed countries and 3
per cent of developing countries (figure
II.13). These programmes enable domestic
firms to invest abroad by providing patient
capital through direct equity participation
and private enterprise funds. These are
made available through import–export
banks, development banks or dedicated
funds targeting particular sectors, countries
or types of firms, such as SMEs.
A growing number of countries are
leveraging OFDI as a tool to further the
goals of the 2030 Agenda. Among the 50
countries worldwide with OFDI promotion
mechanisms, 18 developed countries
(58 per cent) and 5 developing countries
(26 per cent) have put in place at least
one instrument specifically designed to
encourage OFDI in developing countries. In
addition, numerous developed countries,
especially in Europe, have integrated OFDI
promotion schemes into their broader
development assistance strategies.
They actively engage the private sector
in development cooperation initiatives,
so as to capitalize on its strengths and
capabilities to advance development
goals, while promoting growth and
global competitiveness of domestic
firms. Consequently, OFDI promotion
schemes often incorporate criteria that
emphasize the benefits to the host country,
particularly as regards investments that
target developing countries (figure II.14).
Figure II.12
Outward investment promotion and facilitation schemes introduced
mainly in developed countries
Countries with a scheme, 2023
(Number)
Source: UNCTAD.
Latin America and the Caribbean
2
Africa
6
Developing Asia
11
Developed countries
31
More countries
using outward
investment
as a tool for
Agenda 2030
World Investment Report 2024
Investment facilitation and digital government
18
Figure II.14
Leveraging promotion of outward investment to achieve the Sustainable
Development Goals
Criteria for accessing support schemes, by economic grouping
(Percentage)
Source: UNCTAD.
Developed countries
Developing countries
Investment in developing economies
Host-country benefts
Sustainability
58
26
52
16
39
11
Figure II.13
Facilitation is the main support tool worldwide for outward
investment
Tools offered and share of countries using them, 2023
(Percentage)
Source: UNCTAD.
Developed countries
Developing countries
World
Fiscal/fnancial support
62
10
21
Direct capital participation
49
3
13
Investment facilitation services
64
11
23
Investment guarantee
67
5
18
Chapter II
Investment policy trends
19
b. Regulation and screening of
outward investment
OFDI promotion and regulation policies often
coexist within the same country. Historically,
restrictions on OFDI were mainly observed in
developing countries and related to balance-
of-payments risks (UNCTAD, 2024b). In
the early 2000s, the liberalization of OFDI
gained momentum, as countries increasingly
removed foreign exchange restrictions.
In the last decade, by contrast, an
observable shift in the regulatory approach
to OFDI has seen restrictions increase
by nearly one third in both developing
and developed countries (figure II.15).
This increase can be partially explained
by growing concerns over money-
laundering practices, tax evasion and
other illicit financial flows disguised as FDI.
It was accentuated by the coronavirus
pandemic of 2019, which led to a general
slowdown in both inward and outward
liberalization efforts. Finally, in recent
years, concerns have been brought
forward related to the potential risks
that OFDI could pose to national and
economic security, particularly in relation
to strategic sectors and technologies.
6 President of the United States, 2023, Addressing United States investments in certain national security
technologies and products in countries of concern, Presidential Documents: Executive Order 14105 of August
9, 2023, Federal Register, 88:154, https://www.federalregister.gov/documents/2023/08/11/2023-17449/
addressing-united-states-investments-in-certain-national-security-technologies-and-products-in.
In 2023, restrictions on OFDI were in
place in nearly half (95) of the world’s
economies, including a majority of
developing countries and least developed
countries. The most common involve either
the necessity for investors to secure prior
approval for their projects (69 per cent
of countries with OFDI restrictions) or to
register their planned OFDI with authorities
(14 per cent). Total bans on OFDI are in
place in only three countries: Ethiopia,
Nepal and the Syrian Arab Republic.
Screening mechanisms for OFDI based on
national security concerns are also gaining
traction. While some Asian countries have
implemented them for decades (e.g. China,
India and Japan), the focus on the security
aspects of OFDI has recently broadened
to include other major sources. Since
2020, the United States has introduced
several initiatives to monitor and regulate
OFDI, culminating in an executive order
aimed at scrutinizing investments in key
national security technologies in certain
countries (August 2023).6 In January 2024,
the European Commission responded to
growing national security concerns related to
OFDI by proposing a framework to monitor
outbound investment in critical sectors
Figure II.15
Outward investment restrictions on the rise
Measures by nature and economic grouping
(Percentage)
Sources: UNCTAD, based on Investment Policy Monitor database and IMF Annual Report on Exchange
Arrangements and Exchange Restrictions database, both accessed on 31 March 2024.
Less favourable
More favourable
Developing countries
1999–2010
2011–2022
1999–2010
2011–2022
Developed countries
22
78
49
51
21
79
54
46
World Investment Report 2024
Investment facilitation and digital government
20
such as advanced semiconductors and
biotechnology. Member States have been
tasked to provide initial risk assessments by
mid-2025. Based on these assessments,
the Commission will advise member States
7 European Commission, 2024, White paper on outbound investments, 24 January, https://circabc.europa.eu/
ui/group/aac710a0-4eb3-493e-a12a-e988b442a72a/library/51124c0d-58d8-4cd9-8a22-4779f6647899/
details?download=true.
on the extent to which existing tools can
mitigate these risks and whether additional
proportionate policy actions are warranted
at the European Union or national level.7
Chapter II
Investment policy trends
21
B. International investment policies
1. Trends in international investment agreements
In 2023, new-generation international investment agreements
(IIAs) included innovative provisions on investment facilitation and
cooperation and tended to safeguard States’ right to regulate.
However, old-generation IIAs still cover about half of global FDI
stock, making IIA reform more urgent. The year was also marked
by intensified efforts to reform the IIA and ISDS regimes.
a. Conclusion and termination
of investment agreements
In 2023, countries and regional organizations
concluded at least 29 IIAs – 12 bilateral
investment treaties (BITs) and 17 treaties
with investment provisions (TIPs). This
brought the size of the IIA universe to 3,291
(2,831 BITs and 460 TIPs), according to
the UNCTAD IIA Navigator (figure II.16).
Figure II.16
Agreements from the 1990s and 2000s dominate the international
investment agreements universe
(Annual number of agreements signed)
Source: UNCTAD, IIA Navigator database, accessed 25 March 2024.
Note: The UNCTAD IIA Navigator is updated continuously as new IIA-related information becomes available.
Abbreviations: IIA = international investment agreement.
50
100
150
200
250
1959
2023
2018
2013
2008
2003
1998
1993
1988
1983
1978
1973
1968
1963
IIAs in force
IIAs signed, not in force
IIAs terminated
Number of
IIAs in force
2 608
World Investment Report 2024
Investment facilitation and digital government
22
100
200
300
400
1994–2003
2004–2013
2014–2023
Total number
of IIAs terminated
585
In addition, at least 15 IIAs entered into force
and 4 were terminated in 2023, bringing
the total number of IIAs in force to at least
2,608 by the end of the year. These IIAs
are largely dominated by old-generation
treaties, signed in the 1990s and 2000s.
The total number of terminations reached
at least 585 by 2023; about 70 per cent
of these IIAs were terminated in the last
decade (figure II.17). Under sunset clauses,
IIAs may continue to protect investments
in existence at the time of termination or
withdrawal and grant investors access
to investor–State dispute settlement
(ISDS) for up to 20 years afterward.
IIAs signed and/or adopted in 2023
cover a range of investment governance
issues that go beyond protection, such
as investment facilitation, cooperation
or liberalization (figure II.18). Notably,
the majority of TIPs signed or adopted
in 2023 included commitments on
facilitation or cooperation. About half
contained protection or liberalization
provisions. In the Agreement Establishing
the African Continental Free Trade Area
(AfCFTA), the Protocol on Investment –
adopted in February 2023 – provides an
example of this nascent shift (box II.2).
Newly concluded protection-focused IIAs
continued the trend towards safeguarding
States’ right to regulate as well as
reforming or omitting ISDS. It remains to
be seen whether these refinements will be
interpreted in line with the treaty parties’
intent in ISDS. A lot remains to be done to
focus the coverage of IIAs on sustainable
investment and foster responsible business
conduct by investors. New IIAs also
commonly continue to bind countries for
long periods of time, limiting their ability to
adapt to changing economic realities and
new regulatory imperatives (figure II.19).
The reform of old-generation IIAs continues
to advance at a slow pace. Only 19
per cent of the IIAs signed since 2020
replace an old-generation IIA; 39 per
cent ensure that the reformed provisions
they contain would be effectively applied
where parallel old-generation IIAs exist.
Source: UNCTAD, IIA Navigator database, accessed 25 March 2024.
Abbreviations: IIAs = international investment agreements.
Figure II.17
Terminations of investment agreements reach nearly 600
(Annual number of terminations)
Chapter II
Investment policy trends
23
The Investment Protocol to the AfCFTA, which involves 54 countries, is the first megaregional IIA covering the
African continent in its entirety. It was adopted by the Heads of the State and Government during the Assembly
of the African Union on 18–19 February 2023.
The Protocol builds on existing investment treaty reform objectives and best practices recognized by the African
Union and the regional economic communities, as well as UNCTAD. UNCTAD’s work on IIA reform is recognized in
the preamble of the Protocol. The Protocol provides a balanced approach to international investment governance
and contains the following elements:
•
Proactive promotion and facilitation commitments for investment that fosters sustainable development
•
Refined investment protection provisions that preserve the contracting parties’ right and duty to regulate in
the public interest and are extended to sustainable investments only
•
A dedicated chapter on investment and sustainable development, with proactive commitments on climate
action, health and pandemics, human capital development and technology transfer
•
Enforceable investor obligations related to environmental and labour protection, human rights, the rights of
local communities, transparent corporate governance, tax and non-interference in local governance
•
Firm commitments on technical assistance and capacity-building for contracting parties, as well as support
for implementation by the Pan-African Trade and Investment Agency established under the Protocol.
Upon entry into force, the Protocol will consolidate the IIA regime in Africa. Under its terms, 183 intra-African
BITs will be replaced and regional economic organizations in Africa undertake to harmonize regional IIAs with the
content of the Protocol.
UNCTAD is a member of the task force that assisted the AfCFTA Secretariat in the negotiation of the Investment
Protocol and continues to assist in the negotiation of the Investment Dispute Settlement Annex to it.
Source: UNCTAD.
Box II.2
AfCFTA Investment Protocol (2023)
Figure II.18
Content of investment agreements is becoming more diverse
(Number of agreements signed in 2023 by type of commitment)
Source: UNCTAD, IIA Navigator database, accessed 25 March 2024.
Notes: Based on 22 IIAs (14 TIPs and 8 BITs) signed and/or adopted in 2023 for which text or other public
information on content is available. Cooperation commitments refer to the establishment of institutional
frameworks to cooperate on investment activities (investment committee) and/or undertakings to conduct joint
activities on investment in one or more economic sectors.
Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with
investment provisions.
BITs
TIPs
Cooperation
5
11
Protection
8
7
Facilitation/promotion
4
10
Liberalization
1
8
World Investment Report 2024
Investment facilitation and digital government
24
IIAs in force cover 65 per cent of global
FDI stock. TIPs, which include regional and
megaregional agreements and relate to a
broad range of economic issues beyond
investment disciplines, account for the
largest share – 53 per cent. BITs, which
typically include investment protection
provisions only and apply bilaterally, cover
about 7 per cent. The remaining 5 per cent
are covered simultaneously by a TIP and a
BIT (figure II.20). The coverage of TIPs has
increased by at least 10 per cent in the past
decade, following the growing relevance
of regional investment policymaking.
Old-generation IIAs, which provide broad
and unrefined provisions that often expose
host countries to greater risk of ISDS,
cover 49 per cent of the total global FDI
stock. For 53 countries, more than 80 per
cent of total FDI stock is covered by an
old-generation IIA. The exposure to ISDS
is overall higher for developing economies
and LDCs. Old-generation IIAs cover 65
Figure II.19
Recently signed investment agreements include reform features
Agreements signed between 2020 and 2023 with selected reform features
(Percentage)
Source: UNCTAD.
Note: Based on 36 IIAs concluded in 2020–2023 for which texts are available, not including agreements that
lack investment protection provisions.
Abbreviations: IIA = international investment agreement, ISDS = investor–State dispute settlement.
a The IIAs counted contain reform language for five or more key substantive provisions, including at least a
circumscribed fair and equitable treatment standard and a clarified indirect expropriation clause, or a general
exceptions clause with other reformed clauses, in line with the UNCTAD IIA Reform Accelerator (UNCTAD,
2020a).
Right-to-regulate safeguards
Promotion/facilitation commitments
ISDS reformed
Importation excluded
Duration/survival clause of fewer than
10 years
Old-generation IIA(s) replaced
Investor obligations
Scope defned by reference to
sustainability
72
64
50
39
31
19
14
3
Selected features of IIAs
Right-to-regulate safeguards. Reforms language of the majority of
key substantive IIA provisions, as defned in the UNCTAD IIA Reform
Accelerator, including those most often invoked in ISDS.a
Duration/survival clause of fewer than 10 years. Provides for initial
duration of validity and survival clause of fewer than 10 years or omits
them.
ISDS reformed. Contains procedural improvements, limits the access to
ISDS for certain types of claims or omits ISDS altogether.
Old-generation IIA(s) replaced. Provides for the termination or
suspension of at least one IIA upon entry into force.
Promotion/facilitation commitments. Includes commitments to
transparency and/or the improvement of the regulatory environment,
stakeholder engagement on investment policies or cooperation.
Investor obligations. Contains obligations applicable to investors, such
as responsible business conduct, avoiding corruption, environmental
management and the like.
Importation of elements from unreformed IIAs excluded. Excludes
application of most-favoured-nation and non-derogation provisions to
obligations in other IIAs.
Scope defned by reference to sustainability. The IIA scope of
coverage is defned by reference to "sustainable development" and/or
"sustainable investment".
Chapter II
Investment policy trends
25
per cent of developing countries’ FDI stock.
This is 16 per cent higher than the global
average and more than 20 per cent higher
than the share for developed economies.
The difference is even higher for LDCs,
for which old-generation treaties cover
71 per cent of FDI stock (figure II.21).
IIA terminations and replacements since
2012 have affected the IIA coverage of
about 13 per cent of the total FDI stock.8
Following terminations, 6 per cent of the
stock is no longer covered; 4 per cent
relates to developed economies and 2
per cent to developing economies. The
remaining 7 per cent are now covered
by a new-generation IIA. Barely any
8 Analysis based on 424 IIAs (415 BITs and 9 TIPs) terminated since 2012 (including IIAs that were terminated
by mutual consent, unilaterally terminated, expired or replaced by a new treaty).
FDI stock of LDCs has been affected
by terminations or replacements.
Taken together, these data suggest that to
date IIA reform has had a limited effect on
mitigating the risk of ISDS in developing
countries and has largely left the FDI stock
of LDCs subject to old-generation IIAs.
Old-generation IIAs have served as the
basis for almost all ISDS cases to date
(about 97 per cent), and developing
countries have been respondents in the
majority of them (about 62 per cent). Of
these, at least 58 cases based on old-
generation IIAs were initiated against LDCs.
ISDS proceedings represent a significant
financial risk for developing countries and
TIPs
53
None
35
BITs and TIPs
5
BITs
7
Figure II.20
Investment agreements in force cover 65 per cent of global stock of
foreign direct investment
Share of stock covered, by type of IIA
(Percentage)
Sources: UNCTAD, IIA Navigator database, accessed 25 March 2024, and IMF Coordinated Direct Investment
Survey database, accessed 19 March 2024.
Notes: FDI stocks estimated on the basis of information about 193 United Nations Member States’ shares of
world FDI inward stock for 2022. Does not include confidential and unspecified stock data. Analysis based on
2,429 IIAs in force (2,220 BITs and 209 TIPs) with substantive investment commitments. For TIPs that include a
relevant regional economic integration organization, only the FDI stock of members for which the IIA is in force
was counted. Excludes the Energy Charter Treaty (1994) in view of its sector-specific scope.
Abbreviations: BIT = bilateral investment treaty, FDI = foreign direct investment, IIA = international investment
agreement, TIP = treaty with investment provisions.
World Investment Report 2024
Investment facilitation and digital government
26
LDCs, in particular. The average amount
sought by investors in ISDS cases is $1.1
billion and the average amount awarded is
1 billion. At the
end of 2023, the amount that LDCs were
required to pay totalled 270 million.
b. Other developments relating
to investment rule-making
The withdrawals of France, Germany and
Poland from the Energy Charter Treaty
(ECT) (1994) became effective in 2023. At
least three more countries have deposited
notices to exit the ECT over concerns
related to climate change, and the European
Parliament voted in favour of the withdrawal
of the European Union in April 2024.
The trend towards negotiating flexible
international instruments aimed at
channelling investment towards the
green economy also continued.
Partners concluded negotiations on
the Clean Economy Agreement in the
context of the Indo-Pacific Economic
Framework for Prosperity.
Figure II.21
Old-generation investment agreements cover the majority of foreign
direct investment stock in developing and least developed countries
Stock covered, by economic grouping and generation of agreement
(Percentage)
Sources: UNCTAD, IIA Navigator database, accessed 25 March 2024, and IMF Coordinated Direct Investment
Survey database, accessed 19 March 2024.
Notes: FDI stocks estimated on the basis of information about 193 United Nations Member States’ shares of
world FDI inward stock for 2022. Does not include confidential and unspecified stock data. Analysis based on
2,429 IIAs in force (2,220 BITs and 209 TIPs) with substantive investment commitments. For TIPs that include a
relevant regional economic integration organization, only the FDI stock of members for which the IIA is in force
was counted. Excludes the Energy Charter Treaty (1994) in view of its sector-specific scope. Where a new-
generation IIA coexists with an old-generation IIA covering the same FDI stock without suspending its effect,
the relevant FDI stock is considered covered by an old-generation IIA.
Abbreviations: BIT = bilateral investment treaty, FDI = foreign direct investment, IIA = international investment
agreement, TIP = treaty with investment provisions.
49
16
35
45
18
37
65
8
27
71
2
27
World
Developed
Developing
(except least developed)
Least developed
Old-generation
New-generation
Not covered
Chapter II
Investment policy trends
27
The year witnessed the first outputs of the
work of the United Nations Commission on
International Trade Law (UNCITRAL) Working
Group III on ISDS reform. In July 2023 the
UNCITRAL Commission adopted the Model
Provisions and the Guidelines on Mediation
for International Investment Disputes, and
the Code of Conduct for Arbitrators in
International Investment Dispute Resolution.
In April 2024, Working Group III finalized
the draft statute for the establishment of an
advisory centre on investment disputes.
The text of the Investment Facilitation for
Development Agreement was made public
on 25 February 2024 by the ministers of
123 participating members of the World
Trade Organization. The status of
the text in relation to the Organization’s
architecture remains to be determined.
The UNCTAD World Investment Forum
2023 took place in Abu Dhabi on 16–20
October 2023 ahead of the twenty-eighth
Conference of the Parties (COP28). At the
Forum investment policymakers and experts
discussed urgent reforms of the IIA regime
in light of the climate crisis, resulting in the
launch of the UNCTAD Multistakeholder
Platform for IIA Reform (box II.3).
Work on diverse aspects of international
investment governance continued in a
number of international forums (table II.2).
Notably, Brazil – which holds the Group
of 20 Presidency in 2024 – identified
sustainable development in IIAs as one
of the key priorities for the Group of 20
Trade and Investment Working Group.
The events in the IIA track at the UNCTAD World Investment Forum 2023 brought together key actors in
IIA reform:
High-level IIA conference 2023 (18 October 2023). Investment policymakers and experts from
governments, international organizations, think tanks, academia and the private sector noted the challenges
that the current IIA regime may pose to climate action, explored options for aligning IIAs with climate
mitigation and adaptation goals, and called for the urgent reform of the stock of old-generation treaties.
Based on requests by participants to identify ways to fast-track investment treaty reform for sustainable
development and climate action, UNCTAD launched a Multi-Stakeholder Platform for IIA Reform.
International policy developments in investment facilitation (19 October 2023). The session united
key actors in investment facilitation from Governments, development partners, private sector representatives
and regional/international organizations, to analyse global trends and challenges in investment facilitation
policies for sustainable development. Speakers welcomed UNCTAD’s policy options for facilitating investment
in sustainable development, part of the IIA Issues Note Investment Facilitation in IIAs: Trends and Policy
Options (UNCTAD, 2023a).
Regional sessions (16–18 October 2023). Three sessions co-organized with key regional partner
organizations complemented the UNCTAD World Investment Forum IIA track and highlighted the role that
such organizations can play in shaping coherent international investment policies among their members:
•
D-8 Organization for Economic Cooperation – UNCTAD Guiding Principles for Investment
•
AfCFTA Investment Protocol: towards a new generation of investment policies in Africa
•
Islamic Development Bank–UNCTAD Investment Policy Principles
Source: UNCTAD.
Notes: For more information on the UNCTAD World Investment Forum, see https://
worldinvestmentforum.unctad.org/wif-events-programme?event=80. For information on the
UNCTAD Multi-Stakeholder Platform for IIA Reform, see https://investmentpolicy.unctad.org/news/
hub/1732/20231020-launch-of-multi-stakeholder-platform-for-investment-treaty-reforms.
Box II.3
UNCTAD World Investment Forum 2023 – IIA track highlights
World Investment Report 2024
Investment facilitation and digital government
28
Table II.2
Work relating to investment rule-making in international forums,
2023–2024
Source: UNCTAD, based on various sources.
Abbreviations: ICC = International Chamber of Commerce, IIA = international investment agreement, ISDS
= investor–State dispute settlement, OECD = Organisation for Economic Co-operation and Development,
OHCHR = Office of the United Nations High Commissioner for Human Rights, OIC = Organisation of Islamic
Cooperation, UNCITRAL = United Nations Commission on International Trade Law, UNIDROIT = International
Institute for the Unification of Private Law, WTO = World Trade Organization.
Organization/initiative
IIA-related coverage
Most recent outputs/events
Americas Partnership for Economic
Prosperity
Financing/investment for sustainable
infrastructure
East Room Declaration (November 2023)
Asia-Pacific Economic Cooperation
Sustainability considerations for investment
policy
San Francisco principles on integrating
inclusivity and sustainability into trade and
investment policy (November 2023)
Draft legally binding instrument on the
right to development
Right to regulate
Draft instrument presented to Human Rights
Council (September 2023)
Interaction with the scope of IIAs
Group of 20 Trade and Investment
Working Group
Sustainable development in IIAs
Second meeting (April 2024)
Investment facilitation in IIAs
UNCTAD-OECD Report mapping of
sustainable development and investment
facilitation provisions in IIAs by Group of 20
members and invited countries (April 2024)
Investment Facilitation for
Development, WTO
Investment facilitation
Joint Ministerial Declaration on the
Investment Facilitation for Development
Agreement by participating countries
(February 2024)
OECD Work Programme on the Future
of Investment Treaties
IIAs and climate change
OECD Investment Treaty Conference (March
2024)
IIA reform
OHCHR Special Rapporteur on the issue
of human rights obligations relating to
the enjoyment of a safe, clean, healthy
and sustainable environment
ISDS
Report on risks of ISDS for the right to a
healthy environment (July 2023)
Safe, clean, healthy and sustainable
environment
OIC Intergovernmental Experts Group
on ISDS
ISDS, permanent mechanism
Second expert meeting (September 2023)
OIC investment agreement
UNCITRAL Working Group III
ISDS reform
Model provisions and guidelines on
mediation, and codes of conduct for
arbitrators and judges adopted by the
UNCITRAL Commission (July 2023)
Draft statute of advisory center for ISDS
finalized (April 2024)
UNCTAD
IIA reform for sustainable development
First meeting of Multi-stakeholder Platform
for IIA Reform (February 2024)
Policy analysis, technical assistance,
consensus building
Capacity-building and technical assistance
on IIA reform provided for more than 90
countries
UNIDROIT and ICC Working Group
International investment contracts
(codification)
Second working group meeting (March 2024)
Chapter II
Investment policy trends
29
2. Trends in investor–State dispute settlement
The total ISDS case count reached 1,332, with 60 new arbitrations
initiated in 2023. About 70 per cent of them were brought
against developing countries, including three LDCs. Investors in
construction, manufacturing and extractives accounted for over
half of the claims.
a. New cases initiated in 2023
In 2023, 60 known treaty-based ISDS cases
were initiated – 48 cases at the International
Centre for Settlement of Investment
Disputes (ICSID) and 12 cases before other
forums (figure II.22). As some arbitrations
can be kept confidential, the actual number
of arbitrations filed in 2023 (and previous
years) is likely to be higher. In the past 10
years, the total number of ISDS cases has
more than doubled. There were fewer than
Figure II.22
Investor–State dispute settlement cases surpassed 1,300 at the end of
2023
(Annual number of known treaty-based cases)
Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024.
Notes: Information has been compiled from public sources, including specialized reporting services. UNCTAD
statistics do not cover investor–State cases that are based exclusively on investment contracts (State
contracts) or national investment laws, or cases in which a party has signalled its intention to submit a claim to
ISDS but has not commenced the arbitration. Annual and cumulative case numbers are continually adjusted as
a result of verification processes and may not match exactly case numbers reported in previous years.
Abbreviations: ICSID = International Centre for Settlement of Investment Disputes, ISDS = investor–State
dispute settlement.
20
40
60
80
100
1987
1993
1997
1995
2001
1999
2005
2003
2007
2015
2013
2011
2009
2017
2021
2019
2023
ICSID
Non-ICSID
Cumulative number
of known ISDS cases
1 332
World Investment Report 2024
Investment facilitation and digital government
30
600 known ISDS cases at the end of 2013,
against more than 1,300 at the end of 2023.
To date, 132 countries and one economic
grouping are known to have been
respondents to one or more ISDS claims.
The new cases in 2023 were initiated
against 37 countries and one economic
grouping (the European Union). About 70
per cent of them were brought against
developing countries, including LDCs
(Myanmar, Senegal and the United Republic
of Tanzania). Mexico was the most frequent
respondent, with 10 new known cases.
Honduras faced five cases, followed by
Argentina and the Bolivarian Republic of
Venezuela with three cases each. The largest
share of claims was directed at countries
in Latin America and the Caribbean, with
about half of the 60 cases. In regional terms,
between 1987 and 2023, respondent States
in Europe and in Latin America and the
9 Fossil fuel-related cases include those related to mining of coal and lignite; extraction of crude petroleum
and natural gas; power generation from coal, oil and gas; transportation and storage of fossil fuels; and
manufacture of coke and refined petroleum products.
Caribbean each accounted for about 30 per
cent of the total 1,332 known ISDS cases.
Developed-country claimants brought most
– about 75 per cent – of the 60 known
cases in 2023. The highest numbers of
cases were brought by claimants from the
United States (13), the United Kingdom (8)
and Switzerland (5). Between 1987 and
2023, claimants invoking the IIAs of five
countries – the United States, the Kingdom
of the Netherlands, the United Kingdom,
Germany and Spain – initiated about 45
per cent of the 1,332 known ISDS cases.
The ISDS cases filed in 2023 involved
disputes related to several economic
sectors (figure II.23). Construction,
manufacturing and extractive industries
accounted for over half of them, with 10
or more cases each. By the end of 2023,
investors had filed a total of 235 fossil
fuel-related cases,9 making such activities
Construction
Manufacturing
Mining, oil, gas and coal extraction
Transportation and storage
Financial and insurance services
Supply of electricity, gas and related
Real estate
WASH and waste management
Information and communication
Agriculture, forestry and fshing
Tourism and sports
12
10
10
7
6
6
5
3
2
2
2
Figure II.23
Construction, manufacturing, and extraction activities account for over
half of investor–State cases filed in 2023
(Number of known cases by sector)
Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024.
Note: Some cases concerned multiple sectors.
Abbreviations: WASH = water, sanitation and hygiene.
Chapter II
Investment policy trends
31
among those most frequently brought
to the ISDS system. Construction and
manufacturing activities, which commonly
involve lengthy and asset-intensive projects,
are typically prone to litigation risk.
About 70 per cent of investor–State
arbitrations in 2023 were brought under
BITs and TIPs signed in the 1990s or
earlier. In combination, the North American
Free Trade Agreement (NAFTA) (1992)
and the Agreement between Canada,
the United States and Mexico (USMCA)
(2018) were the IIAs most frequently
invoked in 2023. They gave rise to 11
cases based on so-called “legacy claims”
under the NAFTA. Five cases were based
on the ECT (1994), followed by the Central
America–Dominican Republic Free Trade
Agreement (FTA) (2004) with three cases
and the Association of Southeast Asian
Nations–Australia–New Zealand FTA
(2009) with two cases. Between 1987
and 2023, about 20 per cent of the 1,332
known ISDS cases invoked either the ECT
(162 cases) or the NAFTA (92 cases).
b. Outcomes of investor–State
dispute settlement
In 2023, ISDS tribunals rendered at least 49
known substantive decisions in investor–
State disputes, 28 of which were in the
public domain at the time of writing. Ten of
the public decisions principally addressed
jurisdictional and preliminary objections.
In four of them, tribunals dismissed such
objections (at least in part) and continued
the arbitration proceedings; in six of them,
tribunals upheld the objections and ceased
the proceedings for lack of jurisdiction or
admissibility. Another 18 public decisions
were rendered on the merits, with 9 holding
the State liable for IIA breaches and 9
dismissing all investor claims. In addition,
six publicly available decisions in annulment
proceedings at ICSID were rendered. In all
of them, the ad hoc committees of ICSID
rejected the applications for annulment.
By the end of 2023, at least 958 ISDS
proceedings had been concluded,
leading to different results (figure II.24).
Figure II.24
Outcomes of investor–State dispute settlement cases can differ greatly
Share of concluded cases, 1987–2023
(Percentage)
Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024.
a Decided in favour of neither party (liability found but no damages awarded).
Decided in favour of
State
38
Breach but no
damagesa
3
Discontinued
13
Settled
18
Decided in favour of
investor
28
World Investment Report 2024
Investment facilitation and digital government
32
Newly concluded IIAs increasingly
incorporate proactive commitments aimed
at improving the investment climate in the
contracting parties. They increasingly steer
towards investment facilitation commitments
(see chapter IV.C). There is growing interest
also in establishing continuous cooperation
mechanisms for investment activities,
sometimes geared towards specific
development objectives. The majority of
investment protection elements in newly
concluded IIAs also continued to include
refinements, clarifications and flexibility
mechanisms that aim to preserve countries’
right to regulate in the public interest.
IIA reform continues to advance at a slow
pace, accentuating the dichotomy in the IIA
regime between newer and older treaties.
Old-generation IIAs continue to dominate
the regime as much in terms of number of
IIAs in force as in coverage of FDI stock.
They also continue to form the basis of
most ISDS cases. Developing countries
– and LDCs in particular – are the most
disadvantaged by the slow pace of reform,
as their exposure to the risks of ISDS is
significantly higher than that of developed
economies. In addition, the dichotomy is
producing a progressively more complex
IIA regime with overlapping and sometimes
contradictory commitments, making it
difficult for countries to navigate, especially
developing ones and least developed ones.
UNCTAD’s Multi-Stakeholder Platform
for IIA Reform, established in 2023 as an
outcome of UNCTAD’s World Investment
Forum, aims to fast-track IIA reform and
underscores the importance of providing
an inclusive forum that promotes the
alignment of investment governance with
sustainable development priorities. Since
2012, UNCTAD has played a leading role in
facilitating IIA reform action by developing
core policy guidance tools. UNCTAD will
continue to work with all stakeholders to
build the capacity of country negotiators
and policymakers to ensure that the IIA
regime works for – rather than impedes
– sustainable development objectives.
* * *
Chapter III
Sustainable
finance trends
Regulations and standards are proliferating; greenwashing remains a challenge
Stock exchanges help drive
sustainability disclosure
The sustainable finance market grew but signs of a slowdown persist
More institutional investors
reported on sustainability
performance in 2023
Sustainable bond market
Sustainable fund market
Sustainable finance regulation
Sustainability disclosure
Global issuance, 2023: 4 trillion
2022
2023
63
94
Green
Social
Sustainability
Sustainability-
linked
587
154
109
22
Market value, 2023: $3 trillion
+7%
Net inflows
($ billions)
-89%
2018
2019
2020
557
2021
161
2022
63
2023
58 public pension funds and
sovereign wealth funds report…
50% growth in sustainable
finance measures, 2023
Developing economies:
60% of new policies
59% provide written guidance
31% enforce mandatory rules
…but only 17 target fossil
fuel divestment and renewables
investment
Top
100
58
42
17 countries adopted
new ISSB standards
Greenwashing: only 20%
of “green fund” portfolios are
exposed to climate-positive assets
provide training
66%
3%
12%
Chapter III
Sustainable finance trends
79
A. Sustainability-themed capital
market products
The sustainable finance market continues to grow. In 2023, the
value of sustainable investment products, encompassing bonds
and funds,1 reached more than 872 billion, a 3 per
cent rise from 2022, bringing the cumulative value of the market
since 2018 to more than 161 billion
in 2022 to $63 billion in 2023. Greenwashing remains the most
significant challenge to the sustainable fund market.
1. Sustainable bond markets
1 This chapter covers publicly traded sustainable finance products only, namely bonds and funds. It excludes
derivatives whose value may be unrealized, as well as voluntary carbon markets, whose value - for now -
remains insignificant
Global issuance of green, social,
sustainability and sustainability-linked
bonds (box III.1) has grown fourfold since
2018. As a share of global bond markets,
the sustainable segment represented 5
per cent in 2023, unchanged from 2022.
This consistent share as well as record
levels of outstanding bonds and increased
annual issuance of sustainable bonds signal
the rising importance of such bonds as
a mechanism for financing sustainable
development. However, the near-record
levels of issuance of green bonds and
sustainability-linked bonds were offset by
falls in issuance of social and sustainability
bonds – partly related to the phasing out of
social and sustainability bonds related to the
coronavirus disease (COVID-19) pandemic
(generally referred to as COVID-response
bonds) – which contributed to a slowing in
the five-year compound annual growth rate
of the sustainable bond segment (figure III.1).
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Box III.1
What is the difference between green, social, sustainability and
sustainability-linked bonds?
All four types of sustainable bonds are fixed-income securities designed to target sustainable outcomes while offering a
financial return to investors. Green, social and sustainability bonds are generally tied to the financing of a specific project or
use of proceeds, whereas sustainability-linked bonds instead integrate in their design a level of sustainability performance
(such as greenhouse gas (GHG) emissions).
Green bonds raise funds specifically for projects with environmental benefits, such as renewable energy or pollution
prevention, with issuers providing transparency on how the proceeds are used. These bonds are typically linked to assets
and backed by the issuer’s balance sheet. Historically, the focus has been on direct financing of physical assets and
projects and indirect financing thereof (e.g. loans to suitable assets or projects).
Social bonds raise funds for projects with positive social outcomes, such as education, health care, affordable housing
and employment generation, especially for underserved or marginalized communities. Issuers of social bonds also commit
to transparency regarding the use of proceeds and the impact of the projects funded, ensuring that investors can see
the social benefits derived from their investments.
Sustainability bonds combine elements of both green and social bonds to finance projects with both environmental and
social benefits. The proceeds from these bonds are used to fund a diverse range of initiatives, such as renewable energy
projects, water conservation, sustainable agriculture, affordable housing and health-care facilities. Sustainability bonds are
also designed for investors looking to support comprehensive projects that contribute to the Sustainable Development
Goals. Like green and social bonds, issuers of sustainability bonds provide transparency and reporting on the allocation
of proceeds and the impact of the projects financed, ensuring accountability and alignment with sustainability objectives.
Sustainability-linked bonds tie the cost of financing to key performance indicators of sustainability. These bonds
differ from green, social and sustainability bonds in their structure and objectives. Whereas traditional green, social
and sustainability bonds focus on financing or refinancing projects that have specific environmental or social benefits,
sustainability-linked bonds are uniquely characterized by their performance-based approach. The financial or structural
characteristics of the bond (such as the interest rate) are directly linked to the issuer’s achievement of predefined
sustainability targets. Transparency and credibility are maintained through regular reporting on progress towards the
targets and through third-party verification to ensure objectives are met, making these bonds a powerful tool for promoting
sustainability in finance.
Sources: UNCTAD and Climate Bonds Initiative.
Figure III.1
The sustainable bond market recovered in 2023, aided by green
bond growth
Global sustainable bond issuance by year and by category
(Billions of dollars and percentage year-on-year growth)
Source: UNCTAD, based on information from Climate Bonds Initiative.
227
358
716
1 015
843
872
587
154
109
22
+27%
+58%
+100%
+42%
-17%
+3%
+15%
-7%
-31%
+83%
2018
2019
2020
2021
2022
2023
Green
Social
Sustainability Sustainability-
linked
Total sustainable bond market
25%
CAGR
2018−2023
$4 trillion
cumulative
issuance since
2018
Chapter III
Sustainable finance trends
81
Issuers based in Europe account for 46
per cent of the global market, with 2023
issuance up slightly from 2022 (figure III.2).
The Asia-Pacific region accounted for a
third of total issuance, a rise of nearly 40 per
cent from 2022. Issuers in North America
accounted for 11 per cent of the global
market in 2023. Supranational issuance,
which is an important source of sustainable
bonds, fell to 106
billion in 2022, a drop of 77 per cent.
Reflecting this regional distribution, the
euro is the most common currency used
for sustainable debt issuance, accounting
for over 40 per cent of total cumulative
issuance to date (in equivalent United
States dollars). This is followed by the
dollar (30 per cent), renminbi (9 per cent)
and pound sterling (4 per cent), with the
remaining 17 per cent in other currencies.
Developing countries that issue bonds in
major reserve currencies while generating
revenues in local currencies encounter
currency mismatch risks. Investors,
especially large institutional ones, often
have better access to a variety of financial
instruments such as futures, options or
swaps, allowing them to hedge against
these currency risks. However, this
hedging can lead to demand for higher
yields to compensate for the additional
risks, ultimately increasing the costs of
financing. The involvement of international
development finance institutions such as
the World Bank, the International Finance
Corporation and regional development
banks can be crucial in mitigating
these risks and reducing the financing
costs linked to currency mismatches in
bond issuances (UNCTAD, 2023f). In
addition, deepening local capital markets
and issuing debt instruments in local
currencies can also be effective, ensuring
that sustainable bonds make a greater
contribution to sustainable outcomes.
In terms of cumulative issuance (outstanding
debt), supranational issuance remains
larger than any single country and thus
an important generator of finance for
sustainable projects. As a group, developing
countries remain underrepresented in global
sustainable bond markets, even compared
with traditional bond markets, although
China and Chile rank among the top 15
issuers for cumulative sustainable bond
issuance, with 53 billion,
respectively, at the end of the third quarter
of 2023. Their sustainable bond issuance
has been helped by strong policy support
Figure III.2
European issuers of sustainable bonds lead the market
Global sustainable bond issuance by region, 2023
(Billions of dollars and percentage change from 2022)
Source: UNCTAD, based on information from Climate Bonds Initiative and Environmental Finance.
a Percentage change not available because data source and coverage for 2022 differed.
Asia-Pacifc
North America
Latin America and the Caribbean
Supranational
Africaa
288
Europe
405
97
54
24
4
+0.75%
+39%
-28%
+74%
-77%
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for the growth of local and international
markets (Climate Bonds Initiative, 2023).
Financial and non-financial corporate entities
were the largest issuers of sustainable
bonds in 2023, followed by government-
backed entities (figure III.3). Among the
latter, public pension and sovereign wealth
funds (PPFs and SWFs) have become more
active issuers of sustainable debt as well
as more active buyers. Sovereign issuers,
the next largest issuer type, account for
one tenth of total cumulative issuance of
sustainable bonds but about two thirds of
the overall debt market, suggesting that
there is significant potential to expand
the share of sovereign debt in sustainable
bond markets (Climate Bonds Initiative).
a. Green bonds
The value of green bonds issued grew 15
per cent to 509
billion in 2022, representing two thirds of
sustainable bond issuance. Looking at
use of proceeds categories, this strong
growth – reversing 2022 trends – was
mainly driven by increases in the energy,
transport, information and communication
technology, waste and industry sectors
(figure III.4). The increase was also
supported by a recovery in sustainable
bonds issued by financial corporates to
172 billion, which was just short of the
2021 high point of 120 billion in 2023, up from 92 billion (figure III.5).
In a year of declining values for some
sustainable equity investments, the rising
demand for green bonds in 2023 could
be the result of investors looking for lower-
risk routes to gain exposure to sustainable
sectors and/or emerging markets, in
addition to a general rebalancing towards
fixed income in an environment of higher
interest rates. Research by the Climate
Bonds Initiative has shown that investors
are willing to absorb a “greenium” (lower
yield and/or higher price) that is usually
associated with green bonds, indicating
the strength of demand for green versus
traditional bonds (Climate Bonds Initiative,
2021). On the supply side, the rise in
sovereign issuance may be helping
countries to diversify their investor base
and provide credibility to green policies.
Figure III.3
Corporate issuers dominated sustainable bond issuance in 2023
Global sustainable bond issuance by issuer type
(Billions of dollars)
Source: UNCTAD, based on information from Climate Bonds Initiative.
Green
Sustainability-linked
Social
Sustainability
Non-fnancial corporate
172
22
13
2
Financial corporate
163
25
1
17
Government-backed entity
73
91
11
Sovereign
120
25
7 6
Development bank
48
15
10
Local government
18
12
18
Chapter III
Sustainable finance trends
83
b. Social, sustainability and
sustainability-linked bonds
The values of both social and sustainability
bond issuance both fell in 2023. Social
bonds issuance declined by 7 per cent,
from 153 billion, while that
of sustainability bonds fell by 30 per cent,
from 109 billion. Despite
the growing awareness of climate and
environmental sustainability issues and the
opening of more investment opportunities
in social and sustainable projects, both
types of bonds continued falling to pre-
pandemic levels of issuance (figure III.6).
The fall is likely directly related to recovery
Figure III.4
Energy, transport and buildings accounted for 75 per cent of the green
bond market in 2023
Global green bond issuance by sector
(Percentage)
Source: UNCTAD, based on information from Climate Bonds Initiative.
Energy
Transport
Green buildings
Land use and marine resources
Water
Waste
Climate adaptation and resilience
Information and communication
technology
Industry
35
22
18
6
6
5
4
2
2
Figure III.5
Sovereign issuance of green bonds saw the largest gains in 2023
Green bond market size by type of issuer
(Billions of dollars and percentage change from 2022)
Source: UNCTAD, based on information from Climate Bonds Initiative.
+35%
+13%
+45%
-26%
+2%
–
Non-financial corporate
172
Financial corporate
163
Sovereign
120
Government-backed entity
73
Development bank
48
Local government
12
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84
from the pandemic, during which the
value of COVID-response bonds surged
– momentum that has now subsided.
Nevertheless, together these two categories
still represent 38 per cent of cumulative
sustainable bond issuance since 2018.
In contrast, the annual issuance of
sustainability-linked bonds increased 83
per cent, from 22
billion in 2023. This continues a constant
annual increase since the introduction of
the first such bond by Enel (Italy) in 2019,
bringing cumulative issuance of such bonds
to 1.5 trillion
cumulative
issuance since
2018
-7%
combined CAGR
2020–2023
Chapter III
Sustainable finance trends
85
2. Sustainable funds
a. Market trends
The sustainable fund market continued to
expand in 2023, albeit at a slower pace.
The number of sustainability-themed funds
worldwide reached 7,485, up 7 per cent
from 2022. These funds remain highly
concentrated in Europe and the United
States, representing 73 per cent and 9 per
cent of the global market, respectively. The
share of the market in the rest of the world
increased slightly, from 16 per cent to 19 per
cent, with growth witnessed in Australia and
Canada and in developing Asia (figure III.7).
The total assets of sustainable funds
reached almost 2.5 trillion, or 85 per cent of the global
market. The value of sustainable funds in
the United States increased from 324 billion in 2023,
representing about 11 per cent of the global
market. The market share in the rest of
the world remains at about 5 per cent.
Although the increasing number and value of
sustainable funds indicate continued growth,
sustainable funds faced a challenging
environment in 2023. High interest rates,
lagging performance, lukewarm demand and
rising concerns about greenwashing issues
all contributed to growing uncertainties in
the market. As a result, the number of new
launches has continued to drop, from a
record high of 240 in the fourth quarter of
2021 to 121 in the fourth quarter of 2023.
In total, 565 launches were recorded in
2023, down from 682 in 2022. The decline
was more than offset by the restructuring of
conventional funds into sustainable ones,
in particular in Europe, leading to continued
expansion of the universe of sustainable
funds. Sustainability-themed funds remain
an important tool to tilt capital markets
Figure III.7
The market value of sustainable funds recovered in 2023, reaching a
record high
(Billions of dollars and number)
Source: UNCTAD, based on Morningstar data.
277
262
302
389
428
673
1 460
2 231
2 078
2 492
49
51
63
82
89
140
236
74
357
286
324
40
56
68
91
106
83
112
1 714
7 485
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Europe
United States
Rest of the world
Number of sustainable funds
World Investment Report 2024
Investment facilitation and digital government
86
towards more sustainable investment and
thus direct capital to sectors and areas that
can contribute to sustainable development.
Net investment flows to sustainable funds
also continued to drop, from 63 billion in 2023, marking
a significant decrease from the record
of 76 billion, nearly halved from the 50 billion from
European conventional funds, the European
sustainable fund market has remained
relatively resilient, demonstrating continued
interest by investors in this asset category.
The investment momentum in sustainable
funds in the United States reversed
completely in 2023. Following a surge in
inflows in 2020 and 2021 (472 billion, respectively), new
inflows plummeted to only 13
billion. In addition to dismal returns,
persisting greenwashing concerns and a
backlash against sustainable investment
strategies in the United States market
(see section C.2) also contributed
to a chilling effect on demand.
In terms of financial performance,
sustainable equity funds underperformed
relative to conventional funds for the second
consecutive year (Henry and Furdak,
2024). Article 9 funds, the “dark green”
products known for their commitment
to specific sustainable investment
objectives and substantive approach to
sustainability integration under the European
Union Sustainable Finance Disclosure
Regulation (SFDR), underperformed their
benchmark by more than 6 per cent in
2023. Article 8 funds, the “light green”
products that take environmental or social
sustainability into consideration in asset
allocation, also underperformed, but by
a narrower margin of less than 1 per
cent. Only Article 6 funds, which do not
incorporate sustainability considerations
into their investment strategies beyond
basic ESG risk assessments, nearly
matched their benchmarks.
Figure III.8
Net flows to sustainable funds continued their slide in 2023
(Billions of dollars)
Source: UNCTAD, based on Morningstar data.
a The figure for 2022 has been updated since its publication in WIR 2023.
28
24
33
72
60
159
352
557
161
63
2014
2015
2017
2016
2018
2019
2020
2021
2022a
2023
Chapter III
Sustainable finance trends
87
This disparity in performance may be
attributed to short-term market dynamics
that work against some popular sectors
in sustainable investments. Renewable
energy, for example, has been particularly
affected by elevated interest rates, since
the sector is particularly characterized by
higher upfront costs and lower operational
expenses over time. Such short-term
fluctuations should not overshadow
the long-term benefits of sustainable
investing, underscoring the importance
of taking a long-term perspective.
b. The greenwashing challenge
As sustainable investment products gain
popularity, concerns about greenwashing
are also growing. Greenwashing poses
the most significant challenge to the
sustainable fund market, primarily because
of the lack of specific product standards
for sustainable funds, including in leading
markets. UNCTAD analysis of global green
funds published in WIR 2023 revealed
that their average net exposure to climate-
positive assets (low-carbon assets minus
total fossil fuels) is slightly more than 20
per cent, casting doubt on their proclaimed
green credentials. According to Morningstar
data, just over 20 per cent of Article 9 funds
reported minimum sustainable investments
aligned with the European Union taxonomy
between 0 and 10 per cent, and only 8 per
cent target taxonomy-aligned investments
of at least 10 per cent. Meanwhile, only
4 per cent are completely free from oil
and gas investments, and 15 per cent
allocate more than 5 per cent of their
assets to oil and gas as of December 2023
(Bioy et al., 2024). These figures suggest
that, even among products regarded
as “dark green”, a substantial portion
might not live up to their sustainability
claims. It is not surprising that concerns
about greenwashing have dampened
investor demand, partly explaining the
loss of momentum in investment within
the European market and leading to
outflows in the United States market.
The persistence of greenwashing has
demonstrated that more systemic efforts
are needed to tackle the issue. In response
to concerns about the implementation
of the SFDR, in December 2023 the
European Union Commission launched a
consultation with the industry and other
stakeholders on a general review of the
regulation, focusing on bringing more
clarity and credibility to the sustainable
fund market so as to tackle greenwashing
concerns. This consultation addresses
critical issues such as the interaction with
the European Union taxonomy and other
sustainable finance legislation, potential
changes to disclosure requirements and
the establishment of a categorization
system for financial products. In parallel, the
European Supervisory Authorities published
a final report amending the draft Regulatory
Technical Standards for the Delegated
Regulation supplementing the SFDR. The
report proposes additional social indicators
for disclosing the principal adverse impacts
of investment decisions on the environment
and society, new product disclosure
requirements regarding GHG emissions
reduction and improvements to disclosures
on the “do no significant harm” principle.
These measures are designed to bring more
clarity to the SFDR and its implementation
standards and enhance its consistency
with the European Union Taxonomy
Regulation with the aim of improving its
robustness and effectiveness in addressing
greenwashing. (For further discussion
of policy responses to greenwashing
in other countries, see section C.)
The complexity of defining and combating
greenwashing underscores the critical need
for clear, verifiable sustainability disclosure
rules and effective enforcement to ensure
market integrity. In addition, it is essential
to establish well-defined rules and product
standards that clearly outline the criteria
required for a product to be labelled as
sustainable. Moreover, reliance on self-
assessment should be replaced by external
auditing and third-party ratings to ensure
market transparency and credibility.
Exposure
to climate-
positive assets
only 20 per
cent, casting
doubt on green
credentials
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Investment facilitation and digital government
88
B. Sovereign and public institutional
investors
Institutional investors made progress on sustainability performance
and
compliance
with
international
sustainability
reporting
standards in 2023. Since UNCTAD began monitoring in 2019, the
number of these funds that report has grown from one in four to
almost three in five. Nevertheless, this means that a significant
number of these funds still do not disclose any information on their
sustainability performance. SWFs and PPFs, with their long-term
investment horizons, continued to integrate sustainability into their
investment strategies and improve their climate risk management.
Yet, a majority of funds still have not committed to net zero in
their investment strategies. Both SWFs and PPFs must comply
with a range of reporting standards and obligations and have tried
to keep pace with the rapidly evolving international landscape for
sustainability reporting, especially on climate action.
With assets of more than $30 trillion at
the end of 2023 – a significant portion
originating from developing economies –
SWFs and PPFs have received growing
attention as potential sources of investment,
especially in sectors relevant to the
Sustainable Development Goals and in
developing countries. As the world’s largest
institutional asset owners, some SWFs and
PPFs have substantial market influence
through their allocation decisions and
strategic influence over the investments
they hold through active ownership. PPFs
and SWFs also differ from other investors
in terms of their liabilities, which are
generally long term, and their mandates,
which are often aligned with public policy
objectives, such as achieving net zero.
However, these funds are not always
required to disclose and report on their
governance or sustainability performance.
Robust regulatory and policy frameworks
are needed to ensure that institutional
investment can contribute to the sustainable
development agenda, especially in
developing countries. For many funds,
fiduciary obligations still limit their
exposure to sustainable sectors and
to developing countries, which have a
higher risk premium. Addressing this
challenge may require education and
training for funds about markets and
opportunities in developing countries.
UNCTAD analysis of the top 100 institutional
asset owners identified 70 PPFs and
30 SWFs, representing more than $24
trillion in assets under management in
2023, or 80 per cent of global PPF and
SWF assets. More than two thirds of the
top 100 are from developed economies;
SWFs are predominantly based in
developing countries (figure III.9).
In 2023, some 58 of them reported on
their sustainability performance, either in a
dedicated sustainability report or in annual
financial reporting. Among these funds,
PPFs are, in general, relatively better at
disclosing sustainability-related information
Chapter III
Sustainable finance trends
89
than SWFs (60 per cent of PPFs disclose,
against just over 50 per cent of SWFs).
Disclosure is strongly linked to the regulatory
environment in a fund’s jurisdiction. Europe
stands out, where 90 per cent of the funds
report on sustainability performance, a figure
related to the more comprehensive reporting
requirements of the European Union.
Among the funds that report, Canadian
pension funds make up the majority of
those in North America, again reflecting
the relatively advanced regulatory
environment in that country. Conversely,
2 Economist Intelligence Unit (2023), Anti-ESG sentiment in the US weakens ESG markets, 29 June, https://
www.eiu.com/n/anti-esg-sentiment-in-the-us-weakens-esg-markets.
3 UNCTAD Sustainable Finance Regulation Platform: http://gsfo.org.
some funds in the United States recently
experienced pushback against their
sustainable investment strategies and
sustainability disclosure at the State level
as well as from public campaigning.2
Among the top 100, developing-country
funds tend to report on sustainability
performance less than developed-country
funds. A majority of funds in the emerging
Asia-Pacific markets do report, but even
in countries that have relatively advanced
policy environments, such as China
and Singapore (see section C),3 several
Figure III.9
The top 100 sovereign wealth funds and public pension funds manage
24
trillion
Middle East
11
Emerging
Asia-Pacifc
9
Developed Asia-Pacifc
4
North America
2
Europe
3
Africa
1
Middle East
2
Emerging Asia-Pacifc
7
Developed Asia-Pacifc
12
North America
33
Europe
15
Africa
1
Developed-
economy
funds
69
Developing-
economy
funds
31
PPFs
70
SWFs
30
World Investment Report 2024
Investment facilitation and digital government
90
funds in the top 100 do not report. This
reflects some implementation challenges
and weaker disclosure obligations in
these jurisdictions. In the Middle East, a
region with many SWFs, fewer than one
in three SWFs – and no PPF – reports
sustainability-related information, indicating
that policy measures to strengthen
sustainability reporting would be helpful.
Despite advances, the dichotomy in
disclosure persists. Forty-two funds
still do not report on their sustainability
performance. This group includes almost
half of the SWFs in the top 100, with a
noticeable concentration in the Middle East
and emerging Asia. In the case of PPFs, the
tendency not to report is skewed towards
North America. This is partly the result of the
weight of these regions in the top 100 but
also likely related to regulatory requirements
that are weaker than in Europe.
At the same time, the funds that do report
exhibit some of the most advanced policies
on sustainability integration. They are making
sustained efforts to address sustainability
risks, both for the material threat to their
business models and out of an ethical
stance towards future generations. This
group of asset owners comprises many
first movers, several of which have been
addressing sustainability issues for many
years already and now employ, for example,
complex climate modelling analysis and
valuation models and rigorous screening
of investments. The following analysis is
based on the public disclosures of the
58 reporting funds in the top 100.
1. Sustainability integration strategies and practices
Most reporting funds articulate a clear
vision for sustainability integration and have
implemented policies and guidelines to
manage sustainability risk, such as specific
strategies on climate change mitigation.
Many funds have also created dedicated
sustainable investment teams. Yet, despite
the existence of such climate strategies,
only one in three of these funds reported a
target for fossil fuel divestment in 2023, a
share unchanged from the preceding year.
a. Investment strategies
Sustainability risk has been driving PPF and
SWF investment strategies and decision-
making for several years. In 2023, 9 out
of every 10 funds reported the general
integration of sustainability considerations
in their investment strategies (figure III.10).
Four out of every five funds reported the
integration of social and governance
dimensions in their investment strategies by
taking into account issues such as labour
rights, executive pay, tax contributions
and board diversity. A similar number of
funds also reported impact strategies,
especially on the environmental side;
these can involve sectoral targeting,
such as renewables, and capital market
instruments, such as green or sustainability
bonds. Less than half mentioned the
integration of the Sustainable Development
Goals in their investment decisions.
Another way funds integrate a sustainability
perspective in their investment strategies
is through active ownership. In 2023,
almost 80 per cent report engagement with
their investees (figure III.11). This enables
funds to influence the behaviour of their
portfolio holdings through discussion or
voting for policy changes. While more than
two thirds of funds reported providing
guidance on ESG criteria and Goals criteria
to their asset managers and investees,
less than a quarter offered their asset
managers training on these topics.
58 of top 100
PPFs and SWFs
reported on
sustainability
performance
in 2023
Chapter III
Sustainable finance trends
91
Figure III.10
Sustainability shapes investment strategies used by funds in 2023
(Percentage of reporting funds)
Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022.
Note: Funds can report more than one strategy.
Abbreviation: ESG = environmental, social and governance.
a Includes issues related to child labour, diversity and others.
b Includes issues related to to executive pay, board diversity, tax and others.
c Includes ESG-oriented sectors (e.g. renewable energy, green housing) or capital market instruments
(e.g. green bonds, ESG funds) or markets (emerging and developing economies) in ESG investment.
General integration of sustainability
considerations
Integration of social dimensiona
Integration of governance dimensionb
Impact investmentc
Negative screening or exclusion
Positive or best-in-class screening
Integration of Sustainable
Development Goals considerations
91
84
80
79
61
59
45
Figure III.11
Institutional investors are active owners of their assets
(Percentage of reporting funds)
Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022.
Abbreviation: ESG = environmental, social and governance;
Active engagement activities
Guidance on ESG (and Sustainable
Development Goals) provided to
asset managers or investees
Voting policy that takes ESG factors
into account
Training provided for asset managers or
investees
79
68
63
23
World Investment Report 2024
Investment facilitation and digital government
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b. Climate-related actions
Reporting funds demonstrate significant
engagement on climate change mitigation,
with 9 out of 10 funds having developed
specific strategies addressing climate
issues. This is partly the result of regulations
and fund commitments in this area and
partly because of the nature of climate-
related reporting metrics available to
funds. Nonetheless, while this commitment
is significant, the actions taken vary in
depth and potential effectiveness and
point to areas for further development.
Funds are more likely to set targets for
investment in renewable energy than to
define a target for divestment from fossil
fuels, with just under a third of funds
doing both (figure III.12). Among those
that do have targets for both, funds
in Europe, particularly those in Nordic
countries, take the lead with a dual strategy
that includes significant investments in
renewable energy and assertive fossil fuel
divestments. This approach aligns with the
comprehensive climate policies in Europe
and reflects strategic diversification. This
is also true for hydrocarbon funds, such
as Norges Bank Investment Management
(Norway), which are transitioning towards
more sustainable energy solutions.
Despite robust investments in renewable
energies, PPFs in North America
take varied approaches to fossil fuel
divestment, influenced by diverse state-
level policies and public opinion. PPFs,
such as the Healthcare of Ontario Pension
Plan (Canada) and the New York State
Common Retirement Fund (United States),
lean heavily towards renewable energy
investments, but these funds are less
proactive in divesting from fossil fuels. This
difference reflects the balancing act between
sustainable commitments and funds’
fiduciary duty to ensure stable returns.
Middle Eastern and African funds, such
as Mubadala (United Arab Emirates),
which receives funding from sources
in the hydrocarbons industry, and the
Public Investment Corporation (South
Africa), which is linked to an energy sector
still dependent on coal, temper their
approach. The result is a careful balance
between exploring renewable energy
investments and maintaining stakes in
fossil fuels. This nuanced approach reflects
the complex interplay between these
Figure III.12
Only 30 per cent of funds have targets for renewables investment and
fossil fuel divestment
Funds by type of target
(Number)
Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022.
Target for investment
in renewable energy
22
Target for divestment
from fossil fuels
2
Targets for both
17
No targets for either
17
Chapter III
Sustainable finance trends
93
regions’ economic priorities, including
employment in fossil fuel industries, and
their sustainable development objectives.
Among funds that have committed to
achieving net zero or carbon neutrality,
most have set the target year of
2050. Some have set more ambitious
targets, while others, particularly those
associated with hydrocarbon sectors,
have set later targets, such as 2060.
Three quarters of reporting funds have
adopted sophisticated, systematic climate
risk assessment strategies. This signifies
a commitment by a majority of reporting
funds to integrate climate risk into their
risk management frameworks, aiming
to mitigate vulnerabilities and exposure
to transitional and physical risks, and to
explore new opportunities (table III.1). North
American funds, such as the California
State Teachers’ Retirement System, are
pioneers in climate scenario analysis,
exploring how various global warming
scenarios could influence its portfolio. SWFs
in oil-rich regions often integrate broader
risk management approaches, possibly
because of their exposure to the fluctuating
dynamics of the energy sector amid global
decarbonization efforts. Sectoral analysis
is gaining traction among European funds,
which scrutinize specific industries for
climate-related vulnerabilities, allowing for
more targeted risk mitigation efforts. About
20 per cent of funds also conduct climate
stress testing of their investment portfolio.
Table III.1
Most funds systematically assess sustainability and climate risk
Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022.
Note: Number of reporting funds = 41.
Category
Number of funds
Integrated risk management
25
Climate scenario analysis
20
Sectorial analysis
7
Stress testing
7
Portfolio testing
6
2. Sustainability disclosure
a. Reporting frameworks and
standards used by funds
In 2023, PPFs and SWFs maintained
their commitment to the standardization
of sustainability reporting. The Task
Force on Climate-related Financial
Disclosures (TCFD) and the Principles
for Responsible Investment are the two
main frameworks that funds use for their
sustainability reporting (figure III.13).
Following closely are the new International
Financial Reporting Standards (IFRS)
Sustainability Disclosure Standards set by
the International Sustainability Standards
Board (ISSB), the Global Reporting
Initiative (GRI) and the Sustainability
Accounting Standards Board (SASB).
The growing adoption of the new ISSB
standard, which incorporates the elements
of the TCFD standard, represents a
significant development in SWF and
PPF sustainability reporting, showing the
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potential rise of the standard as a global
baseline for sustainability disclosure.
Nonetheless, the variety of frameworks
and standards in use shows that further
convergence will be beneficial for
enhancing comparability and consistency
in disclosure among SWFs and PPFs.
b. The main reporting metrics
used for sustainability
disclosure
While almost 95 per cent of reporting
funds have put in place policies on
sustainability, fewer funds – 64 per
cent – clearly disclose the metrics or
methodologies they use to measure
sustainability performance and impact.
Reporting funds mainly use 16 indicators to
measure their sustainability performance,
categorized into five reporting areas (figure
III.14). Climate and GHG emissions are the
main area of disclosure and measurement:
among the 37 funds reporting on
indicators, more than 60 per cent have
set specific ones for GHG accounting.
The indicators are categorized into three
types: absolute emissions, emissions
intensity and total carbon footprint.
These calculations are typically applied
to portfolios: funds generally monitor
scope 1 and scope 2 GHG emissions (in
tons of carbon dioxide equivalent), with
a small minority of funds going further
and reporting on scope 3 emissions.
For those funds that use emissions
intensity metrics, the largest number use
the carbon footprint indicator, describing
the total carbon emissions for a portfolio.
Nearly half use the TFCD-recommended
weighted average carbon intensity, which
indicates the portfolio’s exposure to carbon-
intensive companies, expressed in tons
of carbon dioxide equivalent per million
dollars of revenue. It assesses a portfolio’s
carbon efficiency by considering each
investment asset’s revenue-based emissions
intensity and its weight in the portfolio.
Some funds consider operational emission
reduction actions of invested companies,
including energy consumption, renewable
energy usage and operational carbon
footprint calculation. However, few funds
incorporate science-based climate targets
into their metrics system. Regarding
environmental protection and resource
consumption, specific indicators include
Figure III.13
Most funds use a global sustainability reporting standard or framework
(Number of reporting funds)
Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2022.
a CDP was formerly known as the Carbon Disclosure Project.
Task Force on Climate-Related Financial
Disclosures
Principles for Responsible Investment
International Sustainability Standards
Board
Global Reporting Initiative
Sustainability Accounting Standards
Board
Corporate Sustainability Reporting
Directive
CDPa
European Union Taxonomy
33
22
16
13
12
5
5
4
Chapter III
Sustainable finance trends
95
expenditure on environmental protection
by portfolio companies, water withdrawal
rates and whether portfolio companies
have a responsible waste management
system. Regarding corporate governance,
funds predominantly use ESG and
sustainability-related metrics; company
diversity and issues such as employee
training are also reported. In general, social
areas are underreported compared with
environmental and climate areas. Social
issues are typically considered within the
broader context of sustainability, with
only one fund specifically addressing the
social impact of portfolio companies.
To ensure the quality of sustainability
reporting, third-party verification or auditing
is important, in the same way that financial
reporting is audited. Yet only one in four
reporting funds use third-party verification.
Despite its importance for ensuring credibility
and trust (and combating greenwashing),
auditing is currently voluntary. Nevertheless,
the International Auditing and Assurance
Standards Board (IAASB) is developing
the International Standard on Sustainability
Assurance (ISSA) 5000, General
Requirements for Sustainability Assurance
Engagements, which will be issued before
the end of 2024. It is intended to serve as a
general standard suitable for any assurance
purpose. According to the IAASB, it will
apply to sustainability information reported
across any sustainability topic and prepared
under multiple frameworks, including
the recently released IFRS Sustainability
Disclosure Standards S1 and S2.
Figure III.14
SWFs and PPFs reported sustainability metrics in five areas in 2023
Source: UNCTAD, based on latest fund reporting.
Abbreviations: ESG = environmental, social and governance, GHG = greenhouse gas, PPF = public pension
fund, SWF = sovereign wealth fund, tCO2e = tons of carbon dioxide equivalent.
Reporting indicator
Number of
funds reporting
Examples
• Carbon footprint of investments
• Scope 1 and 2 GHG emissions of investments
• Carbon intensity (no specifc calculation methods)
• Scope 3 GHG emissions of investments
• Weighted average carbon intensity
• Absolute emissions of investments (no scope)
• Total portfolio emissions (tCO2e)
• Portfolio carbon intensity (tCO2e/$ million of portfolio value)
• Portfolio weighted average carbon intensity (tCO2e/$ million of revenue)
• Electricity production from renewable energy sources
• Fossil fuel revenue
• Climate-neutral and circular internal business operations
• Number of portfolio companies with science-based net-zero
2050 target
• Waste management, environmental performance of properties
• Water withdrawal
• Sustainability considerations in investments
• Investments in Sustainable Development Goals and climate solutions
• Exposure to fossil fuels
• Climate risk and climate stress test
• Emissions reduction of operations
• Science-based climate target
• Work-related injuries, net new hires and employee engagement
• Gender, age, ethnic and cultural background, and work capacity
• ESG/sustainability related
• Others
• Diversity related
13
7
5
4
4
3
5
4
3
8
6
3
7
7
3
36
GHG accounting
17
Climate risk and emissions reduction
17
Corporate governance-related targets
12
Environment-related targets
5
Sustainable investment targets
• Environmental protection and resource consumption
5
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C. Policies, regulations and
standards
In 2023, the IFRS Foundation launched the Sustainability
Disclosure Standards, which have attracted significant interest
globally. The emergence of international standards, including the
IFRS and European standards, has created spillover effects that
affect developing economies and their small and medium-sized
enterprises (SMEs). Progress has been made in enhancing the
interoperability of international standards. Stock exchanges also
continue to play a vital role in the adoption and implementation
of sustainability reporting. Governments from both developed
and developing economies have accelerated sustainable finance
policymaking, focusing on leveraging capital markets for climate
transition. In 2023, 26 of the 35 economies tracked by the UNCTAD
Global Sustainable Finance Observatory introduced more than 90
measures dedicated to sustainable finance, marking a significant
increase from the 63 measures adopted in 2022. Countries are
integrating
sustainable
finance
into
national
development
strategies
more and more, prioritizing policy impact and effectiveness.
1. International sustainability reporting standards
a. New standards
June 2023 saw the launch of the first
two of the IFRS Sustainability Disclosure
Standards by the ISSB, after a global
consultation process. The International
Organization for Securities Commissions
(IOSCO) issued a statement endorsing the
standards and called on its 130 member
jurisdictions, which regulate more than 95
per cent of the world’s financial markets,
“to consider ways in which they might
adopt, apply or otherwise be informed by
the ISSB standards within the context of
their jurisdictional arrangements, in a way
that promotes consistent and comparable
climate-related and other sustainability-
related disclosures for investors.” This
statement has been received as a strong
signal from market regulators to encourage
the adoption of the ISSB standards.
The ISSB, created in 2021 by the IFRS
Foundation, develops standards that
form a global baseline for disclosure of
sustainability-related risks and opportunities,
to meet the needs of investors and other
capital market participants. It was formed
in response to strong demand from capital
market participants and international
policymakers, including the members of
the Group of Seven, the Group of 20 and
the Financial Stability Board, to harmonize
and simplify the landscape of investor-
oriented sustainability disclosure standards.
Chapter III
Sustainable finance trends
97
The first standard, IFRS S1 General
Requirements for Disclosure of
Sustainability-related Financial Information,
sets out a requirement for an entity
to disclose information about all risks
and opportunities related to material
sustainability that could reasonably be
expected to affect the entity’s prospects.
It provides conceptual foundations to aid
the disclosure of this information, as well as
core content requirements applicable to all
sustainability-related risks and opportunities.
IFRS S2 Climate-related Disclosures
provides more detailed requirements for the
disclosure of climate-related information.
At its formation, the ISSB merged with four
formerly independent bodies: the TCFD, the
Climate Disclosure Standards Board (CDSB),
the SASB and the International Integrated
Reporting Council (IIRC). As a result, the
ISSB standards draw heavily from the
voluntary investor-focused standards and
frameworks produced by those four bodies.
Companies using ISSB standards should
make disclosures about their governance
and risk management of sustainability and
climate-related risks and opportunities,
as well as the strategy, metrics and
targets used to manage those risks and
opportunities. In line with the concept of
providing a globally consistent baseline,
national policymakers may add building
blocks to the ISSB’s standards in order to
meet local reporting objectives, provided
that local provisions do not obscure
information required by the global baseline.
Following the launch of the ISSB standards
and their endorsement by IOSCO, the ISSB
set three new priorities. First, for future
areas of disclosure standardization, the
ISSB is exploring biodiversity, ecosystems
and ecosystem services, as well as human
capital. It has also published educational
material on nature and social aspects of
climate-related risks and opportunities.
Second, in support of adoption of the
standards by market participants, the ISSB
has established a partnership framework
for capacity-building, working with public
and private organizations, global and local,
to ensure accelerated readiness among
jurisdictions to adopt the standards. A
dedicated IFRS Sustainability Knowledge
Hub was also launched to guide report
preparers. Third, in support of adoption
of the standards by jurisdictions, the
ISSB has been engaging with regulators
worldwide and has published a preview
of a jurisdictional guide for the adoption
or other use of the standards.
b. Status of adoption
An increasing number of jurisdictions have
already adopted the ISSB standards, with
many others working on adoption (table
III.2). While some intend to implement the
standards fully as the globally consistent
baseline, others plan to introduce
amendments to them, which may result
in inconsistencies in the information
reported by complying entities.
In response to the rise of international
and regional standards and their
spillover effects through global supply
and investment chains, many countries,
including developing ones, are taking
action to modernize their company
reporting systems by aligning them more
closely with international best practices.
However, several challenges could pose
severe barriers to policymaking in this
area in developing economies (UNCTAD,
2024c). They include (a) the fragmentation
of international standards, (b) the lack of
robust national sustainability reporting
infrastructure, (c) insufficient knowledge
and human capacity, and (d) limited access
to sustainability data. Addressing these
issues would require enhanced international
coordination on sustainable finance
regulations, especially in standard-setting,
while considering the specific needs and
challenges faced by developing economies.
Technical support will also be essential.
Towards this end, UNCTAD, through its
Intergovernmental Working Group of
Experts on International Standards of
Accounting and Reporting, is supporting
countries in reinforcing their regulations and
17
jurisdictions
using ISSB
standards, with
others working
towards
adoption
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institutions, and building human capacity
to implement international standards, such
as those of the ISSB. Since 2021, UNCTAD
has been launching regional partnerships
to promote high-quality sustainability
reporting in developing countries. The
Partnerships in Africa (29 countries and
58 institutions) and in Latin America (30
institutions in 15 countries) have become
operational over the past two years. At the
2023 World Investment Forum, UNCTAD
announced additional regional partnerships
for Asia, Eurasia, and the Gulf States and
neighbouring countries. These partnerships
are vehicles for facilitating the exchange
of good practices in the implementation
of sustainability reporting standards.
c. Policy spillover effects
The effects of these international standards
can extend beyond the jurisdictions where
they are formally adopted, through global
supply chains. Large companies and
financial institutions increasingly require
their suppliers or investee companies
to report on sustainability. For example,
beyond disclosing scope 3 GHG emissions
Table III.2
Jurisdictions move toward adopting ISSB standards
Source: UNCTAD.
Jurisdiction
Status as of April 2024
Implementation date
Australia
Consulting on standards until 1 March (currently adopting
only IFRS S2)
Staggered implementation from January 2025
Bangladesh
Introduced mandatory requirements for banks and finance
companies
January 2024
Brazil
Adopting in full (IFRS S1 and S2)
January 2026
Canada
Consulting on draft standards from March to June 2024
January 2025 for listed companies, January 2027 for
unlisted companies with assets of more than $1 billion
Costa Rica
Adopted in full (IFRS S1 and S2) in 2024
Phased mandatory adoption for public companies (January
2025) and companies classed as large taxpayers (January
2026)
Japan
Issued standards for consultation
March 2025
Kenya
Developing a road map
-
Malaysia
Consulted on standards
Phased mandatory adoption for listed and unlisted
companies December 2025–December 2027
Morocco
Reviewing disclosure and target-setting requirements
Early 2025 (currently only for banks)
Nigeria
Consulted on adoption road map
Phased mandatory adoption for listed companies and
SMEs between January 2027 and January 2030
Pakistan
Consulting on adopting IFRS S1 and S2
Phased mandatory reporting between January 2025 and
January 2027
Philippines
Revising sustainability reporting guidelines for listed
companies to incorporate IFRS S1 and S2
January 2025 for listed companies, January 2027 for
unlisted companies with assets of more than $1 billion
Republic of Korea
Finalizing standards for June 2024
January 2026 or later
Singapore
Introduced mandatory climate-related disclosures
(currently adopting only IFRS S1 for climate reporting)
January 2025 for listed companies, January 2027 for
unlisted companies with assets of more than $1 billion
Türkiye
Adopted in full (IFRS S1 and S2)
January 2024
United Kingdom
Consulting on standards until July 2024
-
Hong Kong, China
Developing adoption road map
-
Chapter III
Sustainable finance trends
99
along supply chains, the ISSB S2 standard
requires financial institutions to report
“financed emissions” – the emissions
associated with their investments, including
those in SMEs. The SFDR of the European
Union includes similar requirements. As
sustainable finance gains traction, all
companies, including SMEs, are increasingly
expected to provide sustainability
reports to meet investor demands.
In some cases, companies may need to
comply with regulations in markets where
they have significant operations, even if
they are not listed there. For example,
under the European Union Corporate
Sustainability Reporting Directive (CSRD),
non-European Union companies will have
to report if they generate more than €150
million in the European Union market.
It is estimated that about 3,000 United
States companies and more than 10,000
businesses worldwide will be affected by
the requirements (Huck, 2023). Similarly,
the climate disclosure rules released
recently by the United States Securities
and Exchange Commission (SEC) include
requirements for not only local, but also
foreign incorporated entities (SEC, 2024).
Sustainability reporting requirements can
further arise from legislative developments
beyond the immediate standard-setting
community. For instance, the European
Union Carbon Border Adjustment
Mechanism is not specifically a sustainability
disclosure regulation, yet its implications
for climate-related disclosures will extend
well beyond Europe. Starting in October
2023, importers of certain goods into
the European Union are required to
report quarterly on the direct and indirect
emissions embedded in each product.
The requirements related to these standards
and related regulations will have a cascading
effect, affecting exporters and their suppliers,
including SMEs from other regions, and
posing notable challenges for developing
economies. This challenge urgently requires
international coordination, including
enhanced interoperability and consistency
among international and regional standards.
d. Interoperability
With the shift from voluntary disclosure
initiatives towards mandatory reporting
requirements, there has been a renewed
impetus to examine the consistency and
interoperability of the sustainability reporting
landscape. As new requirements are
introduced, businesses operating across
jurisdictions may face inconsistent disclosure
obligations, leading to greater workloads
and potential inconsistencies in the
information reported from one jurisdiction
to another. Similarly, investors operating
internationally may face an additional
challenge when comparing the disclosures
of companies they are assessing.
Overall, the newly developed requirements
can be classified by their focus on single
materiality or double materiality. Single
materiality (sometimes referred to as
“investor materiality” or “financial materiality”)
is primarily intended to inform a general
investor audience and thus focuses on
the impact of sustainability on an entity’s
prospects and financial performance.
Examples of such requirements include
the ISSB standards and the climate rule of
the United States Securities and Exchange
Commission. Other requirements, such
as the European Sustainability Reporting
Standards and the proposed requirements
in China, take a double materiality (also
known as “impact materiality”) approach,
covering both the impact of sustainability
on the entity and the impact of the entity
on sustainability. The GRI standards
focus specifically on double materiality.
To minimize potential inconsistencies and
issues with interoperability, standard-
setters have been working to align their
standards more closely. Notable examples
are the efforts by the European Financial
Reporting Advisory Group, which develops
the European Sustainability Reporting
Standards, in achieving a “high level of
alignment” with the GRI standards and the
ISSB IFRS S2 standard on climate change.
The IFRS Foundation and GRI have also
published a summary of interoperability
Inconsistent
disclosure
obligations
across
jurisdictions
creates
more work
for reporting
entities
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considerations for GHG emissions,
to support more efficient reporting for
companies that use both the ISSB
standards and the GRI standards. This
resource was developed under the two
organizations’ collaboration agreement, to
coordinate their sustainability-related work
programs and standard-setting activities.
As jurisdictions continue their
implementation of sustainability disclosure
regimes, international investors and others
continue to highlight the importance of
consistent requirements. Where existing
requirements are in place or well under
way, some have proposed that international
standards should be given equivalence to
local requirements, especially in the case of
foreign entities, to avoid potential conflicts
within the requirements and allow for more
streamlined global sustainability reporting.
Such equivalence has been achieved in
financial reporting, where for example
foreign private issuers listed on a United
States exchange are permitted to prepare
their financial statements according to IFRS
accounting standards as an alternative
to the Generally Accepted Accounting
Principles standards more commonly
used by United States companies.
e. Stock exchanges promoting
adoption and implementation
As the interface between market regulators,
issuers (both bond and equity), investors
and standard-setters, stock exchanges
are playing an important practical role in
promoting the implementation and adoption
of sustainability reporting standards and new
sustainable finance products (figure III.15).
In 2023, the number of exchanges with
ESG-themed bond segments increased,
continuing a sharp rise in these segments
since 2017 and for the first time exceeding
the number of markets covered by an ESG
equity index. For many years, sustainable
finance focused primarily on equity markets,
but this has changed in recent years
as sustainability-themed products also
emerged in the bond market, derivatives
markets and elsewhere. The past year also
saw a continued upward trend in mandatory
listing requirements related to sustainability
reporting, with 38 markets having such
rules, up from close to zero just a decade
ago. The standardization and regulation
of sustainability reporting is also creating
greater demand for market education on
this topic, as a core mandate of exchanges
is to educate market participants on
compliance issues and transparency and
reporting. The past year saw a continued
sharp upward trend in the number of
exchanges providing such training.
As of the close of 2023, about 59 per
cent (71) of all exchanges offered written
guidance to issuers on sustainability
reporting, a more than tenfold increase from
a decade earlier. This written guidance, often
voluntary, plays a critical role in preparing
market participants for mandatory rules that
typically follow. The trend lines over the past
decade show a strong relationship between
exchange guidance issuance and mandatory
listing rules. In light of these ongoing trends,
the objective of Sustainable Development
Goal 12.6 concerning sustainability reporting
is on track to be attained by 2030. The
market is gravitating towards a more
concentrated set of standards. Exchanges
are actively endorsing global ESG reporting
frameworks. The GRI standards remain
the most frequently cited, followed by the
four component standards of the ISSB
(those of CDSB, IIRC, SASB and TCFD).
Markets
that require
sustainability
reporting: 38
and growing.
SDG 12.6
on track
Chapter III
Sustainable finance trends
101
Figure III.15
Stock exchanges continue to play an important role in promoting
sustainability standards and products
(Number of exchanges with standard or product)
Source: UNCTAD, Sustainable Stock Exchanges database.
Abbreviation: ESG = environmental, social and governance.
2004 2005
2007
2003
2006
2008 2009 2010 2011
2013
2012
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
0
10
20
30
40
50
60
70
80
90
100
Sustainability reports
Written guidance on ESG reporting
Training on ESG topics
Markets covered by an ESG index
Mandatory ESG listing requirements
ESG bond segments
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2. Policymaking at national and regional levels
a. Overview
The rapid expansion in the sustainable
finance market has brought about the
parallel growth of national sustainable
finance measures. National and regional
governments are increasingly creating
policies and regulatory frameworks to
leverage capital markets to achieve their
net-zero goals. The UNCTAD Global
Sustainable Finance Observatory monitors
sustainable finance regulations and policy
measures in 35 economies (countries and
economic groupings). They include the
members of the Group of 20, the largest
developing economies outside the Group
of 20 and selected financial centres.
Together these economies represent
more than 90 per cent of global GDP
and the world’s largest capital markets.
In 2023, these economies introduced a
total of 94 sustainable finance policies and
regulations. This brings the cumulative
number of sustainable finance measures
since 2014 to 516, with nearly 60 per
cent of them introduced in the past five
years, partly in response to the rapid
expansion of the sustainable finance
market and product availability (figure
III.16). Meanwhile, at least 69 sustainable
finance measures are in development.
Figure III.16
Record level of new sustainable finance policy measures and regulations
adopted in selected economies in 2023
(Number of measures adopted by year)
Source: Global Sustainable Finance Observatory (GSFO.org), based on UNCTAD, PRI and World Bank data.
Notes: Encompasses seven key policy areas for sustainable finance: national strategy, national framework
and guidelines, taxonomy, product standards, sustainability disclosure, sector-specific regulations and carbon
pricing. Other economies are Switzerland; 13 developing economies (Bangladesh, Chile, Colombia, Egypt,
Kenya, Malaysia, Nigeria, the Philippines, Singapore, Thailand, the United Arab Emirates and Viet Nam, as
well as Hong Kong, China); and ASEAN. Relevant measures of the European Union included in Group of 20
economies.
a Number updated to include incentive-related measures.
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
14
2
12
7
10
7
18
8
20
5
24
6
14
15
75
9
50
13
64
30
Group of 20 economies
Other economies
Chapter III
Sustainable finance trends
103
The most popular policy area is sustainability
disclosure, accounting for 37 per cent of all
measures (figure III.17). This highlights the
priorities of improving market clarity and
credibility and addressing greenwashing
concerns. Sector-specific measures,
which covered sustainable banking,
insurance, asset management and others,
constituted 23 per cent of total measures,
and national strategies and frameworks
another 17 per cent. Although specific
measures targeting products such as
sustainable bonds and funds, carbon
pricing and taxonomy represent a smaller
portion of the policy pool, policymaking
in these areas has been notably dynamic
in recent years, with a significant number
of measures currently in development.
Thematically, most of the policy measures
introduced in the last five years have focused
on climate change and the green transition;
however, social sustainability and inclusive
development have started to attract more
attention. Examples include the development
in the European Union of a social taxonomy,
the inclusion of economic activities
targeting social sustainable development
in the South Africa taxonomy and policy
measures adopted by Bangladesh
and China and by the Association of
Southeast Asian Nations (ASEAN) to
support the development of SMEs.
Figure III.17
Sustainability disclosure measures remain the most common policy
category
Sustainable finance policy measures by category, 2014–2023
(Percentage)
Source: Global Sustainable Finance Observatory (GSFO.org).
Sustainability
disclosure
37
Sector-specific
measures
23
Taxonomy
3
Carbon pricing
9
Product-specific
measures
11
National strategy or
framework
17
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b. Regional developments
In 2023, the 35 economies or country
groupings tracked by the Global Sustainable
Finance Observatory adopted substantive
measures across six key policy areas:
national strategy or framework, taxonomy,
sustainability disclosure, sector-specific
measures, product-specific measures
and carbon pricing. Policymaking was
most active in national strategies and
frameworks, sustainability disclosure,
and sector- or product-specific measures
focusing on green bonds, sustainable
banking and investment (table III.3).
The European Union established a
comprehensive sustainable finance
regulatory framework with the CSRD,
which entered into force in January 2023.
Together with the Taxonomy Regulation
and the SFDR, these regulations lay
the foundation of an integrated policy
framework governing sustainable finance in
the European Union. To further strengthen
the framework, the European Union is
conducting a comprehensive review of
the SFDR, the taxonomy and related
technical standards, aiming to improve
their usability and effectiveness and to
ensure consistency among different pillars
of the framework. It also announced a new
package of measures to further strengthen
its sustainable finance regime, which
includes expanding the taxonomy to cover
additional activities contributing to climate
as well as non-climate environmental
objectives, such as water and marine
resources protection, circular economy
transition, pollution prevention and control,
and biodiversity and ecosystem restoration.
The measures also bring more transparency
and integrity to the market by introducing
rules on the ESG rating and provide
guidance to support transition finance.
In the United States, at the federal level,
measures were adopted to promote
climate disclosure and sustainable finance;
however, at the State level, the backlash
against sustainable investment strategies
continues: 17 States have passed legislation
prohibiting fund managers from considering
ESG factors in their investment decisions
or prohibiting States from contracting
with asset managers that exclude certain
industries, such as fossil fuels, from
their portfolios (Malone et al., 2023).
A sharpening focus on policy effectiveness
has also led to policy consolidation in other
developed economies. Australia, Japan,
Switzerland and the United Kingdom are
reviewing legislation related to sustainable
Policy area
Economy
National strategy or framework
Argentina, Brazil, China, France, India, Japan, Mexico, Switzerland, Türkiye, United
Arab Emirates, ASEAN
Taxonomy
Mexico
Sustainability disclosure
Brazil, China, France, Germany, India, Republic of Korea, United Kingdom, United
States, European Union
Sector-specific measures
Argentina, Australia, Brazil, China, India, Indonesia, Italy, Mexico, Switzerland,
European Union
Product-specific measures
Argentina, Australia, Brazil, China, Republic of Korea, European Union
Carbon pricing
Australia, Canada, European Union
Table III.3
Measures in six policy areas adopted by monitored economies, 2023
Source: UNCTAD GSFO Sustainable Finance Regulations Platform.
Note: Sector-specific measures cover sustainable banking, insurance, investment and credit ratings; product-
specific measures cover sustainable funds and bonds. Measures in development are not included.
Chapter III
Sustainable finance trends
105
finance, with a focus on sustainability
disclosure and the development of
sustainable finance taxonomies.
Developing economies are becoming
increasingly active in sustainable finance
policymaking. They accounted for 60 per
cent of new policy measures in 2023 – a
record high. This surge demonstrates their
systemic efforts to leverage sustainable
finance for sustainable development. They
are actively developing national strategies
and frameworks for sustainable finance.
In 2023, seven of them (Argentina, Brazil,
China, India, Mexico, Türkiye and the United
Arab Emirates), together with ASEAN
member States, rolled out national strategies
or frameworks on sustainable finance. Most
of these national strategies were informed
by the overall national development agenda,
aligning with national objectives under the
2030 Agenda for Sustainable Development
and the Paris Agreement. Such strategies
help establish policy objectives, priorities
and key areas for actions to provide
guidance and stimulate national efforts to
support the growth of sustainable finance.
This trend underscores a growing
commitment among countries to adopt
a systematic approach to policymaking
related to sustainable finance.
Another important development concerns
the increase in sector- or product-specific
measures, focusing on sustainable banking,
sustainable insurance and green bonds. For
example, in 2023, Brazil and Chile adopted
national frameworks for sustainable bonds;
the Philippines released guidelines on the
issuance of “blue” or ESG bonds; and
Bangladesh, China, India, Singapore and
Thailand released policies to support the
banking industry in integrating sustainable
development considerations into operations,
covering sustainable deposits, sustainable
loans and green credits (see table III.3).
Except for the largest States, developing
countries in general continue to face
challenges in leveraging sustainable
finance for development owing to a lack
of human resources and knowledge,
weak market infrastructure, and the
fragmentation and inconsistency in
international standards (UNCTAD, 2024c).
The persistently low level of sustainable
investment in many developing economies
poses another challenge to their adoption
of sustainable finance policies.
Larger
developing
economies
are active in
sustainable
finance
policymaking,
but smaller
economies
face multiple
challenges
Some of the findings in this chapter are
positive and give hope for a future financial
system that is sensitive to sustainability
criteria and measures of performance that
go beyond financial return. Other findings
are less positive, including the continued
prevalence of greenwashing, a backlash
against sustainable investment in some
jurisdictions and foot-dragging by some
important categories of investors that are
reluctant to report on sustainability risks.
Overall, the analysis in this chapter shows
that the sustainable finance market
continues to expand and offers further
potential for financing sustainable growth,
including in developing countries. It shows
that a majority of the top 100 PPFs and
SWFs, with patient capital, understand the
threat of sustainability risks to their business
model. Finally, it reveals the positive trend
in sustainable finance policymaking, as
governments have made more efforts to
leverage the potential of sustainable finance,
including through better harmonization
of international standards to achieve
comparable, high-quality reporting criteria.
Going forward, policymakers, regulators
and other stakeholders will have
to address three challenges:
First is spillover effects resulting from
national and regional standard-setting and
regulation, which have implications for
companies around the world. These effects
primarily occur through global supply and
* * *
World Investment Report 2024
Investment facilitation and digital government
106
investment chains, where large companies
and financial institutions increasingly require
their suppliers or investee companies
to report on their sustainability.
Second is integrating sustainable finance
frameworks into national sustainable
development strategies. Most such
strategies have been informed by the overall
national development agenda, aligning
with national objectives under the 2030
Agenda for Sustainable Development and
the Paris Agreement. Such strategies help
establish policy objectives, priorities and
key areas for actions to provide guidance
and stimulate national efforts in supporting
the growth of sustainable finance.
Third is ensuring that sustainable finance
policymaking becomes more impact
oriented, focusing on policy effectiveness.
Prioritizing the impact and effectiveness
of sustainable finance measures is
essential, given the concerns about a rising
backlash against sustainable investment.
Addressing the issue will require improving
the credibility of sustainable finance and
combatting the persistent challenge
of greenwashing, in particular through
enhanced disclosure aligned with leading
international standards, and the clear
definition of sustainability concerning
economic activities and sustainable financial
products. Meanwhile, delivering visible
impact would also be important, particularly
for developing economies that have not
yet benefited from increased sustainable
investment flows to the real economy.
The signals sent through capital markets
can influence, direct and ultimately shape
a future economy that is environmentally
sustainable, socially equitable and fairly
governed. Addressing policy challenges
and implementation issues, including
policy harmonization and spillover effects,
will be essential for realizing any benefits
from sustainable finance for the 2030
Agenda for Sustainable Development.
Chapter IV
Investment
facilitation
and digital
government
More investment agreements
encourage digitalization
Investment facilitation policy
measures are increasingly digital
2015–2016
2021–2023
36%
60%
+67%
2012–2015
2016–2019
64
3
89
22
2020–2023
121
34
Non-digital
Digital
2016
Developed
2024
43
48
2016
Developing
2024
82
124
Number
Quality (1–10)
4.6
6.5
4.8
5.8
2016
Developed
2024
12
28
2016
Developing
2024
13
67
Number
Quality (1–10)
6.4
8.2
5.3
6.8
Investment facilitation portals are growing in number and quality
Information portals
Single windows
Digitalization has broad benefits
Top three business services
provided online
Countries with better
digital government solutions…
Higher FDI
inflows
Higher business
creation rates
Higher
institutional
quality
+8%
Filing taxes
Registering
businesses
Obtaining
licences
Chapter IV
Investment facilitation and digital government
109
A. Introduction
Business and investment facilitation have become central to efforts
to develop the private sector and attract foreign direct investment
(FDI) in developing countries. Facilitation aims to make it easier for
domestic firms and international investors to establish and operate
their businesses. Core elements include providing information,
making rules and regulations transparent, and streamlining
administrative procedures. Because these elements are based on
both information and procedures, digitalization is central to their
effective implementation. They have thus led to a wave of digital
government initiatives, including information portals and online
single windows.
Investment facilitation encompasses policies,
measures and practices aimed at minimizing
or eliminating obstacles faced by investors
in a country (UNCTAD, 2016). Key elements
include enhancing transparency and access
to information for investors, streamlining
administrative procedures, ensuring the
predictability of the policy environment and
promoting the accountability and efficiency
of government officials. Facilitation can also
include initiatives focused on preventing or
resolving investment disputes. Distinct from
investment promotion, which is focused
on marketing a location as an investment
destination, investment facilitation
involves a government-wide approach,
engaging multiple agencies and levels.
Business and investment facilitation are
closely intertwined. Business facilitation
aims to create a favourable environment
for all firms – large and small, foreign and
domestic – to start, operate and grow
their operations. Investment facilitation
adds mechanisms and initiatives aimed
at easing processes specific to foreign
investors, such as foreign investment
approvals or the admission of foreign
personnel. Facilitation efforts can extend
into other policy areas. Trade facilitation,
for example, complements business
and investment facilitation by reducing
complexities in cross-border commerce.
Business and investment facilitation can play
a pivotal role not just in attracting investment
but also in supporting attainment of the
Sustainable Development Goals. By creating
a more transparent and accessible business
environment, they can encourage small
firms to move from the informal to the formal
sector, a vital step in enhancing domestic
revenue mobilization. By removing barriers to
investment and providing equal opportunities
for all, business and investment facilitation
can also play a role in promoting more
inclusive economic growth, enhancing
the access of women, young people and
rural populations to economic activity.
The UNCTAD Division on Investment
and Enterprise has been instrumental
in supporting progress on investment
facilitation. Since 1999, its Investment Policy
Reviews have provided comprehensive
advice to nearly 60 countries and regions
on a wide array of investment facilitation
policies. The Division offers advisory
services on investment facilitation to
investment promotion agencies (IPAs) and
special economic zones (SEZs). Its digital
World Investment Report 2024
Investment facilitation and digital government
110
government platforms, including information
portals and single windows for business,
investment and trade facilitation, have
been deployed in more than 60 countries.
UNCTAD guides on digital investment
provide investors with essential information
to evaluate investment opportunities in
specific countries and regions (box IV.1).
UNCTAD has been a catalyst for
international debate on investment
facilitation. In 2016, the Global Action
Menu on Investment Facilitation outlined
the main elements of investment facilitation
(box IV.2). Since its publication, an
international agreement on investment
facilitation for development has been
negotiated, facilitation has become a
mainstay in regional and bilateral trade
and investment agreements, and national
implementation efforts have proliferated.
By 2023, more than a quarter of investment
policy measures worldwide centred
on facilitation mechanisms (chapter
II). Together with the Action Menu,
UNCTAD launched the Global Enterprise
Registration (GER) index, an objective
rating of countries’ provision of digital
information and services for businesses
and investors. It was used as a baseline
for the state of play on these instruments
during the early stages of discussions on
the IFD agreement, which was finalized by
Box IV.1
UNCTAD: Tools and technical assistance for digital business and
investment facilitation
UNCTAD offers a series of tools and participatory methodologies for documenting and simplifying procedures and
for implementing online platforms. Applied sequentially, they form an integrated programme for the modernization
of public administration.
Document and publish procedures: the eRegulations information portal
The eRegulations system offers an affordable, turnkey solution for governments aiming to simplify administrative
procedures and to make them transparent. Designed from the user’s perspective, it breaks down each procedure
step by step, providing essential information for each. This includes contact details (entity, office, responsible
person), expected outcomes, required documents, costs, duration, legal justifications and options for lodging
complaints. Importantly, creating and maintaining the eRegulations portal requires no programming skills, making
it accessible for government staff who lack technical backgrounds. The system’s versatility allows its use for any
administrative process, including company registration, tax payments, licensing activities, construction permits and
import–export operations. Currently, eRegulations portals are operational in more than 50 countries.
Simplify procedures: 10 principles to simplify administrative procedures
Once administrative procedures are clearly defined, they become easier to simplify. This can be achieved by
comparing existing practices with legal requirements and reducing interactions and document demands to only
what is necessary and sufficient. The “10 principles to simplify administrative procedures” from UNCTAD guide
Governments in reducing procedural steps and requirements, often by more than 50 per cent, without necessitating
changes to existing laws.
Digitalize procedures: the eRegistrations system
eRegistrations is a no-code development platform that allows the creation of online services without programming
skills. It can be easily adapted and configured to any administrative process and may apply to procedures such as
company registration, construction permits, export licences or transfers of property titles. eRegistrations is suited
both to operations involving only one administration (such as the business registry) and to simultaneous operations
at multiple administrations (such as registering a company at the tax office, with the municipal council, with social
security, at the labour department and at the business registry). It can thus operate as an online single window. It
can be installed at any level of government.
Monitoring progress: regional digital investment facilitation monitors
UNCTAD has developed online tools to support the monitoring of progress on digital business and investment
facilitation within the context of regional economic integration organizations. The tools are based on the GER.co
methodology, which assesses the coverage, quality and user-friendliness of information portals and online single
windows for establishing a business. Examples include the digital investment facilitation monitor of the Association
of Southeast Asian Nations (ASEAN) (https://asean.investmentfacilitation.org) and, most recently, the Southern
African Customs Union monitor (https://sacu.investmentfacilitation.org).
Source: UNCTAD. See also https://digitalgovernment.world/ and https://businessfacilitation.org.
Chapter IV
Investment facilitation and digital government
111
some 120 members of the World Trade
Organization (WTO) in February 2024.
At the regional level, UNCTAD assisted
the members of ASEAN in reviewing the
implementation of the ASEAN Investment
Facilitation Framework (AIFF) in 2022
(box IV.3). It was also part of the task
force assisting African countries during
the negotiations of the Protocol on
Investment to the African Continental
Free Trade Area (AfCFTA), which includes
a chapter on investment facilitation.
At the bilateral level, UNCTAD has been
advocating for the introduction of proactive
investment promotion and facilitation
provisions for sustainable investment
in international investment agreements
(IIAs), based on the Investment Policy
Framework for Sustainable Development
(UNCTAD, 2015). UNCTAD recently
developed a set of policy options to enable
governments to transform their IIAs into
tools to channel investment towards
sustainable development (UNCTAD,
2023a). It is working with the Group
of 20 Trade and Investment Working
Group under the Brazilian Presidency
on mapping investment facilitation and
sustainable development provisions in
the IIAs of members of the Group.
Notwithstanding the diverse positions in
debates on investment facilitation at the
international level, the need for robust
investment facilitation practices at the
national level is universally acknowledged.
Policymakers have firmly shifted their
focus to the most effective implementation
strategies and tools. Because investment
facilitation is about enhancing transparency
and providing information to investors and
about making administrative procedures for
businesses easier to complete, digitalization
is at the heart of most facilitation initiatives.
The use of digital government tools for
investment facilitation has several important
benefits. Because of the economies of
scale and scope in the establishment of
digital platforms, they tend to improve not
only foreign investment procedures but also
general business establishment procedures
(e.g. business registration tax, social
security and operating licences), thereby
reducing administrative hurdles not only
for foreign investors but also for domestic
Box IV.2
The UNCTAD Global Action Menu for Investment Facilitation
UNCTAD published its Global Action Menu for Investment Facilitation in 2016. It was debated among investment
stakeholders at the World Investment Forum 2016 and subsequently endorsed by the Trade and Development
Board, the governing body of UNCTAD.
The Menu lists 10 action lines, each with a series of options for policymakers:
1. Promote accessibility and transparency in investment policies, and regulations and procedures relevant to
investors.
2. Enhance predictability and consistency in the application of investment policies.
3. Improve the efficiency of investment administrative procedures.
4. Build constructive stakeholder relationships in investment policy practice.
5. Designate a lead agency, focal point or investment facilitator.
6. Establish monitoring and review mechanisms for investment facilitation.
7. Enhance international cooperation on investment facilitation.
8. Strengthen investment facilitation efforts in developing-country partners.
9. Enhance proactive investment project development in developing-country partners through capacity-building.
10. Complement investment facilitation by enhancing international cooperation for investment promotion for
development through provisions in international investment agreements.
Source: UNCTAD (2016).
World Investment Report 2024
Investment facilitation and digital government
112
firms, including micro, small and medium-
sized enterprises (MSMEs). Moreover, the
implementation of digital government can
positively affect the business climate in ways
that go beyond the immediate scope of
business and investment facilitation and the
reduction of red tape. It has the potential
to tackle the root causes of low investment
attractiveness in many developing
countries by mitigating weaknesses in
governance and institutions more broadly.
For that reason, the focus of this chapter
is on investment facilitation and digital
government. The aim is to take stock of
progress in the implementation of digital
business and investment facilitation
worldwide; to look at the challenges,
opportunities and policy priorities for
its effective implementation; and to
examine how it connects with wider digital
government strategies to promote good
governance and institutional robustness;
to create a more transparent, efficient
and investor-friendly environment; and
to accelerate economic development.
Section B provides an overview of progress
in digital investment facilitation worldwide,
with a focus on information portals and
online single windows, including through
an update on the UNCTAD GER survey on
the spread and quality of digital services for
business in all Member States of the United
Nations. Section C examines the growing
importance of investment facilitation and
its digital component in national investment
policies and IIAs. Section D evaluates the
impact of digital business and investment
facilitation on investment attraction, business
creation, and institutional governance and
transparency. Section E looks at lessons
learned about the implementation of
digital business and investment facilitation,
identifying challenges and opportunities,
and exploring wider implications for the
development of digital government. Section
F summarizes policy implications and
recommendations spanning investment
policy and digital government development.
Box IV.3
ASEAN: regional cooperation on digital investment facilitation
In 2021, the ASEAN countries adopted the ASEAN Investment Facilitation Framework (AIFF), a significant step in
regional investment cooperation. This framework aims to enhance investment attraction across member States
by increasing transparency, streamlining administrative procedures, promoting policy alignment and building the
capacity of investment-related agencies.
The ASEAN region has long been proactive in adopting strategies and policy measures to support investment. These
efforts have intensified in recent years, accelerating during the pandemic, with an increase from 6 new investment
facilitation measures in 2019 to 28 in 2020. These included the introduction of online facilities, e-application systems
and streamlined administrative processes, reflecting a strong regional commitment to digitalizing and simplifying
investment procedures.
Notable initiatives include the Philippines and Malaysia implementing fast-track “green” lanes and simplified
processes to ease investment. Member countries have also developed investment portals and digital platforms for
e-payment and acceptance of electronic documents and certificates, further enhancing the investment landscape.
Overall, investment facilitation efforts in ASEAN are characterized by a dynamic policy environment and innovative
approaches to attract and streamline investment, emphasizing digitalization and institutional strengthening. The
AIFF acts as a strategic blueprint to guide efficient and integrated investment facilitation across the region, including
through the creation of a digital investment facilitation monitor. Progress on AIFF implementation was assessed in
the ASEAN Investment Report 2022 (produced with the support of UNCTAD).
Source: UNCTAD; ASEAN Secretariat and UNCTAD (2022). See also https://asean.investmentfacilitation.org.
Chapter IV
Investment facilitation and digital government
113
B. Progress on digital investment
facilitation worldwide
Administrative procedures for businesses and investors are often
the first government services to be digitalized. Information portals
and online single windows covering mandatory procedures for
the establishment of a business have spread rapidly and are now
available in most countries. Their quality and level of sophistication
varies. Some portals in the least developed countries (LDCs) rival
those in developed countries, showing that digital business and
investment facilitation can provide leapfrogging opportunities.
However, gaps remain, as evidenced by missing coverage, portal
closures, problems in the maintenance of information and “single
window dressing”.
1 UNCTAD contributed to the development of the self-assessment tool, with inputs on sections dealing with
transparency and streamlining of administrative procedures, as well as single windows and technical cooperation.
It is challenging to assess the state
of progress in the implementation of
investment facilitation – in general, not just
digital – around the world in a systematic
manner. Early World Bank research and
the World Bank Doing Business indicators
were among the more comprehensive
efforts before investment facilitation was
clearly defined. Investment Policy Reviews
by both UNCTAD and the Organisation for
Economic Co-operation and Development
include many elements of investment
facilitation assessments. The lack of
updated systematic information across
countries was one of the reasons for the
development of a self-assessment tool
to support the implementation of the
IFD agreement.1 The WTO Secretariat
has developed a standardized self-
assessment guide to help countries
with such assessments (WTO, 2023).
The number of investment facilitation
measures implemented worldwide is on the
rise (chapter II), and with the use of digital
technologies and platforms, these measures
are evolving. This section mostly discusses
progress in the development of information
portals for businesses and investors, which
are platforms that explain the administrative
steps required to establish and operate a
business, and online single windows, which
are transactional portals that allow users to
complete multiple procedures administered
by multiple government agencies online.
1. The wider digital government context
While systematic research on the application
of business and investment facilitation
practices is scarce, information is available
to assess the state of progress on digital
services for business as part of broader
development of digital government. The
United Nations Department of Economic
and Social Affairs (UN DESA) conducts a
biennial eGovernment Survey that provides
an assessment of the digital government
World Investment Report 2024
Investment facilitation and digital government
114
landscape across 193 Member States. The
survey uses the eGovernment Development
Index (EGDI) to rank countries, shedding
light on online services and specific
eGovernment components that benefit
businesses. In its latest edition, the report
examines these online services: business
registration, business licence application,
business tax filing and payment, land title
registration application, environmental
permit application, and access to and
modification of a business’s own data.
The 2022 survey findings unequivocally
underscore the pivotal role of business
facilitation as one of the foremost priorities
in digital government (figure IV.1). Of
the 20 administrative procedures that
are most commonly available as online
government services, half relate to business
establishment and operation (others include
services to citizens such as provision of birth
certificates or residency documentation, and
government administrative functions such
as public sector vacancy announcements
or public procurement). The two most
common procedures – ranked first and
second by some distance – are business
registration and business licensing.
Business and investment facilitation are
clearly important entry points for the
development of digital government.
The survey highlights a global trend in the
use of online services, especially related
to the registration of new businesses.
According to the survey, the number of
countries offering this online service, either
as an information portal or within a single
window – a transactional portal where
(part of) the service can be conducted
online – has grown from 162 in 2020 to
176 in 2022. Similarly, there has been
notable growth in other online services,
such as applications for business licences
(from 151 to 167) and options for payment
of value added tax (from 130 to 141).
The EGDI survey primarily assesses the
presence of some form of eGovernment
service (more than its substance or
comprehensiveness) and does not focus
solely on business and investment facilitation
services. EGDI ratings are highly correlated
with levels of development. Europe and
North America lead in eGovernment
development, with an average EGDI value
exceeding 0.80 out of 1, followed by Asia
(0.65), Latin America (0.64), Oceania
Figure IV.1
Business services are usually the starting point for digital government
Digital government services available to businesses, 2022
(Number of countries with service)
Source: UNCTAD. Elaborated from the questionnaire of the 2022 Online Services Index (most recent
survey year), a component of the United Nations Department of Economic and Social Affairs eGovernment
Development Index.
Note: Includes information portals and online single windows.
Business registration
Business licenses
Utilities payment (electricity)
Building permits
Land title registration
Utilities payment (water)
Environmental permits
0
20
40
60
80
100
120
140
160
180
176
167
152
149
145
141
138
136
134
Business tax filing
Value added tax filing
Chapter IV
Investment facilitation and digital government
115
(0.51) and Africa (0.41). Despite significant
progress in Africa, the EGDI average for
the continent remains low, highlighting
the persistence of a digital divide.
The new Business Ready (B-READY)
index of the World Bank Group, intended
to replace its well-known Ease of Doing
Business rankings, also places significant
weight on the provision of digital government
services, including single windows and
information portals. The UN DESA and
World Bank initiatives reflect a global trend:
countries are increasingly leveraging digital
technologies to streamline information
provision and administrative procedures to
enhance their efforts to facilitate investment.
2. The spread and quality of business portals
UNCTAD survey data (based on the GER
methodology; box IV.4) confirm many of the
findings of the EGDI. In contrast to the EGDI,
the GER survey focuses specifically on
business and investment facilitation portals.
It distinguishes between types (information
portals and single windows), and it assesses
their content and quality. These differences
explain several discrepancies between the
two surveys. Nevertheless, the data show
a clear trend in the development of digital
tools to streamline business registration
processes and other procedures (figure
IV.2). The growth trajectory is evident,
with the utilization of information portals
for business and investment processes in
Box IV.4
The UNCTAD Global Enterprise Registration survey
To comprehensively evaluate the landscape of digital business and investment facilitation, UNCTAD introduced the
Global Enterprise Registration (GER.co) online rating system and associated index in 2016. In its inaugural version,
the platform was developed in collaboration with the Kauffman Foundation’s Global Entrepreneurship Network and
the United States Department of State.
GER.co assesses information portals, gauging their transparency regarding mandatory procedures for the
establishment of a business. These typically include business registration, tax and social security enrolment and
operating licence procurement, and – in the case of foreign investors – investment approval. GER.co also evaluates
online single windows, measuring their effectiveness in enabling businesses and investors to complete mandatory
procedures online.
The assessment uses a 10-point scale, calculated on the basis of objective criteria, thus ensuring a standardized
and transparent evaluation process. The highest-rated information portals provide comprehensive information
about each step of an administrative procedure, what documents are required, how much the procedure costs,
how long the process takes, which laws apply and how to appeal a negative decision. The highest-rated online
single windows enable firms to complete a single form, submit a unified set of documents and make a single
payment covering multiple procedures administered by multiple agencies. In return, investors receive digitally
verifiable certificates.
GER.co provides an interactive interface, allowing stakeholders in each country to submit revised ratings. This
feature ensures that the platform remains current and reflects the evolving digital landscape in different countries.
For this World Investment Report, UNCTAD reviewed the GER ratings of United Nations Member States in
2016, 2021 and 2024. The information portals or single windows evaluated may have changed across the three
assessments as older sites were replaced or new government agencies created. Given the overlapping mandates
of government agencies in investment promotion and business registration, multiple sites may be available for
evaluation in a single country. In each such case, for this analysis UNCTAD retained the information portal or single
window with the best score. In countries with federal systems or where business registration is administered
by a subnational entity, UNCTAD evaluated the situation in the main commercial city. Since GER.co focuses on
business registration, evaluations were made separately of the extent to which the sites benefit foreign investors
and registrations for special economic zones.
Source: UNCTAD. See also https://www.genglobal.org/ger.
World Investment Report 2024
Investment facilitation and digital government
116
developing countries increasing from 82
economies in 2016, when the UNCTAD
Global Action Menu for Investment
Facilitation was launched, to 124 today.
The number of developing economies
with online single windows has risen
from a modest 13 to 67 (figure IV.3).
The observed increase in the number
of portals is the result of growing policy
attention to investment facilitation since
2016 as well as a push following the
COVID-19 pandemic, which accelerated
the implementation of digital business
facilitation measures in many countries.
Several developing countries responded
by streamlining business establishment
procedures, adopting online application
systems, reinforcing one-stop centres,
expediting operating licence approvals
and providing additional support to
investors. Digital tools also became
important for administering support
services for small businesses.
The quality of both information portals and
single windows has also generally increased,
in terms of their comprehensiveness
and coverage of mandatory procedures,
accessibility and user-friendliness. A slight
decline in the average rating of information
portals in LDCs can be explained by the
addition to the sample of new countries
with relatively basic portals. For developing
countries as a group, the average rating
has gone up significantly despite the
increase in the number of portals.
Although information portals in developed
countries improved over the observation
period, their ratings still barely exceed
those in developing countries. This may be
because developed-country governments
are generally considered to have greater
regulatory transparency and more
sophisticated public services, reducing their
incentive to develop comprehensive online
portals. There may also be a displacement
effect: where comprehensive online single
Figure IV.2
Information portals are now present in most countries and their quality is
improving
Information portals for business registration
Source: UNCTAD, GER.co survey.
Notes: Includes only Member States of the United Nations. GER.co rates quality on the basis of 10 objective
criteria (box IV.4). The last assessment for GER.co was undertaken between February and April 2024.
20
0
40
60
80
100
2
0
4
6
8
10
2016
2021
2024
43
41
48
20
0
40
60
80
100
2
0
4
6
8
10
2016
2021
2024
56
73
85
20
0
40
60
80
100
2
0
4
6
8
10
2016
2021
2024
26
35
39
b. Developing countries excluding
least developed (n = 97)
c. Least developed countries (n = 45)
Number (left axes)
Quality (right axes)
a. Developed countries (n = 51)
Chapter IV
Investment facilitation and digital government
117
Figure IV.3
There is still room for growth in online single windows
Online single windows for business registration
Source: UNCTAD, GER.co survey.
Notes: Includes only Member States of the United Nations. GER.co rates quality on the basis of 10 objective
criteria (box IV.4). The last assessment for GER.co was undertaken between February and April 2024.
20
0
40
60
80
100
2
0
4
6
8
10
2016
2021
2024
12
17
28
20
0
40
60
80
100
2
0
4
6
8
10
2016
2021
2024
12
31
51
20
0
40
60
80
100
2
0
4
6
8
10
2016
2021
2024
1
14
16
Number (left axes)
Quality (right axes)
b. Developing countries excluding
least developed (n = 97)
a. Developed countries (n = 51)
c. Least developed countries (n = 45)
windows are introduced but separate
information portals remain operational,
the value of such portals is reduced.
For online single windows, which can be
more technologically complex and require
greater integration and coordination
between government agencies, the ratings
for developed countries remain higher
than those for developing countries. Yet
ratings among developing countries vary
significantly, with some clear outliers.
Several developing countries, among
them some LDCs, feature among the
countries with the world’s best information
portals and single windows, illustrating
that there is a leapfrogging opportunity.
This effect is especially strong for online
single windows, as countries with
relatively few legacy systems may have
an advantage in building online services.
Crucially, many of the developing countries
that lead in the adoption of these digital
tools have received technical assistance,
including from UNCTAD. This underscores
the importance of international cooperation
in facilitating the digital transformation
of business and investment processes,
ensuring that developing countries
can harness the full potential of these
tools to drive economic growth and
attract investment. Appropriately, the
IFD agreement includes provisions
that promote international cooperation
and technical assistance to developing
countries (box IV.5). Such cooperation
can also take place at regional levels,
supporting regional integration efforts.
Whereas almost all LDCs now have
information portals that detail mandatory
business registration and investor
procedures, only one third have introduced
online single windows, as compared with
more than half of the other developing
countries. LDCs face considerable
challenges in consolidating relevant
administrative procedures into a unified
platform. Key difficulties include costs, gaps
in skills and know-how, greater divergence
in the way regulations are translated into
administrative procedures across agencies
and subnational bodies, and frictions in
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Investment facilitation and digital government
118
coordination among the agencies involved
in facilitating businesses and investment.
These difficulties are also evident from
other findings of the survey. In 2024, seven
economies discontinued online single
windows that had been rated in the previous
assessments.2 Ten discontinued information
portals, and nine of these were developing
economies. The cessation of these single
windows and information portals could be
the result of resource constraints, changes
in ownership and responsibility for sites
between ministries or agencies, changes in
regulations prompting the need for updates
or issues with information maintenance.
A significant number of portals refer to
dated legislation or procedures or offer
relatively old forms. Both information
portals and online single windows need
clear ownership and resources for
continuous updates and improvements.
Another phenomenon found during the
survey is that of “single window dressing”,
where significant communication efforts
appear to have been made to market a
portal to investors or the public, but upon
2 Discontinued online single windows were found in Eswatini, Ghana, Serbia, Somalia, South Sudan, Uganda
and Zambia. Discontinued information portals were found in Azerbaijan, the Republic of Congo, Costa Rica,
Eritrea, the Islamic Republic of Iran, Mali, Micronesia, the Russian Federation, Tajikistan and Zimbabwe.
close inspection key procedures either are
not accessible, refer to physical processes
that cannot be conducted online or present
other technical barriers that diminish the
value of the portal. Such limitations are often
revealed only when testing the process
through the creation of a dummy company.
As observed earlier, business registration
is usually the first step in and the basis
for wider digitalization programmes.
The GER survey results indicate that tax
services, social security enrolment and
operating licence acquisition are the most
common additional services included in
online single windows for business and
investment facilitation. Together, these
services constitute the core mandatory
procedures for business establishment.
Other, complementary services often
provided online on the same platform
include the reservation of company
names (part of business registration
procedures), processes to obtain digital
identities or signatures, registrations for
statistical purposes and connections with
chambers of commerce (figure IV.4).
Box IV.5
Investment Facilitation for Development agreement: Digitalization aspects
The Investment Facilitation for Development (IFD) agreement encourages the use of digitalization expressly through
commitments related to the creation of single information portals for transparency; the acceptance of electronic
applications, documents and payments for streamlining; and the establishment of local supplier databases to
facilitate investment. In addition to such digital government tools, digitalization can also ensure the effective
implementation of other IFD commitments. These include avoiding multiple applications, establishing focal points
for informational purposes and providing investors with the opportunity to comment on proposed measures.
Investment facilitation commitments can be resource intensive. Under the IFD agreement, developing and least
developed countries may designate provisions for which implementation is conditional upon the receipt of technical
assistance and capacity-building. Donor-country signatories commit to facilitate the provision of technical assistance
for the implementation of the IFD agreement. Both donor and recipient countries can direct such support towards
digitalization.
Source: UNCTAD, based on the text of the IFD agreement.
Chapter IV
Investment facilitation and digital government
119
3. Foreign investor-specific online procedures
3 Available on the Investment Policy Hub, at https://investmentpolicy.unctad.org/investment-laws.
The distinction between business facilitation
and investment facilitation through digital
government platforms depends on the
degree to which countries require foreign
investors to complete additional or distinct
administrative procedures to establish
their operations. Several scenarios
can be distinguished (table IV.1).
In most countries, foreign investors follow
the same procedures as domestic investors
to establish a business. This is the case
for three quarters of the 141 countries
with an investment law recorded in the
UNCTAD Investment Laws Navigator.3
The same information portals and single
windows created for domestic firms
therefore also serve foreign investors.
This can be especially beneficial for SME
foreign investors and entrepreneurs from
neighbouring countries (box IV.6).Some
countries (16 per cent of those with an
investment law) require foreign companies
to seek government approval to invest.
This authorization, typically referred to as
an investment licence or permit, is usually
delivered after an evaluation process that
considers the investor’s business plan in
light of host-country criteria that can range
from economic development objectives to
national security considerations. This is the
case for several small island developing
States (SIDS) (e.g. Cook Islands, Kiribati,
Maldives, Niue, Papua New Guinea and
Solomon Islands), as well as countries in
the Middle East (e.g. Iran, Oman, Qatar,
Saudi Arabia and the United Arab Emirates)
and in Africa (e.g. Ethiopia, Namibia and
Somalia). In these cases, digital government
solutions need to provide additional
services for foreign investors, either through
dedicated portals or through separate
procedures on the same platform.In other
cases, government approval is required for
investment in specific sectors only. Where
the list of sectors is limited to activities
considered sensitive from a national
security perspective, as in most developed
countries, such approval processes are
referred to as FDI screening (UNCTAD,
2023c). In some countries (e.g. China,
India, Nepal and Thailand), the approval
requirement can extend to a broad range
of sectors and aim to protect domestic
industries or address other public interest
concerns. In this scenario, foreign investors
Figure IV.4
Online single windows offer various services in addition to business
registration
Additional services provided by online single windows, 2024
(Percentage)
Source: UNCTAD, GER.co survey.
Notes: Includes only Member States of the United Nations. The last assessment for GER.co was undertaken
between February and April 2024.
Tax registration
Social security
Business licenses
Digital signature
Chamber of commerce registration
Statistics office registration
66
42
30
14
4
3
World Investment Report 2024
Investment facilitation and digital government
120
Table IV.1
Digital government solutions for foreign investment facilitation are
shaped by legislative scenarios
Foreign investor-specific requirements and implications for digital investment facilitation
Source: UNCTAD.
Scenario
Description
Common business facilitation
practices
Example countries
No distinction
Foreign and domestic investors follow
the same business establishment
procedures
General-purpose business
facilitation portals
Most countries
Foreign investment
license/permit
All foreign investors are required to
follow an approval procedure
General-purpose business
facilitation portals with dedicated
digital procedures
Papua New Guinea
Solomon Islands
Separate foreign investment
facilitation portals, digital
procedures
Ethiopia
Saudi Arabia
Somalia
Separate foreign investment
facilitation portals, non-digital
procedures
Lesotho
Maldives
Sector-specific FDI
approval
Most foreign investors follow
domestic procedures but approval is
required in specific sectors based on
national security (screening) or other
public interest concerns
Separate foreign investment
facilitation portals, digital
procedures
France
Germany
India
Nepal
Separate foreign investment
facilitation portals, non-digital
procedures
Belgium
Canada
Thailand
United States
Foreign investor registry
Foreign investors are included in
a dedicated registry, often as a
prerequisite to obtain the advantages
of the investment law (e.g. incentives)
Separate foreign investment
facilitation portals, digital
procedures
Bhutan
Dominican Republic
Separate foreign investment
facilitation portals, non-digital
procedures
Chile
Colombia
Peru
can use business facilitation portals,
but with some restrictions or additional
requirements in sectors of concern.
A small share of countries (11 per cent
of countries with an investment law)
require foreign investors to register their
companies in a dedicated registry, either as
an alternative or in addition to registering
them as domestic businesses. Registration
is typically done at the IPA or investment
authority or at the central bank. The
purpose of the registration is often to collect
statistics on FDI (e.g. in the Plurinational
State of Bolivia, Cabo Verde, Colombia,
the Dominican Republic and Georgia), or
to enable investors to access the benefits
of the investment law, including incentives
(e.g. in Chile, Nicaragua, Peru and the
Bolivarian Republic of Venezuela). The
dedicated registry can either be separate
Chapter IV
Investment facilitation and digital government
121
from a general business registration portal
or be connected to or integrated in it.
Some countries (17 per cent) impose
investment registration requirements on
both foreign and domestic investors.
The purpose is often to benefit from
the provisions of the investment law –
which usually applies to both foreign and
domestic investment – including eligibility
for incentives (e.g. in Cambodia, Chad,
Kenya, Malawi, the Philippines and Uganda).
Access to the treatment and protection
guarantees of the law can be a crucial
consideration for investors in their decision
to establish and operate in a country,
making this registration equivalent to an
investment permit. In Angola, for instance,
to benefit from the provisions of the Private
Investment Law, both domestic and foreign
businesses that invest more than $1 million
must obtain an investment licence. The
provisions include the ability to access
land concessions, secure fiscal incentives,
transfer funds abroad and obtain other
necessary permits. Complex procedures
specific to foreign investors usually prompt
the establishment of dedicated information
portals or online single windows, distinct
from those for domestic investors.
These different scenarios are reflected
in the accessibility to foreign investors of
online single windows (figure IV.5). For such
investors, portals in developing countries,
and especially in LDCs, have comparatively
more dedicated services or additional forms
or procedures. Most investment laws are
adopted in developing countries, whereas
developed countries tend to rely instead
on general commercial law for business
establishment procedures. Nonetheless,
accessibility to foreign investors is not
actually better in developed countries.
Many developed-country single windows
prevent foreign investors from carrying out
procedures online through requirements
such as electronic identities or certified email
addresses that can be obtained only through
government offices that require residency
or physical presence in the country. These
requirements often stem from anti-money-
laundering legislation or general efforts to
curb illicit financial activities. Such legitimate
regulatory obstacles to the complete
digitalization of business establishment
processes are an important reason for the
continued relevance of information portals
in addition to online single windows.
Box IV.6
Burundi: Fueling business creation and regional integration through digital
investment facilitation
In November 2022, the Burundi Development Agency introduced a digital platform designed to simplify the process
of starting a business in the country (EasyBusiness.bi). Developed using the eRegistrations platform of UNCTAD
and supported by the World Bank through the Local Development Project for Employment, the platform offers a
comprehensive online service for business registration across the country, eliminating the need for entrepreneurs
to travel to the capital.
The platform has reduced the registration requirements by 70 per cent, which has had a profound effect on the
number of businesses being established. Since its launch, registrations have increased by 59 per cent, including
a notable rise in participation from foreign individuals in limited liability companies. More than half of these foreign
partners are from neighbouring countries, and more than 70 per cent from the region. The introduction of the
platform has not only facilitated local business creation but also attracted international interest, fostering economic
growth and development in Burundi.
Source: UNCTAD. See also https://easybusiness.bi.
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Investment facilitation and digital government
122
4. Portal ownership and the role of IPAs
Both information portals and online single
windows for business and investment
facilitation can be managed by different
government entities, depending on their
scope. In countries surveyed by the
GER, over 40 per cent of both types are
administered by line ministries, often for
economic affairs or for trade and investment
(figure IV.6). Investment authorities and
IPAs also frequently manage information
portals, including for general-purpose
business facilitation (not just foreign investor
procedures). Transactional online single
windows are more commonly managed by
business registries and developed as part of
the process of automating such registries.
The lower involvement of IPAs in the
management of online single windows
is understandable, as they are not
direct owners of the resulting registries.
Nonetheless, many IPAs do play a role in the
development of online services for investors
in their country. Only about one quarter of
respondents in the annual UNCTAD IPA
survey reported having no involvement of
any kind in the development of an online
single window for business and investment
facilitation (figure IV.7). The rest reported
various levels of engagement, ranging from
advocacy to advisory roles to participation
in government-wide task forces.
The result of this active engagement is that
IPAs have a generally positive perception
of the share of mandatory administrative
processes that can be completed online, a
perception that contrasts to some degree
Figure IV.5
Single windows in developing countries are often more accessible to
foreign investors than those in developed countries
Accessibility to foreigners of online single windows, 2024
(Percentage)
Source: UNCTAD, GER.co survey.
Notes: Rules-based barriers pose requirements that are not immediately accessible or available to foreigners
(e.g. certified e-identities or work permits). Technical barriers are challenges in accessing the platform at the
time of research (e.g. website inaccessible).
25
14
18
43
39
14
22
20
6
25
19
50
6
Developed countries
Developing countries
(excluding least developed)
Least developed countries
Fully accessible
Dedicated services that redirect to other sites
Different forms or procedures
Rules-based barriers
Technical barriers
Chapter IV
Investment facilitation and digital government
123
Figure IV.6
Portals are generally managed by government ministries, IPAs and
business registries
Ownership of information portals and digital single windows, 2024
(Percentage)
Source: UNCTAD, GER.co survey.
Abbreviation: IPA = investment promotion agency.
Ministry
Trade and investment
Economic affairs
Finance
Justice
Industry
Other line ministry
Business registry
Digital government body
Investment promotion agency
Chamber of commerce
Other
43
15
7
6
5
2
7
25
14
10
3
4
Ministry
Economic affairs
Trade and investment
Finance
Industry
Justice
Other line ministry
Investment promotion agency
Digital government body
Business registry
Chamber of commerce
Other
44
12
12
7
4
3
6
32
14
3
2
5
b. Single windows
a. Information portals
Figure IV.7
Only about one quarter of IPAs have no involvement in developing online
single windows
Role of IPAs in development of online single windows, 2024
(Percentage of survey respondents)
Source: UNCTAD, 2024–2026 World Investment Prospects Survey.
Notes: The survey, conducted in April 2024, collected 96 responses from national and subnational IPAs.
Percentages may not sum to 100 due to rounding.
Abbreviation: IPA = investment promotion agency.
26
19
18
18
14
12
No direct
involvement
Advocacy
role
Leading
development
of online
single window
Part of task
force
developing
digital service
Advisory
role
Leading
development
of selected
digital service
with the results of the GER survey. Some 70
per cent of IPAs report that most mandatory
procedures for business establishment –
including registration, tax and social security
enrolment, and operating licence acquisition
– can be conducted online in their country,
whereas the GER survey of transactional
portals shows lower shares for social
World Investment Report 2024
Investment facilitation and digital government
124
security enrolment and operating licence
acquisition. Either IPAs have lower visibility of
requirements that may be sector specific or
not immediately urgent in the establishment
phase, or these services are provided
mostly through separate online systems
not connected to an online single window.
There is scope for further engagement
by IPAs in the development of digital
government (see, for example, the proactive
role that the Kenyan IPA Keninvest is
taking in this regard (box IV.7)). The digital
transformation of IPAs is ongoing (UNCTAD,
2023b). They often provide other types of
digital investment promotion and facilitation
tools, in combination with or separate
from information portals that deal purely
with administrative procedures. Tools
that connect well with typical investment
facilitation practices include investor
feedback and grievance communication,
online databases to support searches for
local suppliers, and incentives calculators.
Box IV.7
Kenya: Connecting digital tools for investment promotion and facilitation
Despite significant advances in digital government services in Kenya, notably through the eCitizen platform, new
businesses and investors still encounter multiple, disjointed registration processes and authorizations, including
for licences and permits needed to operate in regulated sectors and counties.
Although some applications can be completed online, the lack of integration among systems adds significant
barriers for investors and entrepreneurs. There is a pressing need for enhanced facilitation to elevate investment
levels sufficiently to address interconnected economic, health, security and climate challenges.
The Kenya Investment Authority (Keninvest) offers one-stop, in-person services such as assistance with foreign
taxpayer registration, electrical grid connection and work permits. However, its services do not extend to
crucial permits and licences at the county, sectoral or environmental levels. In addition, it lacks the capability to
comprehensively register investment projects online, collect data or provide effective investor aftercare services,
which are essential for monitoring and supporting successful investment outcomes.
The Kenya Investment Single Window project, being developed by UNCTAD, aims to tackle these issues. It will
introduce an online system to streamline the investment process in the country and enhance the Government’s
capacity to attract and monitor investments effectively.
The system will connect with existing government databases such as the eCitizen portal, the Kenya Revenue
Authority’s iTax system and county government portals. This integration will enhance the functionality of existing
platforms, making it easier for businesses to navigate the regulatory environment.
Source: UNCTAD. See also https://eregulations.invest.go.ke.
Chapter IV
Investment facilitation and digital government
125
C. Facilitation in national and
international investment policies
Investment facilitation plays an increasingly prominent role in
both national and international investment policies. Facilitation
measures are now the largest category of national investment
policy measures, and especially important in developing countries.
More recent national policy measures refer explicitly to digital
government tools. Most modern IIAs and instruments also include
facilitation provisions and act as catalysts for the use of digital
government solutions.
1. National policies
4 For more details regarding the definition of investment-related policy measures and their classification into less
and more favourable to investors, see chapter II, box II.2.
5 The facilitation measures included in this analysis relate to FDI and primarily encompass policy measures
enacted through national legislation. They comprise 333 measures implemented across 99 countries,
including 23 developed and 76 developing countries, over the past 12 years.
Investment facilitation measures have
become a key component of the global
investment policy landscape, constituting
between a quarter and a third of the
investment policy measures more favourable
to investors that countries adopted over
the last decade, and nearly two fifths of
such measures in 2023 (chapter II).4 The
total number of investment facilitation
measures introduced each year has more
than doubled since the early 2000s, growing
by 150 per cent in developing countries
and 82 per cent in developed countries
from 2012–2015 to 2020–2023 (figure
IV.8).5Streamlining initiatives emerged as the
predominant type of investment facilitation
measure over the past decade (53 per
cent), followed by facilitation services (31
per cent) and transparency initiatives (16
per cent). This trend was similar across
developing and developed regions.
During the second half of the 2010s,
digital tools emerged in investment policy
measures. Digital investment facilitation
services, absent from the measures adopted
between 2012 and 2015, constituted
15 per cent of all investment facilitation
service initiatives in 2020–2023. Between
the two periods, the share of digital
streamlining measures grew from less
than 10 to 25 per cent and the share of
digital transparency measures grew from
0 to almost 30 per cent (figure IV.9).
Transparency measures related to
investment included primarily the
consolidation of investment-related
provisions (for instance, in Fiji and
Uzbekistan), the issuance of guidelines
on investment legislation (notably in China
and India) and the establishment of online
investment portals (as seen in Oman and
World Investment Report 2024
Investment facilitation and digital government
126
Uruguay). In addition, the recent expansion
of investment screening regimes (chapter
II) – by itself not among the measures
that are favourable to investors – has
prompted several developed countries
(including Australia, France, the Kingdom
of the Netherlands and the United
Kingdom), to clarify their investment review
frameworks by publishing guidelines.
Streamlining initiatives span a wide
array of measures designed to simplify
and modernize investment policies and
administrative procedures. Non-digital
measures include the simplification of
business registration (e.g. in Mauritius,
Romania and Viet Nam), licensing
procedures (e.g. in Jordan, Mozambique,
Peru and the Philippines) and screening
mechanisms (e.g. in Canada and New
Zealand). They also include the creation
of physical one-stop shops (e.g. in
Algeria, Mongolia and South Africa).
Digital initiatives represented a quarter of
streamlining efforts. The largest category
was the establishment of digital one-
stop shops (10 per cent) or online single
windows. Other digital streamlining initiatives
encompass the digitalization of various
investment-related processes (e.g. the
introduction of online applications, forms,
certificates and payment facilities). As
in the case of transparency measures,
several new digital initiatives aim to
simplify investment screening processes
by introducing portals designed for this
purpose (e.g. in France and Germany).
Facilitation services provide tailored support
from IPAs, SEZs or other entities designed
to aid investors in establishing or expanding
their operations within a country. During
the last decade, measures in this category
were evenly split between services related
to SEZs and those offered by IPAs or
governmental agencies. The latter included
services such as alternative dispute
resolution mechanisms, visa facilitation,
linkage programmes and aftercare services.
Digital tools are increasingly utilized in
delivering investment facilitation services.
This trend strengthened after the COVID-19
pandemic, which saw an expansion in the
offering of digital investment facilitation and
aftercare services by IPAs, with a sharper
focus on promoting linkages between
foreign companies and the local economy
(UNCTAD, 2020b). Oman, for instance,
recently launched an online platform to
connect local companies with global
investors. In Cambodia, the online supplier
database aims not only to link foreign and
Figure IV.8
Facilitation measures are increasingly prevalent in national investment
policies
Facilitation measures by economic grouping and period of adoption
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 15 April 2024.
Developing countries
Developed countries
50
17
95
16
124
31
2012–2015
2016–2019
2020–2023
Chapter IV
Investment facilitation and digital government
127
domestic firms, but also to generate a
“sustainable investment cycle” by rewarding
and motivating sustainable operations.
Traditional approaches to resolving investor
grievances are increasingly incorporating
digital solutions. The Investment
Ombudsman model of the Republic of Korea
serves as a prime example (box IV.8).
Facilitation provisions are increasingly
common not only in investment policy
measures and initiatives, as discussed
earlier, but also in investment laws. Of
141 such laws currently in force, as
recorded by UNCTAD in the Investment
Laws Navigator, 64 (45 per cent) include
clauses on investment facilitation. These
clauses have become more common
in laws enacted after the early 2000s
(figure IV.10). There are some regional
differences; 63 per cent of investment laws
in Africa incorporate investment facilitation
provisions, but only 20 per cent do so
in Latin America and the Caribbean.
As in the case of policy measures,
investment facilitation provisions in
investment laws relate to streamlining,
services and transparency (figure IV.11).
Transparency provisions are present in
19 investment laws currently in force.
They typically commit the State to
publishing all laws, rules and regulations
concerning investment. Only two such
laws emphasize the digital accessibility
of such information, and one mandates
its publication on the official Government
website. Another law requires the
online publication of supplementary
information relevant for investors, such
as socioeconomic data on the country.
Streamlining provisions largely involve
the establishment of one-stop shops for
investors (in 33 of 36 investment laws with
streamlining provisions). Most of these
one-stop shops serve all investors, but
some are tailored specifically to foreign or
strategic investors. Only five laws establish
Figure IV.9
Digital government tools are increasingly common in investment
facilitation measures
Measures by type and period of adoption
(Number)
Source: UNCTAD, Investment Policy Monitor database, accessed 15 April 2024.
7
15
4
21
8
33
3
44
17
58
19
24
30
1
42
7
2012–2015
2016–2019
2020–2023
2012–2015
2016–2019
2020–2023
2012–2015
2016–2019
2020–2023
Non-digital
Digital
b. Streamlining
a. Transparency
c. Facilitation services
World Investment Report 2024
Investment facilitation and digital government
128
Figure IV.10
Recent investment laws frequently include facilitation provisions
Laws by period of adoption
(Number)
Source: UNCTAD, Investment Laws Navigator database, accessed 14 April 2024.
Before 1988
1988–1999
2000–2011
2012–2023
6
11
29
22
13
31
29
With faciliation provisions
Without facilitation provisions
Box IV.8
Republic of Korea: Digital solutions improve investment grievance
settlement
The Republic of Korea pioneered the institutionalization of an ombudsman mechanism for resolving foreign
investment-related grievances. The Office of the Foreign Investment Ombudsman (OFIO), introduced in
1999, acts as a grievance resolution centre and advocacy body for foreign investors. Its digital portal offers
a real-time grievance management system, enabling foreign companies to report issues and monitor case
progress online. The portal also allows virtual meetings with experts, who then coordinate solutions with
relevant ministries or organizations.
The digitalization of OFIO services has accelerated the exchange of information with public entities, which
is critical for resolving foreign investors’ grievances. From 2018 to 2022, OFIO settled 1,746 grievances,
contributing to an increase in decisions to reinvest and a better business environment. This support resulted
in $1.73 billion in reinvestment in 2022 alone. These results have led several countries, including Brazil,
Kazakhstan and the Russian Federation, to adopt similar investment ombudsman mechanisms.
Source: UNCTAD, based on information from the Office of the Foreign Investment Ombudsman and the Korea Trade-
Investment Promotion Agency.
Chapter IV
Investment facilitation and digital government
129
digital one-stop shops. Additional provisions
to streamline investor processes include
simplifying administrative procedures,
promoting digitalization and establishing
maximum timelines for government
processes related to investment.
Facilitation services provisions in investment
laws encompass alternative dispute
resolution (22 laws), including mediation,
conciliation and dedicated mechanisms for
resolving investment-related grievances,
such as investment ombudsmen. They also
include investor support services by IPAs
or other agencies (12 laws). These services
comprise counselling, administrative
assistance for permits and licensing, visa
facilitation for investors and skilled workers,
and assistance in access to land and utilities.
2. International investment agreements
New-generation IIAs increasingly
embrace proactive investment facilitation
features. Yet, much more is needed
to direct facilitation commitments in
IIAs towards sustainable investment
and to ensure that treaty provisions
translate into practical interventions.
Recent IIAs increasingly contain
provisions aimed at improving the
regulatory environment in host countries,
encouraging stakeholder engagement,
setting up regular cooperation mechanisms
between the contracting parties and
facilitating investment for sustainable
development (figure IV.12). Prominent
examples of these provisions appear in
treaties and instruments concluded at the
plurilateral, regional and bilateral levels.
The plurilateral Investment Facilitation for
Development (IFD) agreement strongly
emphasizes transparency and streamlining
of administrative procedures and
contains elements to support sustainable
development, responsible business conduct
and international cooperation. At the regional
level, the Protocol on Investment (2023)
to the AfCFTA, as well as the Association
of Southeast Asian Nations (ASEAN)
Investment Facilitation Framework (2021)
and the Intra-MERCOSUR Cooperation
and Facilitation Investment Protocol
(2017), contain proactive commitments
to sustainable investment, digitalization
and cooperation. At the bilateral level
various models promote investment
facilitation, including the Cooperation
and Facilitation Investment Agreements
concluded by Brazil, the Angola–European
Union Sustainable Investment Facilitation
Agreement (SIFA) (2023) or the framework
agreements such as the Australia–Singapore
Green Economy Agreement (2022).
Digitalization, expressly encouraged
in several recent IIAs, can serve as
a tool for effectively implementing
IIA facilitation commitments. It is the
natural implementation mechanism for
transparency commitments, the most
common facilitation feature in recent IIAs.
Figure IV.11
Streamlining and facilitation services are more common than
transparency provisions in investment laws
Laws with specific investment facilitation measures, 2023
(Number)
Source: UNCTAD, Investment Laws Navigator database, accessed 14 April 2024.
Streamlining
Facilitation services
Transparency
19
36
31
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Investment facilitation and digital government
130
Figure IV.12
Recent IIAs include a wide range of facilitation commitments
Share of IIAs signed during 2015–2023, by investment facilitation feature
(Percentage)
Source: UNCTAD.
Note: Based on 235 IIAs, 148 BITs and 87 TIPs concluded in the period 2015–2023 for which texts are
available.
Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with
investment provision.
Regulatory environment
Stakeholder engagement
Cooperation mechanisms
Sustainable investment
Transparency of investment-related
measures
Entry and stay of personnel
Objective application of investment-
related measures
Regulatory practices and coherence
Streamlining of administrative
procedures
Right to comment on proposed
regulatory measures
Focal points for investors
Institutional framework for cooperation
Technical assistance and capacity-
building
Proactive provisions facilitating
sustainable investment
54
37
22
14
7
30
17
46
14
24
Selected features of IIAs
Transparency of investment-related measures. Commitment to
publish investment-related measures and/or measures that affect the
application of the IIA, including online.
Right to comment on proposed regulatory measures. Commitment
to provide investors the opportunity to comment on proposed measures.
Entry and stay of personnel. Commitment to streamline and/or render
more transparent procedures for granting entry and stay of investors,
including sympathetic consideration commitments.
Focal points for investors. Commitment to establish institutions
available to investors with information, aftercare, dispute avoidance
and/or broader functions.
Objective application of investment-related measures. Commitment
to objective and predictable application, independence of administering
authorities and/or maintenance of appeal and review mechanisms.
Institutional framework for cooperation. Establishment of a
cooperation mechanism under the IIA, including for contracting parties’
institutions responsible for investment.
Streamlining of administrative procedures. Commitment to
eliminate redundant bureaucratic steps and clarify the administrative
process, including through digitalization and eGovernment tools.
Regulatory practices and coherence. Encouragement of good
rule-making practices (e.g. regulatory impact assessment, periodic
review) and/or inter-agency coordination.
Technical assistance and capacity-building. Reference to technical
assistance and/or capacity-building activities in the IIA.
Proactive provisions facilitating sustainable investment.
Commitment to proactive measures aimed at promoting and facilitating
investment linked to the Sustainable Development Goals
(e.g. environment, health, climate action).
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Investment facilitation and digital government
131
It can also operationalize IIA commitments
to streamline investment administrative
procedures and improve stakeholder
engagement. Recent treaties increasingly
encourage digitalization or include
commitments regarding online information
provision or single windows (figure IV.13).
Over half of all IIAs signed since 2015
contain a commitment to publish
investment-related measures. Such
transparency provisions are among the
earliest investment facilitation commitments
to appear in IIAs, and the share of IIAs
that contain them has grown steadily. IIAs
commonly extend this commitment to
proposed measures and at times include
a detailed indicative list of measures to
publish. These can cover regulations
directed specifically at investors, such as
incentive schemes, as well as measures
or laws that are likely to affect investments
indirectly, such as regulations concerning
corporate governance, insolvency, property
or taxation. Examples of such detailed
provisions can be found in the Angola–
European Union SIFA, the IFD agreement,
the Türkiye–United Arab Emirates
Comprehensive Economic Partnership
Agreement (CEPA) (2023) and the ASEAN
Investment Facilitation Framework, among
others. These treaties illustrate the catalytic
role that international agreements can play
in the adoption of facilitation measures
and digital government tools – an effect
already observed with the WTO Trade
Facilitation Agreement (box IV.9).
Digital government tools are the most
effective way to operationalize transparency
commitments. About half of IIAs with
transparency provisions signed in the
Figure IV.13
IIAs increasingly encourage digitalization
Facilitation provisions in IIAs that refer to digital tools
(Percentage)
Source: UNCTAD.
Note: Based on 131 IIAs, 70 BITs and 61 TIPs concluded in 2015–2023 that contain at least one facilitation
provision. Data based in part on International Economic Law Clinic (2024).
Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with
investment provision.
2015–2016
2017–2018
2019–2020
2021–2023
36
40
47
60
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Investment facilitation and digital government
132
past five years contain a commitment to
online publication, and several expressly
encourage the contracting parties to create
a digital information portal. For example,
under the Angola–European Union SIFA,
each contracting party commits to make
a wide range of information available to
investors by electronic means and, where
practicable, through a single portal.
A key national policy component that
recent IIAs have begun to incorporate
is the simplification and streamlining
of investment-related administrative
procedures. These provisions usually aim
to eliminate redundant bureaucratic steps
and to clarify the administrative process for
investment-related application procedures.
They often require a reasonable time frame
and cost for licence applications, encourage
countries to consolidate the application
process under a single agency and establish
certain procedural commitments for the
application process. Recent examples
include the Angola–European Union
SIFA, the China–Ecuador FTA (2023), the
IFD agreement, the Türkiye–United Arab
Emirates CEPA and the ASEAN IFF.
More recently, treaty partners have
also begun to commit to streamlining
procedures in the energy sector to support
energy transition efforts or to facilitate
investment in the energy transition (see
the AfCFTA Investment Protocol and
the European Union–New Zealand FTA)
(UNCTAD, 2023d). Another provision
that can benefit from digitalization is
the streamlining of procedures for
the entry and stay of investors and
key personnel (see, for example, the
Regional Comprehensive Economic
Partnership Agreement (2020) and the
Israel–Republic of Korea FTA (2021)).
Box IV.9
Information portals for trade
Transparency in import, export and transit procedures is essential for businesses to ensure predictability in
cross-border trade. Despite progress in trade facilitation, many companies – particularly micro, small, and
medium-sized enterprises (MSMEs) – still find it challenging to complete trade formalities and documentation.
The challenge often arises from a lack of transparency, cumbersome and redundant procedures, and
uncoordinated legal frameworks, causing businesses to spend excessive time and resources to comply
with trade and customs procedures.
The WTO Trade Facilitation Agreement includes transparency provisions that require members to make
certain information available online, such as detailed descriptions of import, export and transit procedures;
required forms and documents; and contact information for enquiry points. Although the Agreement does
not specify that this information be centralized, it is most effective when presented on a user-centric website
that offers comprehensive, step-by-step guides to trade-related procedures.
Building on extensive experience in developing digital solutions for business and investment procedures,
UNCTAD has created a model Trade Information Portal. This online tool aims to enhance transparency and
assist traders by simplifying the completion of international trade procedures. Launched first in Kenya in
2017, the portal has proven effective. Traders have seen reductions in time and costs to access information
about clearance procedures. By 2022, the National Trade Facilitation Committee of Kenya had simplified
numerous procedures through the portal, eliminating steps and required documents and moving several
processes online.
The UNCTAD Trade Information Portal model, which is based on the eRegulations technology, emphasizes
presenting information from the user’s perspective and providing step-by-step guidance for all import, export
and transit procedures. To date, this approach has been implemented in 28 countries, significantly aiding
traders by simplifying and demystifying the required legal and procedural steps.
Source: UNCTAD. See also https://digitalgovernment.world/trade-information-portals.
Chapter IV
Investment facilitation and digital government
133
Digital government solutions can help
eliminate redundant bureaucratic steps
and streamline the administrative process.
The AIFF (2021) offers a regional example
in which parties endeavour to establish
and maintain single online digital platforms
for investor applications. Similarly, at the
bilateral level, the Türkiye–United Arab
Emirates CEPA contains a commitment
to work towards the “the highest possible
level of digitalization of procedures related
to investments”. Parties also refer to
measures that have proven to be effective,
such as one-stop shops, single portal
submissions or commitments to accept
the submission of electronic applications,
documents and payments (see the AfCFTA
Protocol on Investment and the Angola–
European Union SIFA, among others).
Used strategically, digitalization can not
only improve the overall investment climate
but also contribute to operationalizing IIA
provisions aimed at facilitating sustainable
investment. For example, to render
tangible recent IIA commitments to
facilitate investment in renewable energy,
parties may prioritize the digitalization of
licencing processes related to construction
of energy installations or laying of
cables, disbursement of renewable
energy incentives or connections to
electricity grids (UNCTAD, 2023c).
About 30 per cent of IIAs signed since 2015
include a commitment to offer investors and
relevant other stakeholders the opportunity
to comment on proposed investment-related
measures (see for example the Australia–
United Kingdom FTA (2021)). Some 17
per cent also require the creation of focal
points for investors, with informational
or grievance functions. Examples
include the Cooperation and Facilitation
Investment Agreements of Brazil, the
intra-MERCOSUR Protocol on Investment
Facilitation and the Regional Comprehensive
Economic Partnership Agreement
(2020). Some recent IIAs also encourage
the establishment of local supplier
databases (see the Angola–European
Union SIFA and the IFD agreement,
which are by default digital) (box IV.2).
The use of digital tools can improve the
efficiency of all these commitments, as
well as their accessibility, including for
underrepresented economic actors and civil
society. The work of focal points can be
optimized by, for example, a first-response
automated chat assistant for simple
information requests and a mechanism
to direct grievances to relevant officers,
which allows an overall higher number
of inquiries to be processed. Similarly,
maintaining an online portal for investor
and civil society comments on proposed
investment-related measures can allow a
broader range of stakeholders to access
it and improve the efficiency of collecting,
processing and disaggregating comments.
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134
D. The impact of investment
facilitation and digital government
Digital investment facilitation has positive effects on governance
and institutions, business creation and investment attraction. It
can support the promotion of sustainable investment, although
facilitation measures are difficult to target. Much of the sustainable
development impact occurs through business facilitation, which
contributes to the formalization of local firms, domestic resource
mobilization and higher rates of inclusivity and participation in the
MSME sector.
Systematic research on the impact of
investment facilitation on FDI is both
scarce and difficult to conduct because
of the limited data available on investment
facilitation measures, the interlinked nature
of investment facilitation measures with other
policies and the interdependencies of effects
with other factors that affect FDI flows.
The lack of conclusive evidence and of
a definitive estimate of impact has not
stopped policymakers from pursuing
investment facilitation efforts in international
initiatives and national policy measures.
It is generally accepted that investment
facilitation is an important component
of a conducive business environment,
long identified as one of the three key
factors influencing FDI, together with
economic and policy determinants
(UNCTAD, 1998; Alfaro et al., 2008).
Facilitation efforts affect several dimensions
of the business environment, including
the ease of doing business and the
quality of investment institutions, which
directly influence the establishment and
operations of foreign investors. They
further affect institutional factors such
as levels of corruption, rule of law and
quality of governance, which indirectly
contribute to improving the attractiveness
of a location for foreign investment.
The advantage of investment facilitation
is that it often does not require changes
in policies or legislation. Most investment
facilitation practices, from information
provision to transparency and streamlining,
are about how rules and regulations are
communicated and applied and how
easy they are to comply with, rather than
their substance. Therefore, unlike other
FDI determinants, investment facilitation
measures often require less policy space
(such as for policy determinants) and
do not rely on economic conditions
(such as for economic determinants).
The relevant literature on FDI determinants
substantially supports the attractiveness of
investment facilitation measures as policy
tools for increasing FDI. Empirical studies
have reached broad consensus on the
fact that countries with better business
environments are more likely to attract
higher FDI flows. The impact of investment
facilitation measures – as measured through
their effect on the business environment – is
likely to be economically sizeable. An early
simulation by UNCTAD – used to underpin
its Global Action Menu for Investment
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Investment facilitation and digital government
135
Facilitation (UNCTAD, 2016) and based on a
World Bank study analysing the relationship
between FDI and the number of procedures
to start a foreign business – suggests
that aligning developing countries to the
median level of administrative complexity
(i.e. reducing procedural complexity in
countries above the median) would be
associated with an average increase in
aggregate FDI stock of 20 per cent. Older
studies corroborate the finding (Jayasuriya,
2011; Anderson and Gonzalez, 2013).
Investment facilitation measures can also
contribute to inclusive and sustainable
development. Because of their relatively low
cost (compared with, for example, subsidies,
incentives or the construction of SEZs), they
are expected to disproportionally benefit
smaller and resource-poor economies,
and in general those that have few other
levers to attract FDI. The positive effect
of facilitation practices on governance
and institutions would benefit countries
with weaknesses in these areas relatively
more. Furthermore, investment facilitation
measures will support FDI in manufacturing
and services more than in extractives
(FDI that is mostly resource-seeking and
less sensitive to other determinants),
thereby contributing to economic
diversification. Finally, facilitation measures
will have a greater impact on FDI by
SMEs, which tend to be disproportionately
hindered by administrative hurdles.
Promoting sustainable development through
investment facilitation is not automatic,
despite the prominence of sustainable
development objectives in international
agreements and instruments, including
the recent IFD agreement. Targeting
investment in sectors that contribute more
to sustainable development, or investors
with more sustainable operations, can be
done through typical investment promotion
measures such as incentives, which can be
applied selectively and made conditional on
specific criteria. It is more difficult to envisage
providing information or transparency
selectively. The logic and the economies
of scale of typical investment facilitation
measures would normally dictate that they
are applied across the board. The main
lever that governments can use to support
sustainable development through investment
facilitation is to sequence the implementation
of sector-specific streamlining measures,
prioritizing relevant sectors (e.g. operating
licences in the health sector or planning
permits in the renewable energy sector).
Digital government solutions for business
and investment facilitation, for the most part,
just reinforce the effects of such efforts.
First and foremost, they tend to focus
implementation efforts on the aspects of
investment facilitation that are likely to have
the greatest direct impact on investment
attraction and business creation. Common
provisions in investment facilitation policies
or treaties include elements such as
investor focal points, dispute prevention
mechanisms and stakeholder engagement.
While these are important benefits for
investors and they have the potential to
improve governance, institutions and the
investment climate in the long run, none
are as immediately and continuously
relevant to businesses and investors as
accurate information, transparency of
rules and regulations, and streamlined,
efficient and effective administrative
procedures – all of which feature prominently
in every objective assessment of the
relative attractiveness of business and
investment climates across countries.
Improvements in government digitalization
more broadly, including in areas beyond
business and investment facilitation, can
also positively influence the investment
climate in a country (Al-Sadiq, 2021).
Research has shown a positive correlation
between digital government services and
FDI inflows, stemming from streamlined
procedures, improved information access,
heightened government efficiency, reduced
corruption and cost-saving mechanisms
made possible through the consolidation
of services on a single platform (Opertti
and Volpe Martincus, 2023).
Countries that rank in the top quartile of
the EGDI receive more than 10 times the
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Investment facilitation and digital government
136
average inward FDI flows per capita as
those in the bottom quartile (UNCTAD,
2024a). The same ratio holds for gross fixed
capital formation. This is, of course, largely
explained by the fact that the EGDI rankings
correlate closely with GDP per capita and
the development status of economies,
with mainly higher-middle-income
developing countries in the top quartile,
and LDCs typically in the lower quartiles.
Similar but more nuanced results derive
from correlating investment, business
creation and institutional quality with the
UNCTAD GER ratings, which are less
obviously aligned with development levels
and allow for LDCs to leapfrog higher-
income countries in the quality of their
information portals and online single
windows. On average, GER ratings still fully
align with institutional quality (as measured
by the World Bank’s Governance Index;
figure IV.14), but the differences between
the top three quartiles become marginal,
with significant variance within the top
quartiles. Those quartiles combine more
advanced developing economies with
some LDCs that have created – often with
technical support, including from UNCTAD
– high-quality online single windows.
The same analysis of business creation
rates also shows a positive correlation
between the presence and quality of
information portals and single windows for
business and investment facilitation and the
establishment of new firms (figure IV.15).
Average rates of business creation in the
top three quartiles are again very similar,
and the rate in the top quartile is slightly
below that in the second quartile, as a result
of a combination of lower rates in some
LDCs and in several higher-income, already
more mature, developing economies.
Comparing GER ratings with FDI attraction
rates makes the influence of several
leapfrogging LDCs in the top quartile
even more pronounced than for business
creation rates (figure IV.16). The low levels
of FDI in these LDCs brings down FDI
performance in the group of countries
with the best digital government tools for
business and investment facilitation by a
significant margin. Evidently, high-quality
Figure IV.14
Digital investment facilitation is associated with higher institutional
quality
Institutional quality index by GER quartiles, developing countries, 2022
Sources: UNCTAD, GER.co, and World Bank Governance Indices (2022).
Notes: Quartiles were constructed from the average score between information portals and single windows
from GER.co data for 2024 (or latest available) in developing countries. The institutional quality index represents
the average for indicators of government effectiveness, regulatory quality, rule of law, and control of corruption
on a scale from -2 to 2. It assigns higher scores to countries with better institutional quality, according to
ratings by non-governmental organizations and international organizations. For better representation, a linear
transformation was applied to regulatory quality scores.
1.35
1.4
1.45
1.5
1.55
1.6
1.65
1.7
Bottom quartile 4
Quartile 3
Quartile 2
Top quartile 1
Chapter IV
Investment facilitation and digital government
137
Figure IV.15
Digital investment facilitation is associated with higher rates of business
creation
New business index by GER quartiles, developing economies, 2016–2022
Sources: UNCTAD (GER.co) for ratings and World Bank (Entrepreneurship Database, 2016–2022) for business
creation.
Notes: Quartiles were constructed from the average score between information portals and single windows
from GER.co data for 2024 (or the latest available) in developing countries. The new business creation index is
measured as the number of newly registered companies with limited liability over the total number of companies
with limited liability in the same year (average, 2016–2022). In case of missing data for the total number of
companies with limited liability, the observation from the year before plus the number of newly registered
companies was used. One outlier (Mauritania) was removed from the first quartile.
0.102
0.104
0.106
0.108
0.11
0.112
0.114
0.116
Quartile 3
Quartile 2
Top quartile 1
Bottom quartile 4
Figure IV.16
Digital investment facilitation does not automatically lead to more FDI
Inward FDI as a percentage of GDP by GER quartiles, developing countries, average
2021–2023
Sources: UNCTAD for FDI inflows, UNCTADstat for GDP data, and GER.co for ratings.
Notes: FDI is the average of FDI flows between 2021 and 2023. GDP is the average between 2021 and 2022
(latest year available).
Abbreviations: FDI = foreign direct investment, GDP = gross domestic product.
Bottom quartile 4
Quartile 3
Quartile 2
Top quartile 1
0
0.01
0.02
0.03
0.04
0.05
0.06
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Box IV.10
Impact assessments of digital government tools for business facilitation
Insights from post-implementation reviews of UNCTAD technical assistance programmes in business facilitation
underscore that the ability to register a business online represents a critical step for business creation. It eliminates
a significant barrier to formalization and alleviates the need for MSMEs to visit central government offices, thereby
improving acccess, enhancing consistency in service delivery and reducing corruption risks.
Governments also reported the following benefits:
• Higher rates of formalization of local businesses, and creation of more businesses (local and foreign) overall
• Reduced time, costs, forms and documents required for creating and operating a business
• Positive effect on women, young people and rural populations, who previously faced greater obstacles with
traditional paper-based and urban-based business registration procedures
• Increased tax, social security and other government revenues, with single windows paying for themselves in
two to three years from additional fee generation alone
• Greater formal sector employment opportunities
• Better data on the business sector, enabling more targeted and inclusive policies, particularly if cross-referenced
with tax and social security data
• A more client-friendly approach in government administration
• Enhanced trade and development, through the use of digital information portals for importers and exporters
Impact measurements of selected projects after the implementation of online single windows for business and
investment facilitation show positive effects on the participation of women and young people in the economy.
Impact on women:
• In Benin, one third of business owners registering online are women.
• In Bhutan, 52 per cent of those applying to register their companies are women.
• In El Salvador, 56 per cent of business owners registering online are women.
• In Lesotho, before online registration was possible, women held 26 per cent of business permits. Afterward,
that figure rose to 34 per cent.
Impact on young people:
• In Benin, registration by young people (age 18–30) increased 181 per cent in the first two years of operation.
• In Mali, registration by young people increased 263 per cent after implementation.
Source: UNCTAD.
information portals and online single
windows in and by themselves do not
lead to higher FDI inflows. Improvements
in governance and institutions take time
to affect investor perceptions, and other
fundamental FDI determinants – ranging
from macroeconomic and political stability to
market size and income levels, labour costs
and the quality of physical infrastructure
– are ultimately more important.
The comparison of the correlations of GER
data with business creation rates, on the one
hand, and FDI attraction on the other can be
considered a confirmation that the benefits
of business and investment facilitation
are more significant for domestic firms
than for international investors (box IV.10).
The latter tend to have more resources
for engaging local advisers to support
compliance with regulatory requirements
and to navigate administrative procedures.
Domestic MSMEs and informal businesses
stand to gain much more from streamlined
procedures for business formalization
– hence the insistence by UNCTAD
on combining, as much as possible,
digital government tools for business
facilitation and investment facilitation, and
synergizing programmes for private sector
development and investment attraction.
Chapter IV
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139
The sustainable development impact
of business and investment facilitation
measures is also often more tangible
through their effect on domestic businesses
and MSMEs. The effect on formalization
rates is significant, which contributes to
domestic resource mobilization. There can
also be positive effects on participation rates
for women and vulnerable groups in the
economy, and for rural populations, owing
to easier access to information through
remote access to government services.
Finally, the analysis for this report empirically
evaluated the influence of the quality of
online business registration portals on FDI
inflows in a cross-country data regression
model. Each additional point in the GER
score is associated with 8 per cent more
FDI. The effect is stronger for developing
than for developed countries, presumably
because of higher marginal gains in
governance and institutional quality.
These results are corroborated by other
studies, which consistently find a positive
correlation between a favourable business
environment and FDI inflows. For instance,
a unit increase in the (now defunct)
Doing Business rankings leads to higher
FDI inflows, by $300 million (Jayasuriya,
2011); moving 1 percentage point closer
to the frontier regulatory environment is
associated with an increase in annual FDI
of between 500 million
(Anderson and Gonzalez, 2013). More
recent studies suggest that a reduction in
procedural complexity in countries leads
to higher FDI inflows of about 4 per cent
within the first two years following the
implementation of digital tools (e.g. World
Bank, 2017). These findings highlight the
importance of streamlined administrative
processes in attracting investment.
Empirical analyses specifically focusing on
digital government find that accessibility
to government information and services
online, as measured by the eGovernment
Survey Index of UN DESA, is associated
with about a 2 per cent increase in FDI per
capita inflows, on average (e.g. Al-Sadiq,
2021). The positive relationship between
online digital government tools and FDI
is attributed to streamlined procedures,
enhanced access to information,
improved government efficiency, reduced
corruption, and cost-saving mechanisms
facilitated by service consolidation
on unified platforms (Lögün, 2020;
Máchová et al., 2018; Al-Sadiq, 2021).
Figure IV.17
Higher-quality digital investment
facilitation is associated with more
investment
Impact of gains in GER ratings
on inflows, average 2021–2023
(Percentage)
Sources: UNCTAD for FDI inflows, UNCTADstat for
GDP data and GER.co for ratings.
Notes: Depicts the marginal effects (semi-elasticities)
of higher quality of information portals and single
windows on FDI inflows. Vertical lines represent
confidence intervals at the 90 per cent level.
Predictions based on an ordinary least squares
cross-country model, with robust standard errors.
The independent variable is the average rating
between information portals and single windows in
2024 (or latest available); controls include population
(2021), GDP (2021) and development status.
-10
-5
0
5
10
15
20
Developing countries
World
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140
E. From online business facilitation
to digital government
The basic architecture of digital government solutions for
businesses and investors is fundamentally the same across many
types of services. Thus, expanding their scope to cover more
services helps capture economies of scale and scope. Effective
implementation requires accurate documentation and thorough
simplification of procedures, and a focus on putting in place
enabling legislation rather than reforming the laws underpinning
the procedures. For developing countries, using digital business
and investment facilitation to strengthen public administration
more broadly is an important opportunity.
1. The basic architecture of digital government services
Investment operations encompass a range
of administrative requirements, including
company registration, obtaining various
licences and permits (such as investment,
business activity, environmental and building
permits), property acquisition registration,
compliance with social security, pension
schemes and tax obligations at both
national and local levels (UNCTAD, 2023e).
The administrative processes associated
with these obligations all follow a similar
pattern. Investors submit the necessary
data, documents and payments to one
or more administrative bodies. The
application file is reviewed by the respective
administrations. Upon approval, the
data provided is recorded in a registry,
and a formal certificate – whether
called a licence, permit, registration,
declaration or authorization – is issued.
The application file consistently comprises
three fundamental elements: data (entered
on a form), documents (such as proof of
registration in other registries, identity cards
and authorizations) and payment. The
processing involves a varying number of
operators within the authorizing entity that
assess the file until it is either approved,
rejected or returned for correction or
requests for additional information. The
registry where the information is stored
can take various forms, ranging from
a physical logbook to a spreadsheet
or an online database. Building on this
standard administrative pattern, the basic
architecture of digital government services
mirrors the sequence of steps through a
series of online interactions (figure IV.18).
An online service is a succession of screens
and actions actions through which the
applicant can complete a form, upload the
necessary documents, make a payment,
and submit the application. Subsequently,
one or more operators review the application
file, deciding to either approve or reject
it. Once approved, the applicant’s data
are transmitted to an online registry, and
a digital registration certificate is issued.
Once the application – a platform or
interface – has been put in place to manage
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141
Figure IV.18
Basic architecture of digital government service
Source: UNCTAD.
Online service
(register, modify, cancel, consult)
Government portal
Registry
Access to services
Authentication
User account
Data (form)
Control
1
Control
n
Generate
certifcate
Documents
Payment
Create
Update
Delete
Consult
interactions with users, the processing
components that constitute the actual
service have been developed, and a
database or registry has been created to
manage a particular service such as the
registration of a company name, services
can be added with essentially the same
tools. A single service such as business
registration will usually already comprise a
“family” of services or multiple versions of
itself for different types of legal entities, such
as sole traders, limited liability companies,
and branches or subsidiaries of foreign
firms. But services can equally be extended
to other areas, such as construction
permits, operating licences or obtaining
social security or tax registration numbers.
Digital government services are often
developed through a series of evolutionary
steps. Initially, each government agency
tends to develop its own digital services
independently, leading to a collection
of uncoordinated processes. This
fragmentation forces users to interact
separately with each agency, inputting
the same information multiple times.
Such set-ups lead to discrepancies in
user data across different registries,
as updates in one are not reflected in
others. If an agency requires verification
of a permit from another, it typically
requests a physical copy from the user.
6 See https://e-estonia.com/solutions/x-road-interoperability-services/x-road.
To improve efficiency, some systems allow
agencies to share applicant data among
themselves; an example is X-Road in
Estonia.6 While this reduces redundancy –
applicants do not need to provide the same
information multiple times – it still requires
them to initiate applications with each
agency separately. This model enhances
the user experience and ensures data
quality but depends heavily on inter-agency
cooperation, which can be a limiting factor.
An integrated services approach further
consolidates the user experience by enabling
applicants to interact simultaneously
with multiple agencies through a single
service. Applicants fill out one form, upload
documents once and make a single
payment, even as their applications are
processed separately by each relevant
agency. In this system, which ensures data
consistency, agencies interact seamlessly
and offer a unified service to the applicant,
but they continue to operate independently.
A new approach that holds promise for
the future is a fully user-centric model in
which the applicant is placed at the centre
of public administration (figure IV.19).
All personal and official data, such as
registrations and permits, are consolidated in
an online “safebox” that is accessible to any
government agency the user has dealings
with. This fundamentally changes how data
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are managed, by eliminating the need for
applicants to submit data or documents
multiple times. Instead, applicants simply
grant agencies access to their safebox,
where all required information is stored and
continually updated. Rather than issuing
traditional certificates, agencies validate the
data directly within the safebox, streamlining
processes and ensuring that all information
remains accurate and current. Several
novel technologies are being developed
to bring the user-centric model closer to
reality, such as systems that allow users to
manage access and usage permissions for
their data, and blockchain-enabled verifiable
credentials to improve data security.
Looking at these advanced models and
configurations is especially helpful for
countries that are at the early stages of
developing digital government, those
that have relatively few legacy systems
in place with limited sunk costs, and
those where basic services in support of
business entities of any size can make
an immediate and sizeable difference
in the quality of public administration
and the ease of doing business.
2. Effective implementation
Facilitation is fundamentally about
simplifying compliance. It ensures that
administrative procedures are transparent,
clearly understood and designed to
require minimal effort from users. The
adoption of good business and investment
facilitation practices demands a significant
shift in mindset within public agencies
– from a traditional focus on control
and enforcement, which primarily aims
to prevent fraud and detect violations,
to a supportive role that helps firms
meet administrative requirements.
The initial step involves first acknowledging
that administrative procedures pose
challenges for firms – whether foreign or
local, large or small – and then conducting
an uncompromising analysis of the
underlying causes. The root causes of
administrative complexity are mostly
not in the rules but in the way they
are applied. Rules can be interpreted
differently by different parts and levels of
government. Procedures will vary across
different agencies and local authorities.
They evolve over time depending on
the risk aversity and control mindset of
Figure IV.19
Evolution of digital government services
Source: UNCTAD.
Agency 1
Agency 2
Agency 3
Service 1
Service 2
Service 3
Agency 4
Agency 5
Agency 6
Integrated
service
(4, 5, 6)
Agency 1
Agency 2
Agency 3
Service 1
Service 2
Service 3
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individual civil servants, or in reaction to
occasional instances of malfunction or
malfeasance. The design of procedures to
implement rules often prioritizes form over
substance, causing them, over time, to
depart from the original intent of the rule.
It is therefore important to differentiate
between administrative procedures –
which include the interactions, forms,
information and payments demanded
by administrations to enforce laws – and
the actual laws they aim to implement.
Typically, administrative procedures are more
complex than the laws they are based on,
often incorporating unnecessary conditions
and delays. Streamlining administrative
procedures, in the vast majority of cases,
does not necessitate changes to the
law. It mostly represents a more efficient
and effective application of the law.
From a practical perspective, the
implementation of digital government
services involves three main steps:
(1) accurate documentation of the
procedure that is to be brought online in
its existing form; (2) design of the online
service, including, where possible, the
streamlining of the procedure; and (3)
implementation of the online service.
Documentation of the procedure for which
the digital government solution is being
developed requires the involvement of
administrative officers from the entities
involved in the relevant registration or
authorization processes. It does not require
any technical expertise on information
technology (IT) or online systems. Instead,
it requires detailed knowledge of the
step-by-step process that the user of
the service needs to follow to obtain the
desired certification. The result should
be a breakdown of the steps, and for
each step a detailed mapping including
the entity with which each transaction
takes place, the requirements for
each transaction (e.g. information to
provide, documents to submit, fees to
pay), the possible scenarios that follow
(e.g. further information or documents
needed, referrals to other entities), the
results of the transaction (e.g. rejections,
certifications), possible complaints or
recourse procedures, and the legal basis
for each transaction and administrative
requirement. The latter element is needed
to distinguish between the requirements
and controls actually required by the law
and those that have been added over time
by implementing agencies, as well as to
identify discretionary aspects of procedures.
The administrative officers responsible for
providing the service will be familiar with
individual procedures, yet they may be
limited in their ability to oversee the complete
process from the user’s perspective.
Very often, only after a detailed mapping
of the process does it become clear
that the process has many unnecessary
complexities, redundancies and overlaps,
such as the need to visit the same entities
in different steps or the need to supply the
same information or document multiple
times. Officers may also not be trained
in process documentation techniques;
an important part of capacity-building
programmes in this area is not about IT,
but about process mapping and design.
Design of the online service is still not driven
primarily by IT, although it is important to
involve project managers who are used
to translating rules and administrative
requirements into “code” – logical
instructions that cover every eventuality
of the transactions involved (box IV.11).
A service is usually not designed to exactly
mirror the physical procedure, because
the inefficiencies identified during the
documentation process can be reduced
through a process of streamlining.
Simplification means focusing on those
requirements and controls that are required
by the law, minimizing information and
documentation required at each step,
and regrouping or resequencing steps.
Ultimately, the design of the online service
involves creating a database by defining
exactly what fields of data are required,
designing the user form and document
upload page, creating approval roles for
administrative officers and integrating
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online payment (often using a commercial
provider of online payment services).
Implementation of the online service
involves not only the installation of the
technical elements of the system – through
either physical servers or cloud-based
providers – but various other aspects,
including the management of the transition
process, with each entity responsible for
the relevant registrations or authorizations,
the training of operators in charge of
approvals or controls, and others who
will assist the public or staff call centres,
the testing of the system using real cases
and focus groups, and a communication
campaign. Institutional capacity-building,
both on the service documentation and
design process and, subsequently, on the
operation of the system, is crucial to ensure
continued service development and the
gradual expansion of digital government
to cover all services to business.
In this process, effective communication
on the positive impact of digital investment
facilitation is crucial to maximize buy-in from
implementing agencies and to overcome
resistance. In Benin, the tripling of business
creation also tripled fee income, generating
more jobs for government workers (box
IV.12). In Lesotho, staff using a digital
business licensing system reported greater
satisfaction as their role shifted from
processing forms to advising clients. In
Bhutan, government staff involvement in
developing new online services expanded
their skills and responsibilities, providing
additional motivation. Digital tools, by
better capturing data on business creation,
including user demographics, enable
policymakers to understand the impact
of investment facilitation, measure effects
on communities and ensure inclusivity.
Box IV.11
Bhutan: Empowering civil servants to design their own digital services
In 2021, the Government of Bhutan introduced a groundbreaking government-to-business digital portal specifically
tailored for cottage and small industries, using the customizable digital platform of UNCTAD. This initiative targets
firms valued at less than $14,000, which represent 95 per cent of the country’s economy.
The process is streamlined and user-friendly: entrepreneurs can complete a simple form on a mobile phones and
receive all necessary registration documents instantly and free of charge. The impact was significant: in 2022, about
1 per cent of the population, or 5,500 people, used the service to register a business. This marked a threefold
increase in the registration rate, with women making up 52 per cent of the new users. This surge reflected a
significant transformation in public administration and set a benchmark for digital government worldwide.
The platform empowers civil servants who, after initial training, can independently customize the digital platform to
add online services. These services now encompass a wide array that includes bus service permits, drone flying
authorizations and industrial park leases. This approach helps civil servants empathize with users, enhancing their
understanding of potential bottlenecks and frustrations in the process.
The Government plans to expand the platform over the next two years to include all permits, authorizations and
procedures. The system could extend to encompass all government departments, allowing civil servants to shift
their focus towards more strategic tasks by alleviating administrative burdens. This strategic development has
boosted economic diversification and new businesses, tripling formal employment opportunities, demonstrating
the impact of digital transformation on economic growth and public administration efficiency.
Source: UNCTAD. See also https://unctad.org/news/bhutans-entrepreneurs-can-now-open-business-under-minute.
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Box IV.12
Benin: Using digital government to promote sustainable impact and
inclusivity
Since 2020, the Investment and Export Promotion Agency of Benin has used the digital government platform
of UNCTAD to streamline the registration process for foreign and domestic companies. It allows businesses to
handle all registration steps, including for tax and social security, from a mobile phone. Users fill in one form, scan
and upload documents, and pay with a credit card or mobile money, reducing the time required from five days
to just two hours.
The implementation of the digital platform (monentreprise.bj) nearly tripled the number of business registrations.
the number of business registrations. Notably, a third of these new business owners are women, half are under
age 30 and half are located in rural areas, indicating broad demographic reach. Interviews with users revealed that
the system not only facilitates business creation but also helps in business formalization. Formalized businesses
report greater ease in hiring qualified staff, accessing credit, obtaining insurance, receiving formal training and
exporting to members of the West African Monetary Union. The revenue generated from the increased number of
registrations has provided the Agency with additional funds. These funds have been used to expand staff, enhance
outreach to entrepreneurs and invest further in improving the system, fostering a sustainable impact and inclusivity
in the country’s business environment.
Source: UNCTAD. See also https://www.gouv.bj/article/512/lapiex-lance-monentreprise.bj.
3. Connecting with wider digital government
The prevailing guidance on digital
government implementation favours a
centrally driven approach based on a
national digital government strategy and
supported by a digital government authority
or unit. For example, the Recommendation
of the Council on Digital Government
Strategies of the OECD (2024) recommends
the development of a digital government
strategy aligned with other sectoral
strategies; government-wide coordination
mechanisms; development of digital skills,
job profiles, technologies, contracts and
inter-agency agreements; and review of
legal and regulatory frameworks. A World
Bank (2016) report, which notes that 30
per cent of digital government projects fail
and that only 20 per cent are considered
successful, explains that this imbalance is
due not only to technical issues such as
inadequate infrastructure, interoperability
and cybersecurity risks, but also to
policies, legal frameworks and institutional
factors. The e-Government Survey of
UN DESA (2022) measures factors such
as the presence of legal and institutional
frameworks as the basis for effective
implementation. Technical assistance
and capacity-building by development
agencies generally provide overarching
assessments of digital government
readiness and associated policy advice.
Several practical experiences illustrate
how central steering can be important:
•
Digital government strategies.
Successful digital initiatives are often
underpinned by a comprehensive
strategy. Bhutan and Uruguay exemplify
this approach, with their strategic
frameworks for digitalization. Bhutan
launched its eGovernment Master
Plan in 2014, and Uruguay initiated its
digital agenda with an eGovernment
section in 2007, culminating in 2021
in the Plan de Gobierno Digital 2025.
•
Digital government entity. The creation
of institutions to manage and coordinate
digital strategies can provide valuable
steering. In Benin, the consolidation of
digital strategy entities into the Agency
for Information Systems and Digital in
2022 and in Uruguay the establishment
of the Agency for Digital Government,
Information Society and Knowledge
in 2005 are notable examples.
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•
Legal and regulatory framework.
The development of effective digital
services can be accelerated by enabling
legislation in such areas as personal
data protection, digital payments,
e-signatures and digital identities. The
Digital Code (2018) of Benin and the
National Digital Agenda of El Salvador
are examples of comprehensive
legal frameworks that support digital
strategies, cybersecurity and regulatory
needs in the digital domain.
•
Stakeholder engagement and
communication. Successful digital
government initiatives require
effective stakeholder engagement,
communication strategies and initiatives
to build trust to foster adoption. In
Rwanda, the introduction of a law that
ensures data protection, coupled with
educational and awareness initiatives,
has been credited by the Minister
of Information and Communications
Technology and Innovation for a
30 per cent increase in adoption
of the e-Government platform.
Central steering and support for the roll-
out of digital government are important
and help push the necessary enabling
legislation, budget support and broad-
based stakeholder engagement, yet it can
also lead to complex, costly and lengthy
implementation programmes. The basic
architecture of online services and the
tenets of effective implementation suggest
that there is a complementary approach
that can be used in parallel with or even
in anticipation of major centralized efforts.
This approach is particularly helpful for
developing countries that are still in the early
stages of government digitalization and
that lack the significant resources required
for centralized digitalization projects.
A bottom-up approach, starting from basic
services for business – usually the first
government services to be digitalized – and
gradually expanding to adjacent policy
areas, has several benefits. It can begin in
one or very few public sector entities, does
not necessarily depend on major legislative
interventions, is relatively low cost and adds
immediate value to users and revenue-
generating potential for government. Such
a bottom-up approach can be an integral
part of a wider digital government strategy,
as a “sandbox” approach in which new
digitalization initiatives are rolled out for a
clearly delimited administrative process
before expanding to broader applications. It
allows agencies or subnational entities with
higher levels of capacity or a higher state
of readiness to race ahead (box IV.13).
Box IV.13
Togo: Digital investment facilitation by subnational authorities: special
economic zones
In Togo, digital transformation has significantly enhanced FDI attraction efforts. Launched in 2022, the first
phase of the country’s investment portal (investirautogo.tg) offers a comprehensive online information service.
Managed by the Investment Promotion and Free Zone Agency, the portal provides detailed guidance on
administrative procedures to start and operate a business. It covers nearly 40 procedures and outlines
more than 150 formalities. It also provides contact points for investors who need assistance. It was used
by 13,000 investors in 2023. The portal is part of a collaboration between the United Nations Development
Programme and UNCTAD, begun at the Government’s request and coordinated with the Togo Digital Agency.
The second phase, planned for launch in 2024, is a digital investment window for the Port of Lomé SEZ. It
will facilitate the digitalization of processes such as authorization requests, employee exemption from social
charges and vehicle registration. Expansion into the SEZ underscores the comprehensive involvement of
national institutions in investment facilitation, extending beyond the traditional scope of IPAs.
Source: UNCTAD. See also https://investirautogo.tg.
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Implementing agencies can very
often achieve much independently
of Government-wide efforts or major
legislative reform programmes. A balance
must be found between the need for
overarching strategies and institutions and
practical implementation requirements.
As noted earlier, digitizing administrative
procedures mostly does not require
significant changes in laws. This does not
mean that no legislative action is needed
to support the development of digital
government. However, the emphasis
should be on enabling legislation rather
than on substantive laws underpinning
the administrative procedures. And
while comprehensive legal frameworks
govern personal data protection, digital
payments, e-signatures and digital
identities, basic reforms of mundane
bureaucratic requirements enabling, for
example, the acceptance of electronic
copies of documents, are often sufficient
to allow agencies to proceed with the
implementation of digital services.
Similarly, while the whole-of-government
approach that is usually advocated should
be the ultimate goal for the roll-out of digital
government, it has clear drawbacks for the
pace of development of individual services.
Different institutions tend to operate at
different speeds and find themselves at
different stages of readiness. Centrally
steered programmes that aim to bring along
all public institutions and agencies can miss
out on opportunities to develop individual
services more quickly with a limited number
of first-mover entities (ITU and UNDP
, 2023).
The bottom-up approach defines a limited
initial project scope and digitalizes one
process at a time without necessarily waiting
for lengthy, government-wide reviews of
strategy, legality or IT that risk being divorced
from the reality faced by front-line agencies
and service staff. It helps minimize resistance
and builds momentum for broader digital
transformation at a relatively low monetary
and political cost. It is an approach that
learns from the failures of approaches in
many countries by encouraging agencies
with innovative mindsets to take the
first steps, with others joining as the
advantages of digitalization become clear.
There is significant scope to expand the
array of services on digital government
platforms once the core business and
investment facilitation services (registration,
tax, social security and operating licences)
are covered. Using the online single
window platform developed by UNCTAD,
El Salvador has added services for the filing
of accounts, to support MSMEs not only
in the process of becoming formal but also
in the effort to stay formal (which requires
filing periodic accounts and paying taxes)
(box IV.14). Mali is developing a system
to speed up approval processes for new
pharmaceutical products to streamline the
market for essential medicines (box IV.15).
And Colombia is piloting an emissions
registry to allow firms to calculate and report
emissions in compliance with local legislation
developed to meet commitments under the
Paris Agreement (box IV.16). Adding services
in such specific areas or for sector-specific
procedures can thus help strengthen the
sustainable development impact of digital
business and investment facilitation efforts.
Digital government solutions obviously also
extend to trade, as observed earlier. The
ASYCUDA programme of UNCTAD has a
long track record of implementing online
single windows for clearance of foreign
trade procedures (box IV.17). Similar effects
of economies of scale and scope can be
observed in trade portals, which aim to
incorporate as many relevant procedures
as possible. However, compared with
business and investment facilitation portals,
trade portals are more difficult to envisage
as a basis for wider digital government
expansion because of the narrower scope
of services and institutions they involve.
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Box IV.15
Mali: Expanding the scope of digital services for business:
pharmaceutical approval processes
In November 2023, Mali launched a pioneering online pharmaceutical registry, developed in collaboration
with UNCTAD, the Ministry of Health of Mali and the country’s National Pharmaceutical Association. This
initiative was spurred by the urgent need for pandemic preparedness underscored by the COVID-19 crisis
and aims to address major health challenges for the country’s predominantly young population.
The digital registry is designed to enhance the efficiency of the marketing authorization process and ensure
the safety and quality of medicines. It will improve transparency and traceability, optimize resource use,
support the growth of the local pharmaceutical industry and combat counterfeiting. According to the United
Nations Office on Drugs and Crime (2023), up to half of the pharmaceuticals in Mali are counterfeit or
improperly distributed, emphasizing the need for this system.
The online registry will enable pharmaceutical importers, producers and distributors, along with the
Government, to address supply chain delays and fraud more effectively. This improvement in transparency
and accessibility is expected to streamline the distribution of medicines and vaccinations. Currently, the
approval process for importing, distributing or producing medicines is hindered by bureaucratic delays,
often taking up to 18 months owing to reliance on paper documentation and the requirement for a salaried
representative’s physical presence. The new system will reduce the approval time to three months.
At present, the system allows online registration of pharmaceutical stakeholders and helps medical authorities
monitor the entry, production and distribution of products. It also aids in the identification of obsolete and
unauthorized items and provides data on the locations of products and the needs for them across various
medical facilities. Although still in its pilot phase, digitalization of this registry holds promise for replication
and scaling in other developing countries, potentially transforming health care delivery and management.
Source: UNCTAD. See also https://unctad.org/news/magic-malis-digital-pharmaceutical-registry.
Box IV.14
El Salvador: Expanding the scope of digital services for business:
supporting MSME formalization
In 2018, UNCTAD and the Government of El Salvador launched a digital single window for MSMEs (miempresa.gob.
sv), allowing them to register online with simplified procedures. An important objective was to reduce informality.
Entrepreneurs can register simultaneously with the ministries of finance, labour and commerce, and the municipality.
This automates what were previously 12 separate registrations. The system also integrates an online accounting
tool that supports the filing of annual accounts and can generate six-month tax and social security filings as well
as 11 annual filings. The purpose of these supporting tools is to help businesses become formal and remain
formal – which requires periodic filings.
Many MSMEs are subsistence enterprises or sole traders, in the informal sector. Registrations at the National
Commission for Micro and Small Businesses increased significantly in 2020 and afterward, especially in the most
fragile categories. This translated to a steep rise in the numbers of entrepreneurs (+74 per cent) and MSMEs (+63
per cent) registered for social security in 2021. More than half of these companies were women owned. Their access
to enterprise loans and safety nets critically contributed to the resilience of the private sector in the pandemic.
Source: UNCTAD. See also https://miempresa.gob.sv.
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Box IV.16
Colombia: Expanding the scope of digital services for business:
reporting carbon emissions
In 2023, the Colombian Ministry of Environment, in collaboration with UNCTAD, initiated the development of
a digital platform that will allow businesses to report their carbon emissions annually and obtain necessary
certifications, supporting the country’s commitment to the Paris Agreement objectives.
The registry is set to launch in the latter half of 2024, after final adjustments to the prototype, which was
presented at the World Investment Forum of UNCTAD in October 2023. It integrates a user-friendly emissions
calculator and complies with the standards of the Intergovernmental Panel on Climate Change, ensuring
that it is both comprehensive and accessible for companies that are required to report their emissions. It is
designed to prepare Colombia for upcoming global carbon pricing and tax measures, including the Carbon
Border Adjustment Mechanism of the European Union.
The platform will be expanded with online services for environmental impact assessment certificates, in an
aim to streamline the application and review process, which is often criticized for its inefficiency and lack
of transparency. These assessments are crucial for many sectors in Colombia, in particular construction.
In addition, a digital registry for green business certificates is being considered. This system would enable
companies to evaluate their environmental practices against regional standards and qualify for “green
business” status, which provides benefit from various incentives. These digital innovations not only position
Colombia as a leader in environmental digitalization but also serve as potential models for other countries
with similar environmental and climate legislation.
Source: UNCTAD. See also https://unctad.org/news/un-digital-government-awards-celebrate-excellence-
online-public-services.
Box IV.17
ASYCUDA: Online single windows for trade
Since 2012, the ASYCUDA (Automated System for Customs Data) Programme of UNCTAD has partnered
with governments and international organizations to design, develop and implement an integrated platform for
international trade. It allows all stakeholders to process clearance of trade procedures, including by submitting
permit and licence applications online, while also improving information sharing between partner government
agencies and traders – aligning with Recommendation 33 of the United Nations Economic Commission for Europe
on single windows and trade facilitation. Electronic single windows for trade are one of the most effective measures
to enhance trade facilitation in a country, underscored by their inclusion in the WTO Trade Facilitation Agreement.
By digitally connecting partner government agencies, an ASYCUDA single window simplifies trade, reduces
clearance times and trade costs, ensures transparent and uniform application of duties and taxes, maximizes
government revenue, helps combat corruption and ensures compliance with standards for public health and safety.
ASYCUDA-based electronic single windows are active or being implemented in 13 countries (Barbados, Burundi,
the Comoros, Jamaica, Kazakhstan, Rwanda, Saint Vincent and the Grenadines, Sao Tome and Principe, Timor-
Leste, Turkmenistan, Uganda, Vanuatu and Zimbabwe).
In 2023 UNCTAD published Roadmap for Building a Trade Single Window, which shares experience, expertise
and recommendations in a blueprint for designing and implementing tailored, single windows that comply with
national, regional and international requirements. It is being used as a source by the World Customs Organization
as it updates its Single Window Compendium.
Sources: UNCTAD and UNCTAD (2023b). See also https://asycuda.org/en/# and https://unece.org/sites/default/
files/2023-10/Rec33_ECE-TRADE-352-Rev1E.pdf.
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F. Conclusions and policy
implications
Governance and institutional weaknesses have consistently
featured in research and investor surveys as key challenges to
the attraction of investment in sustainable development. Digital
government contributes to good governance and stronger
institutions. Online tools for business and investment facilitation
have proven to be a good starting point for the broader
implementation of digital government. Digital facilitation of
business and investment is thus a key step in developing broader
digital government services and, indirectly, a key pillar of the
promotion of investment in sustainable development.
Investment facilitation is top of mind for
policymakers worldwide. Investment policy
measures of national governments aimed at
facilitating the establishment and operations
of foreign investors have rapidly increased
in number since the launch of the UNCTAD
Action Menu in 2016 – they now make
up 40 per cent of measures favourable
to investors. Recent agreements at the
bilateral, regional and international levels
more often include provisions on facilitation,
and the recently finalized IFD agreement
may provide further impetus for action by
national policymakers and treaty negotiators.
As discussed in this chapter, international
agreements can be catalysts not only for
investment facilitation but also for digital
tools for that purpose. In its support
to discussions on international policy
instruments, UNCTAD has consistently
emphasized the need to focus the
implementation of investment facilitation
in developing countries on measures with
the highest rate of return. While investment
facilitation provisions can cover many
issues, including dispute prevention, focal
points and collaborative initiatives, the
most cost-effective and impactful ones
revolve around information provision,
transparency of rules and regulations, and
streamlining of administrative procedures
through digital government tools. That is
because they are important all the time
(not just on an occasional or project basis),
they benefit all firms (large and small,
foreign and local) and they can cover
all necessary processes for business
establishment and operation (not just
procedures specific to foreign investment).
Developing countries can be at an
advantage in establishing digital government
tools for business and investment facilitation.
They have fewer legacy systems to integrate
and can adopt the latest solutions. A smaller
number of institutions and decision-makers
can also support faster implementation.
The evidence in this chapter confirms
that there is a leapfrogging opportunity;
some of the lowest-income countries have
created online facilitation platforms that
can compete with the best. However, the
development of most of these platforms has
required technical assistance and support.
Importantly, the IFD agreement and other
international cooperation agreements on
investment aim to accelerate support to
developing countries for the implementation
of investment facilitation mechanisms. Such
Digital
investment
facilitation
measures are
valuable all the
time, for all
firms, in all
processes
Chapter IV
Investment facilitation and digital government
151
support should focus in large part on the
development of digital government solutions.
Governments should adopt a
comprehensive approach to digital
investment facilitation, avoiding dedicated
processes solely for investment
authorization. Investors are not helped by
smooth investment approval processes if
subsequent procedures to establish their
business operations remain inefficient.
Governments should progressively
incorporate all or most procedures and
services required by both foreign and local
businesses, such as business registration,
tax and social security registration, licensing
and other essential services. This approach
enables Governments to harness the full
potential of digitalization and to capture
economies of scale and scope from the
implementation of digital platforms.
But there is no reason to stop at
the core mandatory procedures for
business establishment. Countless other
administrative procedures affecting
business operations may be sector specific
or motivated by policy concerns ranging
from the environment, to health and safety,
to labour and social issues. The digital
government tools that are central to effective
and efficient implementation of business
and investment facilitation initiatives can
serve as a foundation for broader digital
government adoption, making them a
significant step towards modernizing
governance and administrative processes.
As noted in this chapter, digital investment
tools strengthen governance, enhance
transparency and lead to more efficient
administration. Their application more
generally across government can further
improve the attractiveness of countries
to both foreign and local investors. The
return on investment to governments from
setting up a digital platform for investment
facilitation is maximized when more
procedures are covered. Once a digital
business registry is established and firms
have a verifiable online identity, governments
can relatively easily extend online services
to licences (sectoral, import-export),
permits (construction, environmental),
taxes (registration, filing, payment), social
security (employer-employee registration,
filing and payment), land transactions,
health and safety certifications, sector-
specific procedures such as pharmaceutical
approval processes, and carbon
registries. In that way, digital business and
investment facilitation becomes a stepping
stone to wider digital government.
The digital government platform of UNCTAD
includes a suite of tools and technical
assistance products aimed at supporting
developing countries in meeting their
investment facilitation commitments.
They include information portals, online
single windows and regional investment
facilitation monitors specifically tailored
for business and investment facilitation.
Acknowledged by the Donor Committee
for Enterprise Development as exemplars
of good practice, these tools have
garnered widespread attention, being
accessed 6.2 million times in 2023.
The digital single windows developed by
UNCTAD can also be extended to other
areas of government. From a technical
point of view, their cloud-based approach
means there is no need for systems
integration: new databases can be designed
within the same system and application
programming interfaces can connect to
existing registries. New online services can
be created, with civil servants progressively
training their colleagues in other agencies
to use the system or accessing training
at the Digital Government Academy
of UNCTAD and the United Nations
Institute for Training and Research.
At the request of various Governments,
UNCTAD has already started developing
digital single windows that go beyond
business creation to support business
operations, with a specific focus on
the Sustainable Development Goals.
This effort includes tools to facilitate the
licensing of the import, distribution and
local production of pharmaceuticals (using
Digital business
and investment
facilitation tools
are a stepping
stone to
wider digital
government
World Investment Report 2024
Investment facilitation and digital government
152
standards of the World Health Organization),
the registration and calculation of
carbon emissions to assess nationally
determined contributions and to certify
carbon credits and debits (following the
methodology of the Intergovernmental
Panel on Climate Change), tax and social
security filings, and the digitalization of
extended producer responsibility.
This focus on processes relevant for the
Sustainable Development Goals shows
how digital business and investment
facilitation can be deployed specifically
to support sustainable development.
Cases discussed in this chapter provide
ample evidence of the impact of digital
business and investment facilitation on
sustainable development and inclusiveness,
in particular through rates of participation
in the economy of women, youth and
rural communities. Even in countries with
a significant digital divide, solutions have
been found to ensure that population
groups with limited access to the Internet or
lacking digital skills have reaped the benefits
of digitalization, e.g. through terminals
in business registries and municipalities
and through dedicated support.
Building on digital business facilitation
towards wider implementation of digital
government will have an even bigger
impact on sustainable development and on
investment in the Sustainable Development
Goals. There is strong evidence that
good governance, transparent rules and
regulations, and efficient administrative
procedures have a positive impact
on FDI. Surveys of investors and IPAs
consistently show that governance and
institutional weaknesses are at the heart
of challenges in attracting investment for
sustainable development. By supporting the
development of wider digital government
applications, technical assistance for
business and investment facilitation,
including capacity-building initiatives
based on international investment policy
instruments, has the potential to tackle some
of the root causes of the gap in investment
for the Sustainable Development Goals.
UNCTAD has acted as a catalyst for
progress on investment facilitation at the
national and international levels. It has
actively supported individual countries,
regional groups and the international
community through policy advice, policy
guidance and knowledge resources. An
important focus of the organization is now
on implementation – through technical
assistance to Member States on digital
investment facilitation. The digital tools
for business and investment facilitation
included in the UNCTAD digital government
platform are operational in more than 60
countries (and the same tools are used for
trade information portals). Looking ahead,
UNCTAD will continue to support developing
countries and – in collaboration with other
international organizations – look for
opportunities to maximize the development
benefits of digital government solutions
by widening their scope of application.
* * *
Digital business
and investment
facilitation
can support
inclusive and
sustainable
development
World Investment Report 2024
153
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156
FDI inflows
FDI outflows
Region/economy
2018
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
Worlda
1 376 139
1 729 239
984 578
1 621 808
1 355 749
1 331 813
1 010 629
1 444 809
779 507
1 881 922
1 574 724
1 550 584
Developed economies
674 750
1 024 750
337 595
731 843
426 198
464 397
633 813
1 045 960
396 035
1 376 095
1 023 157
1 059 323
Europe
320 294
660 687
158 933
178 748
-105 878
16 493
535 714
648 344
-17 470
705 714
216 770
327 855
European Union
305 556
627 336
154 889
266 502
-84 831
58 645
340 138
644 799
102 670
619 677
169 790
182 746
Austria
5 390
4 905
-9 983
17 092
9 326
4 466
5 612
12 486
7 284
25 243
7 523
9 594
Belgium
27 137
11 861
3 133
9 905
11 551
23 019
43 581
6 111
5 420
30 095
20 311
12 072
Bulgaria
1 143
1 835
3 397
1 794
2 771
3 913
249
449
246
318
561
598
Croatia
1 199
402
146
4 486
3 590
2 749
206
-118
35
926
-254
1 178
Cyprus
-413
52 330
-24 451
7 388
5 732
3 447
-6 941
51 415
-32 965
3 278
-905
-1 833
Czechia
11 010
10 108
9 411
9 051
9 248
7 785
8 663
4 128
2 990
7 734
5 675
7 052
Denmark
-2 497
27 029
1 372
7 095
7 750
8 760
-3 971
36 425
9 660
26 138
5 868
15 129
Estonia
1 426
3 053
3 541
105
1 009
4 577
-46
1 868
292
-770
842
1 506
Finland
-2 172
13 456
-1 579
13 290
5 795
-1 676b
11 455
4 865
5 856
9 156
13 275
1 372b
France
34 671
20 426
13 174
34 109
75 979
42 032
95 621
51 459
23 676
55 087
52 776
72 356
Germany
72 022
52 684
69 954
51 218
27 411
36 698
97 117
151 078
38 700
147 604
145 528
101 254
Greece
3 973
5 019
3 213
6 328
8 451
5 430
477
642
549
1 109
3 198
3 952
Hungary
6 460
4 143
6 842
8 041
9 320
6 016
3 364
3 155
4 436
4 141
4 123
3 299
Ireland
-12 017
149 433
102 519
-3 933
-25 058
-9 165
5 154
32 083
-11 400
56 146
9 395
-6 595
Italy
37 682
22 720
-18 576
-2 952
32 177
18 219
31 542
24 362
2 929
26 415
16 543
13 014
Latvia
960
926
1 004
3 303
1 404
1 212
207
-104
255
2 324
115
582
Lithuania
972
1 441
416
2 860
2 214
1 868
699
382
-46
1 323
367
758
Luxembourg
-83 336
163 718
9 839
25 123
-359 331
-62 808
21 857
176 767
148 012
52 174
-294 199
-23 679
Malta
4 024
3 778
3 921
28 662
19 916
20 900c
7 401
6 960
7 235
24 676
24 625
20 860c
Netherlands
102 134
15 940
-81 651
-70 238
-80 438
-168 450
-44 152
31 023
-173 903
92 375
38 227
-142 185
Poland
15 996
13 510
15 195
29 235
31 470
28 685
891
1 854
851
3 168
6 325
10 403
Portugal
7 181
12 251
7 683
9 615
9 778
7 220
1 375
4 010
2 526
1 468
2 686
3 556
Romania
6 219
5 791
3 432
10 574
10 572
7 130
379
363
53
141
1 297
40
Slovakia
1 675
2 511
-2 404
1 821
2 902
180
322
43
348
297
433
89
Slovenia
1 384
1 463
220
1 846
2 039
1 103
281
610
519
1 356
683
540
Spain
58 063
17 842
14 239
38 318
44 885
35 914
37 944
26 196
33 539
17 260
42 900
30 335
Sweden
5 269
8 761
20 880
22 364
44 706
29 418
20 852
16 286
25 576
30 494
61 873
47 498
Other Europe
14 738
33 352
4 044
-87 754
-21 047
-42 152
195 576
3 545
-120 141
86 037
46 980
145 109
Albania
1 290
1 288
1 108
1 234
1 434
1 630
83
128
88
63
181
265
Belarus
1 421
1 293
1 398
1 238
1 603
2 060
50
16
88
-71
173
23
Bosnia and Herzegovina
581
458
480
683
775
946
2
35
73
46
50
48
Iceland
-381
-225
-928
518
859
977
76
479
-427
3
-118
-181
Republic of Moldova
313
523
150
404
591
428
38
43
-2
33
50
12
Montenegro
490
416
532
699
877
526
109
75
-5
11
53
63
North Macedonia
725
446
230
556
785
667
12
40
53
98
96
101
Norway
1 044
17 023
-7 990
3 825
9 644
7 960
11 181
14 436
9 930
12 842
13 085
8 153
Russian Federation
13 228
32 076
10 410
38 639
-15 205
8 364
35 820
22 024
6 778
64 072
11 510
29 110
Serbia
4 091
4 270
3 469
4 590
4 598
4 870
363
294
112
264
41
308
Switzerland
-100 954
-84 436
-49 570
-76 785
-43 248
13 507
64 955
-46 659
-41 041
-76 161
-74 020
104 954
Ukraine
4 732
6 017
-36
7 320
557
4 247
-127
842
22
-198
344
42
United Kingdom
87 837
53 918
44 397
-71 174
14 912
-89 247
82 961
11 717
-95 877
84 918
95 352
2 007
North America
240 896
280 474
118 890
449 818
378 527
361 271
-99 358
112 548
268 132
383 404
449 398
493 899
Canada
37 662
50 544
25 594
60 382
46 175
50 324
58 049
77 492
43 667
104 878
83 012
89 583
United States
203 234
229 930
93 296
389 436
332 352
310 947
-157 407
35 056
224 465
278 526
366 386
404 316
Other developed economies
113 561
83 589
59 773
103 277
153 549
86 632
197 456
285 068
145 374
286 977
356 989
237 568
Australia
67 569
38 536
14 162
23 855
63 366
29 874
7 825
8 719
5 607
3 100
118 050
9 822
Israel
21 515
17 363
20 969
18 950
23 031
16 422
6 087
8 690
4 579
10 369
10 246
9 970
Japan
9 963
13 755
11 768
34 294
34 194
21 433
144 982
232 627
99 708
208 985
162 126
184 022
Republic of Korea
12 183
9 634
8 765
22 060
25 045
15 178
38 220
35 239
34 832
66 001
65 799
34 541
New Zealand
2 236
4 296
3 997
4 117
7 903
3 568
377
-169
658
-1 451
746
-808
Bermuda
95
5
112
2
10
156c
-35
-38
-11
-27
21
21c
Developing economiesa
701 389
704 489
646 983
889 965
929 551
867 417
376 816
398 849
383 471
505 827
551 567
491 261
Africa
43 772
46 975
41 048
82 196
54 465
52 633
7 899
5 122
2 465
5 144
9 232
61
North Africa
15 407
13 550
9 797
9 509
15 323
13 461
2 269
1 727
356
994
1 171
1 185
Algeria
1 475
1 382
1 140
870
255
1 216
854
31
15
-52
85
84
Egypt
8 141
9 010
5 852
5 122
11 400
9 841
324
405
327
367
342
390
Libya
..
..
..
..
..
..
276
377
-487
-55c
50c
-164c
Morocco
3 559
1 720
1 419
2 266
2 260
1 095
782
893
458
644
641
836
South Sudan
60
-232
18c
68c
122c
-6c
..
..
..
..
..
..
Sudan
1 136
825
717
523
574
548c
..
..
..
..
..
..
Tunisia
1 036
845
652
660
714
768
34
22
43
35
53
40
Annex table 1
FDI flows, by region and economy, 2018–2023
(Millions of dollars)
157
Annex table 1
FDI flows, by region and economy, 2018–2023
(Continued)
FDI inflows
FDI outflows
Region/economy
2018
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
Other Africa
28 366
33 425
31 251
72 687
39 142
39 171
5 629
3 395
2 109
4 150
8 061
-1 124
West Africa
8 126
11 976
10 023
13 626
13 065
12 962
1 105
1 269
2 116
2 469
3 249
755
Benin
194
218
174
346
376
434
10
27
22
43
47
49
Burkina Faso
268
163
-102
-80
670
85
68
16
-7
-43
24
5
Cabo Verde
103
123
68
91
93
118
-9
-16
-4
1
-3
-7
Côte d’Ivoire
620
936
713
1 377
1 599
1 753
145
120
1
285
168
215
Gambia
52
71
190
249
236
208
0.5
-2
-3
-3
2
-1c
Ghana
2 989
3 880
1 876
2 613
1 511
1 354
81
588
542
199
38
56
Guinea
353
43
174
201
650
893c
-0.3
1
2
-3
0.1c
0.1c
Guinea-Bissau
21
72
21
19
33
24
-0.4
0.4
0.3
1
1
0.3
Liberia
129
87
738
536
960
745c
84c
102c
80c
91c
91c
87c
Mali
467
721
537
640
716
698
0.3
1
1
56
44
23
Mauritania
773
887
931
1 064
1 419
873c
..
..
6c
5c
3c
0.1c
Niger
466
717
361
595
966
966
39
32
15
39
9
40
Nigeria
775
2 305
2 385
3 313
895
1 873
566
285
1 473
1 818
2 811
256
Senegal
848
1 065
1 846
2 588
2 929
2 641
53
71
99
52
70
91
Sierra Leone
250
342
173
212
186
263c
..
..
..
..
..
..
Togo
-183
346
-59
-136
-173
34
70
43
-112
-71
-54
-60
Central Africa
8 822
9 254
8 917
6 607
7 083
5 875
79
422
279
498
490
151
Burundi
7
30
21
22
25
29c
..
1
1
1
2
2c
Cameroon
765
1 025
675
964
926
799c
108
126
84
55
27
-109c
Central African
Republic
18c
26c
2c
5c
24c
39c
..
..
..
..
..
..
Chad
461c
567c
558c
705c
614c
913c
..
..
..
..
..
..
Congo
4 315c
3 366c
4 016c
532c
532c
626b
14c
23c
27c
25c
25c
26c
Democratic Republic
of the Congo
1 617
1 488
1 647
1 870
1 846
1 635c
209
134
149
192
436
235c
Equatorial Guinea
-144
821
-9
562
1 388
142c
..
..
..
..
..
..
Gabon
1 379c
1 553c
1 717c
1 529c
1 105c
1 151c
-63c
-34c
..
..
..
..
Rwanda
382
354
260
399
496
523
18
5
..
..
..
..
Sao Tome and Principe
23
24
32
19
127
18
2
1
1
-0.04
0.2
-4
East Africa
7 918
7 681
7 439
10 082
11 543
11 226
248
174
1 508
2 082
1 709
721
Comoros
6
4
4
4
4
5c
..
..
..
..
..
..
Djibouti
170
175
158
168
191
137
..
..
..
..
..
..
Eritrea
61c
-61c
-30c
-31c
-32c
2c
..
..
..
..
..
..
Ethiopia
3 360
2 549
2 381
4 260
3 670
3 263
..
..
..
..
..
..
Kenya
1 139
1 098
1 510
1 406
1 597
1 504c
11
11
1 297
1 840
1 502
588c
Madagascar
353
474
358
358
468
415c
118
102
119
114
142
119c
Mauritius
461
444
225
253
580
760
98
58
16
86
37
16
Seychelles
-66
30
165
225
212
238
20
4
75
42
28
-2
Somalia
408
447
534
601
636
677
..
..
..
..
..
..
Uganda
1 055
1 303
1 191
1 648
2 953
2 886
0.3
0.3
0.3
0.3
0.4
0.4
United Republic of
Tanzania
972
1 217
944
1 190
1 265
1 339c
..
..
..
..
..
..
Southern Africa
3 499
4 514
4 871
42 373
7 450
9 109
4 196
1 529
-1 793
-899
2 614
-2 751
Angola
-6 456
-4 098
-1 866
-4 355
-6 599
-2 086
6
-2 349
91
-1 057
41
33
Botswana
286
94
32
-319
708
198c
82
-20
-68
-33
10
-38c
Eswatini
36
130
36
117
15
29
-11
22
-13
60
-17
-22
Lesotho
41
35
28
-12
-8
-26
..
..
..
..
..
..
Malawi
77
55
252
129
243
208c
-102
23
-154
28
37
32c
Mozambique
2 703
2 212
3 035
5 102
2 458
2 509
-25
-31
153
194
564
174
Namibia
209
-179
-146
851
1 072
2 345
98
9
52
18
12
-310
South Africa
5 450b
5 125b
3 062b
40 215b
9 231b
5 233b
4 076b
3 147b
-1 951b
139b
2 162b
-2 811b
Zambia
408
860
245
394
-65
108
45
696
64
-280
-253
160
Zimbabwe
745
280
194
250
395
588
27
32
33
32
58
31
Asia
501 858
497 788
513 069
666 542
677 829
621 144
359 770
346 416
382 427
457 597
470 637
440 419
East and South-East Asia
400 933
397 183
404 822
542 477
538 249
512 531
300 620
292 723
335 063
380 875
369 413
367 047
East Asia
254 455
232 335
285 512
334 030
315 115
286 214
243 603
203 040
267 099
289 912
286 073
278 533
China
138 306
141 225
149 342
180 957
189 132
163 253
143 037
136 908
153 710
178 819
163 120
147 850
Democratic People’s
Republic of Korea
2c
30c
6c
18c
10c
13c
..
..
..
..
..
..
Mongolia
2 174
2 443
1 719
2 173
2 504
2 248
37
127
26
113
76
76
Hong Kong, China
104 246
73 714
134 710
140 186
109 685
112 676
82 201
53 202
100 715
96 428
106 226
104 286
Macao, China
2 613
6 683
-6 319
5 280
3 625
2 324c
270
1 041
1 148
3 211
1 062
1 607c
Taiwan Province of
China
7 114b
8 240b
6 053b
5 416b
10 158b
5 700b
18 058b
11 763b
11 500b
11 341b
15 589b
24 714b
South-East Asia
146 479
164 848
119 310
208 447
223 134
226 317
57 017
89 683
67 964
90 962
83 339
88 514
Brunei Darussalam
517
375
577
205
-292
-51
..
..
..
..
..
..
158
Annex table 1
FDI flows, by region and economy, 2018–2023
(Continued)
FDI inflows
FDI outflows
Region/economy
2018
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
Cambodia
3 213
3 663
3 625
3 483
3 579
3 959
124
102
127
92
151
151
Indonesia
20 563
23 883
18 591
21 131
25 390
21 628
8 053
3 352
4 448
3 845
7 323
7 070
Lao People’s
Democratic Republic
1 358
756
968
1 072
636
1 668c
..
..
..
..
0.01
..
Malaysia
7 618
7 813
3 160
12 173
16 940
8 653
5 114
6 231
2 419
4 676
13 322
7 643
Myanmar
2 892
2 509
1 907
2 067
1 239
1 520
..
..
..
..
..
..
Philippines
9 949b
8 671b
6 822b
11 983b
5 939d
6 210d
4 116b
3 351b
3 562b
2 251b
308d
1 251d
Singapore
73 115
97 533
74 857
126 674
141 118
159 670
23 926b
67 776b
39 793b
61 368b
52 230b
62 997b
Thailand
11 705
3 765
-6 284
14 417
11 082
4 548
15 085
8 410
17 260
18 398
7 365
10 369
Timor-Leste
48
-239
-713
-419
-395
13
..
-3c
-26c
-26c
-34c
-17c
Viet Nam
15 500
16 120
15 800b
15 660b
17 900b
18 500b
598
465
380b
358b
2 674b
-950b
South Asia
52 262
59 090
71 050
52 683
57 519
35 974
11 630
13 275
11 206
17 716
15 942
13 524
Afghanistan
119b
23b
13b
21b
..
..
39b
26b
37b
31b
..
..
Bangladesh
3 613
2 874
2 564
2 896
3 480
3 004
23
28
12
92
53
30
Bhutan
6
3
1
1
15
18
..
..
..
..
..
..
India
42 156
50 558
64 072
44 763
49 380
28 163
11 447
13 144
11 109
17 253
14 618
13 341
Iran (Islamic Republic of)
2 373
1 508
1 342
1 425
1 500c
1 422c
75
85c
78c
82c
100c
87c
Maldives
576b
961b
441b
643b
732b
762b
..
..
..
..
..
..
Nepal
67
185
126
196
65
74
..
..
..
..
..
..
Pakistan
1 737
2 234
2 057
2 147
1 462
1 818
-21
-85
-45
242
1 157
32
Sri Lanka
1 614b
743b
434b
592b
884b
712b
68b
77b
15b
17b
15b
34b
West Asia
42 030
33 293
30 659
64 156
71 857
65 220
48 431
42 944
38 280
57 503
87 255
58 883
Armenia
267
100
59
366
998
443
7
-133
-27
25
50
54
Azerbaijan
1 403
1 504
507
-1 708
-4 474
253
1 761
2 432
825
77
172
1 875
Bahrain
1 654
1 548
1 021
1 779
2 760
6 840
111
-197
-205
64
1 948
1 113
Georgia
1 352
1 354
595
1 253
2 098
1 595
340
282
23
322
332
53
Iraq
-4 885
-3 508
-2 859
-2 637
-2 088
-5 273c
188
194
147
135
238
279c
Jordan
955
730
760
622
1 251
843
-8
43
26
16
-16
64
Kuwait
204
351
240
567
758
2 113
3 715
-2 696
7 932
4 666
24 613
11 189
Lebanon
2 658
1 905
1 607
600
527
655
631
345
29
-1 339
66
73
Oman
5 602
1 938
1 914
8 793
5 480
4 745c
130
-588
-840
1 178
944
165c
Qatar
-2 186
-2 813
-2 434
-1 093
76
-474
3 523
4 450
2 730
160
2 384
-191
Saudi Arabia
12 141b
3 079b
1 621b
23 112b
28 055b
12 319b
19 252
14 553
5 411
24 674
26 962
16 071
Syrian Arab Republic
..
..
..
..
..
..
..
..
..
..
..
..
Türkiye
12 511
9 469
7 663
11 481
13 447
10 439
3 666
2 973
3 233
5 037
4 716
5 774
United Arab Emirates
10 385
17 875
19 884
20 667
22 737
30 688
15 079
21 226
18 937
22 546
24 833
22 328
Yemen
-282c
-371c
..
..
..
..
4c
3c
..
..
..
..
State of Palestine
252
132
80
353
233
35c
31
56
59
-58
13
36c
Central Asia
6 633
8 223
6 539
7 226
10 205
7 420
-911
-2 526
-2 122
1 504
-1 974
966
Kazakhstan
3 898
3 284
3 670
3 353
6 541
3 223
-1 095
-2 620
-2 206
1 452
-1 535
913
Kyrgyzstan
144
404
-402
226
55
490
100
67
2
2
-455
2
Tajikistan
360b
364b
107b
84b
174b
141b
82b
23b
70b
48b
12b
40b
Turkmenistan
1 607c
1 854c
1 436c
1 287c
936c
1 378c
..
..
..
..
..
..
Uzbekistan
625b
2 316b
1 728b
2 275b
2 498b
2 187b
2b
3b
11b
3b
4b
12b
Latin America and the
Caribbeana
154 458
158 201
91 844
139 948
195 859
193 179
9 584
48 449
-504
41 313
69 131
50 077
South America
106 680
110 224
55 592
94 677
145 965
142 769
232
36 372
-2 703
41 362
52 109
40 789
Argentina
11 717
6 649
4 884
6 903
15 408
22 911
1 726
1 523
1 177
1 537
2 076
2 403
Bolivia (Plurinational
State of)
302
-217
-1 129
584
6
294
-84
48
-111
91
-81
257
Brazil
59 824
65 386
28 322
50 651
73 352
65 897
-16 336
19 031
-13 415
20 450
32 100
29 920
Chile
13 031
14 403
11 292
12 627
16 882
21 027
6 934
11 169
6 242
12 024
11 852
5 567
Colombia
11 299b
13 989b
7 459b
9 561b
17 183b
17 446b
5 126b
3 153b
1 733b
3 181b
3 383b
1 211b
Ecuador
1 389
979
1 095
648
879
372
..
..
..
..
..
..
Guyana
1 231
1 695
2 086
4 468
4 393
7 198
..
17
14
15
5
7
Paraguay
175
334
149
185
725
241
..
..
..
..
..
..
Peru
6 761
6 362
-825
6 272
12 026
3 331
98
1 087
392
1 098
237
889
Suriname
119
-8
0.3
-124
3
-65
..
..
..
..
..
..
Uruguay
-11
2 018
756
1 937
3 456
3 429
718
627
-263
430
500
-812
Venezuela (Bolivarian
Republic of)
844
-1 367
1 504
964
1 651
688c
2 051
-159
1 488
2 319
2 089
1 434c
Central America
45 062
44 032
32 346
42 638
46 350
46 662
9 065
11 709
2 193
-1 025
15 626
7 926
Belize
118
94
76
125
141
50
1
2
4
2
1
2
Costa Rica
2 487
2 812
1 763
3 231
3 164
3 921
53
117
118
85
104
88
El Salvador
826
636
24
386
171
760
-0.04
0.4
22
12
29
29
Guatemala
981
976
935
3 462
1 442
1 552
201
180
149
476
723
665
Honduras
961
498
419
739
920
1 076
66
3
46
226
183
208
159
Annex table 1
FDI flows, by region and economy, 2018–2023
(Concluded)
FDI inflows
FDI outflows
Region/economy
2018
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
Mexico
34 101
34 617
28 211
31 829
36 312
36 058
8 489
10 755
1 720
-2 125
14 532
6 429
Nicaragua
838
503
747
1 220
1 294
1 230
75
59
40
15
19
31
Panama
4 751
3 895
172
1 646
2 906
2 015
180
592
94
285
34
474
Caribbeana
2 715
3 945
3 906
2 634
3 544
3 748
287
368
6
977
1 397
1 363
Antigua and Barbuda
193b
118b
62b
296b
326b
327b
-2b
-15b
1b
-36b
14b
15b
Barbados
242
215
262
239c
200c
225
9
28
8
18c
15c
8c
Dominica
97b
76b
5b
28b
12b
14b
0.1b
0.1b
-0.4b
2b
-1b
-1b
Dominican Republic
2 535
3 021
2 560
3 197
4 099
4 390
209
-192
-99
153
-49
360
Grenada
226b
263b
160b
189b
172b
181b
36b
49b
-45b
-19b
19b
21b
Haiti
105
75
25
51
39
32c
..
..
..
..
..
..
Jamaica
775
665
265
321
319
431c
13
446
7
56
60
-6c
Saint Kitts and Nevis
46b
44b
-0.5b
25b
47b
36b
56b
23b
8b
-3b
-3b
-3b
Saint Lucia
58b
94b
97b
141b
78b
186b
-19b
64b
-35b
-34b
-29b
3b
Saint Vincent and the
Grenadines
28b
58b
57b
169b
68b
79b
15b
10b
3b
-1b
-3b
-3b
Trinidad and Tobago
-700
184
1 056
-935
-913
-1 105c
65
114
98
768
1 385
1 008c
Anguilla
216b
163b
69b
87b
102b
147b
43b
14b
2b
-74b
3b
5b
Aruba
110
-136
137
143
261
-178c
5
-1
1
4
97
91c
Bahamas (the)
947
611
897
1 052
1 255
1 459
117
148
157
66
226
419
British Virgin Islands
34 390c
39 103c
39 620c
39 361c
38 119c
39 889c
41 587c
44 154c
42 280c
43 217c
42 809c
44 158c
Cayman Islands
20 681c
28 165c
23 621c
25 893c
24 590c
28 134c
8 261c
31 630c
10 835c
21 232c
17 990c
20 422c
Curaçao
..
203
156
146
164
155c
..
-11
7
3
11
10c
Montserrat
3b
1b
3b
2b
5b
7b
..
..
..
..
..
..
Sint Maarten
-48
74
22
27
17
37c
4
1
1
6
2
2c
Oceania
1 301
1 525
1 021
1 279
1 398
461
-437
-1 138
-917
1 772
2 568
703
Cook Islands (the)
12b
9b
5b
-2b
4b
6c
0.3b
0.3b
0.3b
0.3b
0.3b
0.3c
Fiji
471
321
241
407
104
91
-4
-36
14
32
16
29
Kiribati
-1
-1
3
1
3
2c
0.1
0.1
0.1
0.1
0.1
0.1c
Marshall Islands (the)
10
4
3
0.5
3
2
..
..
..
..
..
..
Palau
51
45
43
31
72
48c
..
..
..
..
..
..
Papua New Guinea
306b
335b
112b
-11b
458b
-425c
-578b
-1 211b
-990b
1 691b
2 484b
596c
Samoa
17
-4
4
9
5
-3
0.04
4
2
1
-0.1
..
Solomon Islands
25
33
9
28
44
25c
9
4
3
5
2
8c
Tonga
23
-6
4
4
7
24c
1
1
1
-0.1
0.4
0.3c
Tuvalu
0.3c
0.3c
0.1c
0.2c
0.2c
0.2c
..
..
..
..
..
..
Vanuatu
37
53
41
43
11
9c
1
1
1
0.2
1
4c
French Polynesia
6
13
-16
-26
-9c
-6c
38
21
-3
13
6c
15c
New Caledonia
345
723
572
794
696c
687c
96
76
55
30
57c
51c
Memorandum
Least developed countries
(LDCs)e
21 656
22 494
23 996
28 694
26 668
31 299
793
-966
681
-393
1 377
1 160
Landlocked developing
countries (LLDCs)f
21 681
21 975
15 344
19 899
23 599
24 255
1 062
742
-1 408
2 049
-1 750
3 488
Small island developing States
(SIDS)g
6 228
7 143
5 990
6 061
7 263
8 337
619
696
186
1 111
1 684
1 849
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).
a Excluding the financial centres in the Caribbean and special-purpose entities in reported countries.
b Asset/liability basis.
c Estimates.
d Directional basis calculated from asset/liability basis.
e Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the
Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic
Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal,
Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Yemen and Zambia.
f Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, the Plurinational State of Bolivia, Botswana, Burkina Faso, Burundi,
the Central African Republic, Chad, Eswatini, Ethiopia, Kazakhstan, Kyrgyzstan, the Lao People’s Democratic Republic, Lesotho, Malawi, Mali, Mongolia,
Nepal, the Niger, North Macedonia, Paraguay, the Republic of Moldova, Rwanda, South Sudan, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and
Zimbabwe.
g Small island developing States include Antigua and Barbuda, Barbados, the Bahamas, Cabo Verde, the Comoros, Dominica, the Dominican Republic, Fiji,
Grenada, Jamaica, Kiribati, Maldives, the Marshall Islands, Mauritius, the Federated States of Micronesia, Nauru, Palau, Saint Kitts and Nevis, Saint Lucia,
Saint Vincent and the Grenadines, Samoa, Sao Tome and Príncipe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and
Vanuatu.
160
Annex table 2
FDI stock, by region and economy, 2000, 2010, 2022 and 2023
(Millions of dollars)
FDI inward stock
FDI outward stock
Region/economy
2000
2010
2022
2023
2000
2010
2022
2023
Worlda
7 377 201
19 842 937
44 375 102
49 130 846
7 408 709
20 440 527
40 569 644
44 380 560
Developed economies
5 860 038
13 778 925
29 591 913
33 434 653
6 740 421
17 537 053
31 177 995
34 404 485
Europe
2 491 244
8 371 974
16 110 676
17 266 928
3 193 644
10 218 616
17 537 359
18 572 060
European Union
1 882 785
5 902 599
11 672 194
12 453 733
1 967 112
6 952 372
13 530 528
14 499 617
Austria
31 165
160 615
206 490
226 276
24 821
181 638
253 986
273 210
Belgium
..
473 358
531 007
577 961
..
431 613
685 498
770 505
Bulgaria
2 704
44 970
57 475
61 945
67
2 583
3 590
4 317
Croatia
2 785
32 925
38 365
42 909
952
4 969
8 045
8 143
Cyprus
2 846
260 132
63 537
90 804
557
242 556
28 078
48 338
Czechia
21 644
128 504
206 338
216 595
738
14 923
60 806
69 222
Denmark
73 574
96 136
116 291
125 051c
73 100
163 133
221 838
236 967c
Estonia
2 645
15 551
34 289
40 490
259
5 545
12 289
14 204
Finland
24 273
86 698
82 980
149 649b
52 109
137 663
139 076
210 121b
France
184 215
630 710
947 200
1 012 705
365 871
1 172 994
1 544 549
1 635 680
Germany
470 938
955 881
1 091 561
1 128 259c
483 946
1 364 565
2 077 987
2 179 240c
Greece
14 113
35 026
50 578
61 593
6 094
42 623
16 698
21 324
Hungary
22 870
91 015
107 551
118 983
1 280
23 612
40 043
46 097
Ireland
127 089
285 575
1 369 156
1 410 084
27 925
340 114
1 200 117
1 336 414
Italy
122 533
328 058
458 915
493 530
169 957
491 208
558 626
584 031
Latvia
1 691
10 869
24 067
26 595
19
931
5 730
6 304
Lithuania
2 334
15 455
27 686
31 564
29
2 647
6 757
9 736
Luxembourg
..
172 257
1 155 656
1 183 734
..
187 027
1 594 807
1 679 068
Malta
2 263
129 770
491 467
725 715
193
60 596
477 251
695 859
Netherlands
243 733
588 077
2 775 591
2 678 218
305 461
968 105
3 395 399
3 386 269
Poland
33 477
187 602
268 019
335 540
268
16 407
29 658
38 212
Portugal
34 224
90 900
177 165
195 340
19 417
52 497
62 900
69 041
Romania
6 953
68 699
115 133
125 555
136
2 327
4 718
4 902
Slovakia
6 970
50 328
57 372
60 532
555
3 457
5 428
5 062
Slovenia
2 389
10 667
21 545
23 702
772
8 147
9 161
9 983
Spain
156 348
628 341
812 740
897 268
129 194
653 236
567 881
630 189
Sweden
93 791
324 478
384 021
413 135
123 618
377 258
519 611
527 177
Other Europe
608 459
2 469 375
4 438 482
4 813 195
1 226 532
3 266 244
4 006 832
4 072 444
Albania
247
3 255
11 104
13 985
..
154
995
1 389
Belarus
1 306
9 904
15 440
15 822
24
205
1 496
1 470
Bosnia and Herzegovina
450
6 709
9 515
10 667
..
211
736
814
Iceland
497
11 784
9 070
9 384
663
11 466
4 797
5 023
Republic of Moldova
449
2 897
4 933
5 531
23
90
425
448
Montenegro
..
4 231
5 494
6 066
..
..
190
271
North Macedonia
540
4 351
7 480
8 421
16
100
166
210
Norway
30 265
167 932
148 338
157 160
34 026
179 568
209 589
202 275
Russian Federation
29 738
464 228
359 982
278 812
19 211
336 355
299 131
258 240
Serbia
..
22 299
53 499
60 459
..
1 960
4 511
4 999
Switzerland
101 635
648 092
1 038 034
1 136 788
232 202
1 043 199
1 316 327
1 472 959
Ukraine
3 875
52 872
50 987
54 261
170
6 548
-867
-885
United Kingdom
439 458
1 068 187
2 718 892
3 048 932
940 197
1 686 260
2 168 530
2 124 191
North America
3 108 255
4 406 182
11 879 938
14 482 837
3 136 637
5 808 053
10 270 591
12 180 818
Canada
325 020
983 889
1 495 991
1 665 774
442 623
998 466
2 287 758
2 746 892
United States
2 783 235
3 422 293
10 383 947
12 817 063
2 694 014
4 809 587
7 982 833
9 433 926
Other developed economies
260 539
1 000 769
1 601 299
1 684 888
410 140
1 510 383
3 370 045
3 651 606
Australia
121 686
527 728
776 764
807 427
92 508
449 740
655 344
710 639
Israel
20 426
60 086
229 880
244 472
9 091
67 893
99 842
108 680
Japan
50 323
214 880
225 367
246 801c
278 445
831 076
1 948 555
2 132 578c
Korea, Republic of
43 738
135 500
272 328
284 146
21 497
144 032
647 568
682 023
New Zealand
24 101
59 738
94 319
99 128
8 491
16 717
18 608
17 536
Bermuda
265c
2 837
2 642c
2 915c
108c
925
129c
151c
Developing economiesa
1 517 163
6 064 012
14 783 189
15 696 192
668 288
2 903 474
9 391 648
9 976 074
Africa
153 062
620 046
1 045 624
1 036 252
39 815
137 363
296 153
248 821
North Africa
45 590
201 109
336 039
354 974
3 199
25 770
40 219
42 324
Algeria
3 379c
19 545
35 643
36 860
205c
1 505
2 810
2 894
Egypt
19 955
73 095
148 888
158 689
655
5 448
9 190
9 580
Libya
471c
16 334
18 462c
18 462c
1 903c
16 615
20 450c
20 286c
Morocco
8 842c
45 082
63 278
69 297
402c
1 914
7 066
8 076
Sudan
1 398
15 690
30 301c
30 849c
..
..
..
..
Tunisia
11 545
31 364
39 467
40 817c
33
287
703
1 488c
Other Africa
107 472
418 937
709 585
681 279
36 616
111 594
255 934
206 496
West Africa
33 010
106 590
210 529
210 814
6 381
18 090
31 165
31 268
161
Annex table 2
FDI stock, by region and economy, 2000, 2010, 2022 and 2023
(Continued)
FDI inward stock
FDI outward stock
Region/economy
2000
2010
2022
2023
2000
2010
2022
2023
Benin
213
604
3 154
3 711
11
21
376
440
Burkina Faso
28
354
2 998
3 193
0.4
8
377
396
Cabo Verde
192c
1 367
2 346
2 572
..
2
94
106
Côte d’Ivoire
2 483
6 978
13 691
15 974
9
94
1 404
1 674
Gambia
216
323
1 176c
1 384c
..
..
..
..
Ghana
1 554c
10 080
46 006
47 360
..
83
1 830
1 886c
Guinea
263c
486
5 252c
6 145c
12c
144
97c
97c
Guinea-Bissau
38
63
326
362
..
5
11
12
Liberia
3 247c
10 206
10 889c
11 633c
2 188
4 714
5 010c
5 097c
Mali
132
1 964
6 742
7 697
1
18
317
352
Mauritania
146c
2 372c
5 825c
6 702c
4c
28c
3c
3c
Niger
45
2 251
8 628
9 926
1
9
391
446
Nigeria
23 786
66 797
86 239
73 375
4 144
12 576
18 297
17 663
Senegal
295
1 699
13 184
16 358
22
263
991
1 120
Sierra Leone
284c
482
2 688c
2 951c
..
..
..
..
Togo
87
565
1 385
1 469
-10
126
1 966
1 975
Central Africa
5 053
39 227
120 236
126 047
1 651
2 217
4 733
4 884
Burundi
47c
13
255c
283c
2c
2
8c
9c
Cameroon
917c
3 099c
6 484
7 283c
1 252c
971c
734
625c
Central African Republic
104
511
715c
754c
43
..
..
..
Chad
576c
3 594c
8 372c
9 285c
..
..
..
..
Congo
1 893c
9 261c
34 026c
34 653c
40c
34c
157c
183c
Democratic Republic of the Congo
617
9 368
30 995
32 629c
34
229
3 677
3 913c
Equatorial Guinea
1 060c
9 413c
19 069c
19 211c
..
..
..
..
Gabon
-227c
3 287c
16 591c
17 742c
280c
946c
79c
79c
Rwanda
55
422
3 237
3 697
..
13
74
74
Sao Tome and Principe
11c
260c
493
511c
..
21c
5c
1c
East Africa
7 202
37 754
99 466
110 318
387
1 474
3 261
3 993
Comoros
21c
60c
145c
150c
..
..
..
..
Djibouti
40
..
..
..
..
..
..
..
Eritrea
337c
666c
1 029c
1 031c
..
..
..
..
Ethiopia
941c
4 206
35 281
38 544c
..
..
..
..
Kenya
932c
4 967
9 692
11 196c
115c
62
2 668
3 256c
Madagascar
141
4 383
4 120
4 535c
9c
193
838
957c
Mauritius
683
4 658
5 894c
6 418c
132
864
743c
773c
Seychelles
515
2 960
3 117
3 354
130
290
-1 162
-1 167
Somalia
4c
566
4 923
5 600
..
..
..
..
Uganda
807
5 575
16 631
19 517
..
66
174
175
United Republic of Tanzania
2 781
9 712
18 634c
19 973c
..
..
..
..
Southern Africa
62 208
235 365
279 354
234 100
28 198
89 813
216 775
166 352
Angola
7 977
32 458
14 262
12 177
-8
1 870
5 259
5 292
Botswana
1 827
3 351
5 194
5 410c
517
1 007
1 039
916c
Eswatini
536
927
966
896
87
91
162
133
Lesotho
330
929
958
851
..
..
..
..
Malawi
358
963
1 484
1 692c
-5
45
243
276c
Mozambique
1 249
4 331
54 597
57 281
1
3
7
7
Namibia
1 276
3 595
7 747
9 136
45
722
1 034
697
South Africa
43 451
179 565b
172 210b
124 025b
27 328
83 249b
207 954b
157 764b
Zambia
3 966c
7 433
15 384
15 492c
..
2 531
311
471c
Zimbabwe
1 238
1 815
6 553
7 141
234
297
766
796
Asia
1 023 690
3 878 998
11 052 894
11 674 477
575 247
2 348 138
8 269 297
8 793 808
East and South-East Asia
908 302
2 888 852
9 210 207
9 845 585
557 764
2 059 331
7 365 627
7 823 232
East Asia
650 700
1 738 193
5 704 180
5 976 425
473 708
1 455 117
5 239 530
5 503 294
China
193 348c
586 882c
3 496 380
3 659 633c
27 768c
317 211
2 754 810
2 939 100c
Democratic People’s Republic of Korea
77c
236c
949c
963c
..
..
..
..
Mongolia
182
8 445
28 521
30 697
..
2 616
907
1 024
Macao, China
2 801c
13 603
45 737
47 955c
..
550
13 278
14 856c
Hong Kong, China
435 417
1 067 520
2 008 153
2 107 038
379 285
943 938
1 975 466
2 028 532
Taiwan Province of China
18 875
61 508b
124 440b
130 140c
66 655
190 803b
495 068b
519 782c
South-East Asia
257 603
1 150 659
3 506 027
3 869 160
84 056
604 214
2 126 097
2 319 939
Brunei Darussalam
3 868c
4 140
6 798
6 753
..
..
..
..
Cambodia
1 580
9 026
44 537
48 420
193
331
1 321
1 473
Indonesia
25 060
160 735
264 034
285 690c
6 940
6 672
104 886
111 954c
Lao People’s Democratic Republic
588c
1 888c
12 736c
14 404c
26c
68c
95c
95c
Malaysia
52 747
101 620
199 206
201 736
15 878
96 964
137 655
144 361
Myanmar
3 752c
14 507
38 427
39 948
..
..
..
..
162
FDI inward stock
FDI outward stock
Region/economy
2000
2010
2022
2023
2000
2010
2022
2023
Philippines
13 762c
25 896b
109 622d
118 985d
1 032c
6 710b
63 560d
68 272d
Singapore
110 570
633 354b
2 326 998b
2 632 364b
56 755
466 723b
1 638 614b
1 792 289b
Thailand
30 944
142 334
292 205
290 870
3 232
24 418
165 398
187 893
Timor-Leste
..
155
993
1 018
..
94
24
7
Viet Nam
14 730c
57 004c
210 471c
228 971c
..
2 234c
14 545c
13 595c
South Asia
30 743
269 143
643 371
675 576
2 761
100 441
231 859
245 241
Afghanistan
17c
963
1 613c
1 613c
..
16
165c
165c
Bangladesh
2 162
6 072
20 755
20 549
68
98
400
385
Bhutan
4c
204
419c
438c
..
..
..
..
India
16 339
205 580
510 703
536 930
1 733
96 901
222 628
235 956
Iran (Islamic Republic of)
2 597c
28 953
61 636c
63 058c
411c
1 713c
4 239c
4 325c
Maldives
128c
1 114c
6 718c
7 479c
..
..
..
..
Nepal
72c
239
2 187
2 067
..
..
..
..
Pakistan
6 919
19 828
25 292
28 610
489
1 362
2 894
2 850
Sri Lanka
2 505
6 190
14 047
14 831
60
351
1 534
1 560
West Asia
72 352
619 425
982 875
931 257
14 672
172 001
654 509
707 394
Armenia
513
4 405
7 124
7 499
..
150
571
618
Azerbaijan
1 791
14 253
32 503
32 745
1
5 790
26 981
28 717
Bahrain
5 906
15 154
36 245
43 084
1 752
7 883
20 955
22 068
Georgia
762
8 518
22 329
24 354
118
848
3 249
3 529
Iraq
-48
7 965
..
..
..
632
3 389
3 598c
Jordan
3 135
21 899
38 496
39 534
44
473
681
745
Kuwait
608
11 884
15 091
16 648
1 428
28 189
45 818
50 246
Lebanon
14 233
44 285
70 604
71 260
352
6 831
14 729
14 802
Oman
2 577c
14 987
51 324c
56 069c
..
2 796
6 057c
6 222c
Qatar
1 912
30 549
27 610
27 136c
74
12 995
50 054
49 862c
Saudi Arabia
17 577b
176 378b
268 947b
215 524b
5 285c
26 528
187 068
203 768
Syrian Arab Republic
1 244
9 939c
10 743c
10 743c
..
5
5c
5c
Türkiye
18 812
188 308
202 503
156 537
3 668
22 509
54 082
60 041
United Arab Emirates
1 069c
63 869
194 300
224 987
1 938c
55 560
239 880
262 208
Yemen
843c
4 858c
1 942c
1 942c
13c
571c
672c
672c
State of Palestine
1 418c
2 176
3 116
3 195c
..
241
318
292c
Central Asia
12 293
101 577
216 441
222 059
49
16 365
17 303
17 941
Kazakhstan
10 078
82 648
154 419
157 198
16
16 212
16 792
17 381
Kyrgyzstan
432
1 698
3 506
3 810
33
2
26
27
Tajikistan
136
1 226
3 329
3 333
..
..
283
323
Turkmenistan
949c
13 442c
41 537c
42 915c
..
..
..
..
Uzbekistan
698c
2 564
13 649
14 804
..
152
202
210
Latin America and the Caribbeana
338 557
1 550 274
2 653 078
2 953 403
53 170
417 359
820 142
928 378
South America
186 425
1 085 464
1 727 712
1 898 677
43 634
288 295
604 267
677 146
Argentina
67 601
85 591
116 698
128 855
21 141
30 328
45 781
48 299
Bolivia (Plurinational State of)
5 188
6 890
9 839
9 633
29
8
854
1 167
Brazil
..
640 330
878 144
997 570
..
149 333
299 369
365 813
Chile
45 753
160 904
250 062
267 132
11 154
61 126
134 744
137 182
Colombia
11 157
82 991b
234 231b
254 329b
2 989
23 717b
73 295b
73 295b
Ecuador
6 337
11 858
22 292
22 664
..
..
..
..
Guyana
756
1 784
17 074
10 279
1
2
78
47
Paraguay
1 003
3 555
7 666
8 906
..
..
..
..
Peru
11 062
42 976
129 221
132 546
505
4 265
10 124
10 885
Suriname
..
..
1 936
1 853
..
..
202
213
Uruguay
2 088
12 479
34 653
38 326
138
345
6 898
6 091
Venezuela (Bolivarian Republic of)
35 480
36 107
25 897
26 585c
7 676
19 171
30 735
32 169c
Central America
139 768
417 113
843 099
968 310
8 534
126 025
208 553
242 658
Belize
294
1 454
2 679
2 812
42
49
76
78
Costa Rica
2 809
15 936
52 474
55 165c
22
1 135
3 758
3 769c
El Salvador
1 973
7 284
10 100
10 841
104
1
1 689
1 720
Guatemala
3 420
4 554
22 409
24 080
93
452
2 936
3 618
Honduras
1 392
6 951
18 557
19 633
..
867
2 877
3 132
Mexico
121 691
355 512
662 718
778 371
8 273
119 967
190 122
222 742
Nicaragua
1 414
4 681
12 500
13 730
..
181
818
849
Panama
6 775
20 742
61 662
63 676
..
3 374
6 277
6 751
Caribbeana
12 365
47 697
82 267
86 417
1 002
3 039
7 322
8 574
Antigua and Barbuda
..
..
2 090b
2 390b
..
..
91b
99b
Barbados
308
4 970
8 544c
8 769c
41
4 058
3 858c
3 866c
Dominica
..
..
517b
537b
..
..
3b
2b
Annex table 2
FDI stock, by region and economy, 2000, 2010, 2022 and 2023
(Continued)
163
Annex table 2
FDI stock, by region and economy, 2000, 2010, 2022 and 2023
(Concluded)
Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics).
a Excluding the financial centres in the Caribbean and special-purpose entities in reporting countries.
b Asset/liability basis.
c Estimates.
d Directional basis calculated from asset/liability basis.
e Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the
Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic
Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal,
Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Yemen and Zambia.
f Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, the Plurinational State of Bolivia, Botswana, Burkina Faso, Burundi,
the Central African Republic, Chad, Eswatini, Ethiopia, Kazakhstan, Kyrgyzstan, the Lao People’s Democratic Republic, Lesotho, Malawi, Mali, Mongolia,
Nepal, the Niger, North Macedonia, Paraguay, the Republic of Moldova, Rwanda, South Sudan, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and
Zimbabwe.
g Small island developing States include Antigua and Barbuda, the Bahamas, Barbados, Cabo Verde, the Comoros, Dominica, the Dominican Republic, Fiji,
Grenada, Jamaica, Kiribati, Maldives, the Marshall Islands, Mauritius, the Federated States of Micronesia, Nauru, Palau, Saint Kitts and Nevis, Saint Lucia,
Saint Vincent and the Grenadines, Samoa, Sao Tome and Príncipe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and
Vanuatu.
FDI inward stock
FDI outward stock
Region/economy
2000
2010
2022
2023
2000
2010
2022
2023
Dominican Republic
1 673
18 793
51 982
56 372
..
743
917
1 277
Grenada
..
..
1 990b
2 153b
..
..
99b
112b
Haiti
95
625
2 031
2 063c
..
..
..
..
Jamaica
3 317
10 855
18 332
18 763c
709
176
1 136
1 131c
Saint Kitts and Nevis
..
..
1 676b
1 709b
..
..
102b
100b
Saint Lucia
..
..
1 865b
2 004b
..
..
638b
635b
Saint Vincent and the Grenadines
..
..
1 601b
1 683b
..
..
93b
91b
Trinidad and Tobago
7 280c
17 424
9 922
9 218c
293c
2 119
5 269
6 167c
Anguilla
..
..
1 382b
1 528b
..
..
94b
96b
Aruba
1 161
4 567
4 686
4 508c
675
682
760
852c
Bahamas (the)
3 865c
13 160
28 512
29 904
547c
2 538
7 572
7 991
British Virgin Islands
30 289c
265 783c
1 028 356c
1 068 246c
69 041c
376 866c
128 306c
172 465c
Cayman Islands
27 316c
161 916c
572 927c
601 061c
21 643c
89 316c
362 435c
382 857c
Curaçao
..
527
1 081c
1 236c
..
32
1 002c
1 012c
Montserrat
..
..
42b
49b
..
..
..
..
Sint Maarten
..
256
190c
224c
..
10
107c
111c
Oceania
1 854
14 694
31 593
32 060
56
614
6 055
5 067
Cook Islands (the)
..
..
181c
187c
..
..
14c
14c
Fiji
356
2 963
5 755
5 855
39
47
125
163
Kiribati
..
5
11
13c
..
2
1
1c
Marshall Islands (the)
20
120
170
164
..
..
..
..
Palau
173
232
858
905c
..
..
..
..
Papua New Guinea
935
3 748
4 878c
4 454c
1c
-5c
4 168c
3 078c
Samoa
77
220
318
315
..
14
51
51
Solomon Islands
106c
552
652
681c
..
27
77
77c
Tonga
19c
220c
108c
132c
14c
58c
50c
50c
Tuvalu
..
5
9c
9c
..
..
..
..
Vanuatu
61c
454
636
647c
..
23
29
28c
French Polynesia
146c
442c
1 110c
1 104c
..
144c
354c
368c
New Caledonia
-41c
5 726c
16 908c
17 595c
2c
304c
1 187c
1 237c
Memorandum
Least developed countries (LDCs)d
35 969
161 402
429 955
459 109
2 604
11 515
22 890
23 988
Landlocked developing countries (LLDCs)f
33 630
183 972
444 859
468 390
1 025
29 288
53 514
56 413
Small island developing States (SIDS)g
18 806
80 554
155 252
163 726
1 906
11 076
19 815
21 560
World Investment Report 2024
164
WIR past issues
WIR 2023: Investing in Sustainable Energy for All
WIR 2022: International Tax Reforms and Sustainable Investment
WIR 2021: Investing in Sustainable Recovery
WIR 2020: International Production Beyond the Pandemic
WIR 2019: Special Economic Zones
WIR 2018: Investment and New Industrial Policies
WIR 2017: Investment and the Digital Economy
WIR 2016: Investor Nationality: Policy Challenges
WIR 2015: Reforming International Investment Governance
WIR 2014: Investing in the SDGs: An Action Plan
WIR 2013: Global Value Chains: Investment and Trade for Development
WIR 2012: Towards a New Generation of Investment Policies
WIR 2011: Non-Equity Modes of International Production and Development
WIR 2010: Investing in a Low-Carbon Economy
WIR 2009: Transnational Corporations, Agricultural Production and Development
WIR 2008: Transnational Corporations and the Infrastructure Challenge
WIR 2007: Transnational Corporations, Extractive Industries and Development
WIR 2006: FDI from Developing and Transition Economies: Implications for Development
WIR 2005: Transnational Corporations and the Internationalization of R&D
WIR 2004: The Shift Towards Services
WIR 2003: FDI Policies for Development: National and International Perspectives
WIR 2002: Transnational Corporations and Export Competitiveness
WIR 2001: Promoting Linkages
WIR 2000: Cross-border Mergers and Acquisitions and Development
WIR 1999: Foreign Direct Investment and the Challenge of Development
WIR 1998: Trends and Determinants
WIR 1997: Transnational Corporations, Market Structure and Competition Policy
WIR 1996: Investment, Trade and International Policy Arrangements
WIR 1995: Transnational Corporations and Competitiveness
WIR 1994: Transnational Corporations, Employment and the Workplace
WIR 1993: Transnational Corporations and Integrated International Production
WIR 1992: Transnational Corporations as Engines of Growth
WIR 1991: The Triad in Foreign Direct InvestmentPlain-text mathematical notation (without MathML)
U NI T E D NAT I O NS CO NFE R E N C E ON T R A D E A N D D E VE L OP M E N T Investment facilitation and digital government 2024 World investment report 2024 World investment report U NI T E D NAT I O NS CO NFE R E N C E ON T R A D E A N D D E VE L OP M E N T Investment facilitation and digital government Geneva, 2024 Mention of any firm or licensed process does not imply the endorsement of the United Nations. This publication has been edited externally. United Nations publication issued by UN Trade and Development. UNCTAD/WIR/2024 ISBN 978-92-1-003134-9 PDF ISBN 978-92-1-358973-1 EPUB ISBN 978-92-1-358974-8 Print ISSN 1020-2218 Online ISSN 2225-1677 Sales no. E.24.II.D.11 World Investment Report 2024 Investment facilitation and digital government iii Preface Investment is the fuel for sustainable development. Closing the SDG and climate financing gap will require an estimated 500billionofinternationalpublicfinanceand500 billion of international private finance per year, much of which would be in the form of foreign direct investment. But many developing countries are running on empty. Global and regional crises, trade tensions and tighter financing conditions have had a chilling effect on foreign direct investment, which remained subdued in 2023 for a second year in succession. Global flows of foreign direct investment stagnated at $1.3 trillion. Notably, foreign direct investment in new industrial and infrastructure projects in developing countries declined, while new investment in sectors relevant to the Sustainable Development Goals fell by more than 10 per cent. Stagnant SDG investment and insufficient funding is severely hindering implementation of the 2030 Agenda and the SDGs, particularly in least developed countries. We need urgent action to remove obstacles and provide a transparent, streamlined investment climate for sustainable development. This World Investment Report shows that the lacklustre financial flows to developing countries are not due to a lack of investment policy efforts. Investment facilitation has become a prominent feature of national policies and international agreements. Digital government solutions are proliferating, aiding investors and strengthening governance and institutions. But despite these efforts, finance is not flowing at sufficient scale, due to high interest rates and geopolitical conditions. That means we must redouble our efforts. I urge all decision makers to prioritize the mobilization of sustainable finance at scale. The SDG Stimulus we have proposed is a practical and achievable means of delivering this. Our call for reform and scaling up of multilateral development banks is intended to significantly increase the crowding in of private investment. I also encourage policymakers to prioritize strengthening investment governance in developing countries, to ensure financial flows are directed towards the SDGs. UNCTAD’s recommendations for the use of business facilitation and digital government to ease sustainable investment can play an important part in achieving these goals. António Guterres Secretary-General of the United Nations World Investment Report 2024 Investment facilitation and digital government iv Foreword In a world grappling with global and regional crises, the delicate balance of foreign direct investment (FDI) hangs precariously. This World Investment Report (WIR) serves as a stark reminder that investment, the lifeblood of sustainable development, is not merely a statistic but a lifeline for developing nations. It is the fuel that powers progress towards the Sustainable Development Goals (SDGs) and the 2030 Agenda for Sustainable Development. The challenges we face are multifaceted and interconnected. Geoeconomic fragmentation is reshaping the landscape of global investment. Trade networks are fragmenting, regulatory environments are diverging and international supply chains are being reconfigured. These shifts create both obstacles and isolated opportunities, with some countries benefiting from investments in global value chain-intensive manufacturing while others struggle to participate in the global economy. Overall, however, these trends are leading to a further deterioration of the international investment landscape as seen from the developing world. Last year, FDI fell by more than 10 per cent globally, and by 7 per cent in the developing world. International project finance, crucial for infrastructure development, was particularly hard hit, falling by 26 per cent. Prospects for 2024 remain challenging, with weakening growth prospects and continuing trade and geopolitical tensions. Furthermore, the WIR reveals a crisis in SDG investment, with a more than 10 per cent decrease in 2023. Two sectors, agrifood systems and water and sanitation, registered fewer internationally financed projects in 2023 than in 2015, when the SDGs were adopted. This decline, driven by tighter financing conditions and a slowdown in sustainable finance markets, underscores the need for concerted action to steer investments towards projects that genuinely contribute to a sustainable future. Meanwhile, the mobilization of funds for SDG investment through sustainable finance products in global capital markets is still growing but slowing down. Sustainable bonds showed marginal growth in 2023, and new inflows in sustainable investment funds dropped by 60 per cent. Greenwashing concerns are increasingly affecting investor demand. More broadly, policy action is needed to mitigate the risk of a widening backlash against sustainable investment strategies. The world needs a robust and credible sustainable finance industry, and no effort must be spared to fortify it before it is too late. But the way we do that must be carefully considered. Policymakers should be mindful of the spillover effects of international sustainability reporting standards, particularly on small and medium-sized enterprises (SMEs) in developing countries. These SMEs, the engines of inclusive growth and job creation, are precisely the ones that need sustainable finance flows the most. However they may struggle to meet increased disclosure requirements, potentially affecting their market access and participation in global supply chains. Striking a balance between promoting transparency and avoiding undue burdens on businesses will be crucial for a sustainable and inclusive investment landscape. Against this complex backdrop, the WIR underscores the importance of investment facilitation and digital government as tools to attract and retain investment. By streamlining procedures, enhancing transparency and leveraging digital tools such as online single windows, we can World Investment Report 2024 Investment facilitation and digital government v foster a more conducive investment climate, particularly in developing countries. Furthermore, the report emphasizes that digital business and investment facilitation is not merely a technical solution; it is a stepping stone towards wider digital government implementation, which can address underlying weaknesses in governance and institutions that often hinder investment and impede progress towards sustainable development. Investment facilitation, while essential, is not a panacea for the challenges facing global investment flows. However, it is an undeniable prerequisite for fostering an environment conducive to sustainable investment. The proliferation of digital solutions for investment facilitation, as highlighted in this report, exemplifies the WIR’s commitment to providing tangible and actionable policy recommendations even in the most challenging of times. As we navigate the complexities of the 21st century, the WIR reminds us that investment is not just about capital flows; it is about human potential, environmental stewardship and the enduring pursuit of a more equitable and sustainable world. Let us embrace this vision with renewed determination, recognizing that the choices we make today will shape the world we leave behind for generations to come. Rebeca Grynspan Secretary General of UN Trade and Development World Investment Report 2024 Investment facilitation and digital government vi Acknowledgements The World Investment Report 2024 was prepared by a team at UNCTAD led by Richard Bolwijn. UNCTAD team members included Dafina Atanasova, Vincent Beyer, Stephania Bonilla, Julien Bornon, Bruno Casella, Joseph Clements, Mathilde Closset, Tiffany Grabski, Frank Grozel, Natalia Guerra, Hamed El Kady, Anastasia Leskova, Massimo Meloni, Anthony Miller, Bita Mortazavi, Abraham Negash, Yongfu Ouyang, Marios Pournaris, Ian Richards, Diana Rosert, Amelia U. Santos-Paulino, Changbum Son, Astrit Sulstarova, Yihua Teng, Claudia Trentini and Kee Hwee Wee. Research support and inputs were provided by Ciman Araleh, Gregory Allan Auclair, Weijia Hu, Oktawian Kuc, Corli Le Roux, Noé Michon, Elisa Navarra, Nelson Pérez, Lucas Ricardo, Lauren Satterthwaite, Prachi Sharma, Kjartan Sorensen, Rick van der Maas and Vanina Vegezzi. Comments and contributions were provided by colleagues in UNCTAD: Kiyoshi Adachi, Rodrigo Carcamo, Marco Fugazza, Ebru Gökçe-Dessemond, Poul Hansen, Igor Paunovic, Luisa Rodriguez, Mesut Saygili, Dawei Wang and Anida Yupari, as well as the Office of the Secretary-General. Statistical assistance was provided by Mohamed Chiraz Baly, Kerem Bayrakceken and Bradley Boicourt. IT assistance was provided by Chrysanthi Kourti. The manuscript was copy-edited by Lise Lingo. The design of the charts and infographics, and the typesetting of the report were done by Maria Teresa Arrigoni and Matteo Oldani. Production of the report was supported by Elisabeth Mareschal and Katia Vieu. At various stages of the preparation of the theme chapter, including the peer review, brainstorming meetings and discussions in the margin of the UNCTAD Investment and Enterprise Commission meeting on Investment Facilitation for Sustainable Development, the team benefited from comments and inputs received from external experts: Yasser Abbas, Isiaka Abdulqadir Imam, Axel Berger, Alejandro Encinas Nájera, Najwa Halaseh, Archie Kariuki, Olga Lucia Lozano, Victor Matassi, Ugo Panizza, Deniz Susar, Camilo Trigueros, Chhime Tshering, Ingmar Vali, Christian Volpe Martincus, Dana Akram Abdallah Al Zoubi, and Juwang Zhu. The team is grateful for advice, input and comments received from numerous officials in central banks, national government agencies, international organizations and non-governmental organizations. World Investment Report 2024 Investment facilitation and digital government vii Explanatory notes The terms country and economy as used in this report also refer, as appropriate, to territories or areas. In addition, the designations of country and economy groupings are intended solely for statistical or analytical convenience and do not necessarily express a judgement about the stage of development reached by a particular country or area in the development process. The major country and economic groupings used in this report follow the classification of the United Nations Statistical Office: • Developed economies: the member countries of the OECD (other than Chile, Colombia, Costa Rica, Mexico and Türkiye), European Union member countries that are not OECD members (Bulgaria, Croatia, Cyprus, Malta and Romania) plus Albania, Andorra, Belarus, Bermuda, Bosnia and Herzegovina, Liechtenstein, Monaco, Montenegro, North Macedonia, the Republic of Moldova, the Russian Federation, San Marino, Serbia and Ukraine, plus the territories of Faroe Islands, Gibraltar, Greenland, Guernsey and Jersey. • Developing economies: in general, all economies not specified above. For statistical purposes, the data for China do not include those for Hong Kong Special Administrative Region (Hong Kong SAR), Macao Special Administrative Region (Macao SAR) or Taiwan Province of China. Throughout the report, data on investment trends for the Netherlands refer only to the Netherlands; information for Aruba, Curaçao and Sint Maarten is reported separately. Methodological details on FDI and MNE statistics can be found on the report website (https:// unctad.org/topic/investment/world-investment-report). The following symbols have been used in the tables: • Two dots (..) indicate that data are not available or are not separately reported. Rows in tables have been omitted in those cases where no data are available for any of the elements in the row. • A dash (–) indicates that the item is equal to zero or its value is negligible. • A blank in a table indicates that the item is not applicable, unless otherwise indicated. • A slash (/) between dates representing years, e.g., 2020/21, indicates a financial year. • Use of a dash (–) between dates representing years, e.g., 2020–2021, signifies the full period involved, including the beginning and end years. • Reference to “dollars” ($) means United States dollars, unless otherwise indicated. Annual rates of growth or change, unless otherwise stated, refer to annual compound rates. Details and percentages in tables do not necessarily add to totals because of rounding. World Investment Report 2024 Investment facilitation and digital government viii Abbreviations AfCFTA African Continental Free Trade Area ASEAN Association of Southeast Asian Nations ASYCUDA Automated System for Customs Data AIFF ASEAN Investment Facilitation Framework BIT bilateral investment treaty CDP Carbon Disclosure Project CEPA Comprehensive Economic Partnership Agreement COVID-19 coronavirus disease 2019 ECT Energy Charter Treaty EGDI eGovernment Development Index ESG environmental, social and governance EVs electric vehicles FDI foreign direct investment FTA free trade agreement GDP gross domestic product GER Global Enterprise Registration GHG greenhouse gas GSFO Global Sustainable Finance Observatory GVC global value chain ICC International Chamber of Commerce ICSID International Centre for Settlement of Investment Disputes ICT information and communications technology IFD Investment Facilitation for Development IFRS International Financial Reporting Standards IIA international investment agreement IMF International Monetary Fund IPA investment promotion agency IPFSD Investment Policy Framework for Sustainable Development ISDS investor–State dispute settlement ISSB International Sustainability Standards Board IT Information technology LDC least developed country LLDC landlocked developing country M&As mergers and acquisitions MNE multinational enterprise MSMEs micro-, small and medium-sized enterprises NAFTA North American Free Trade Agreement OECD Organisation for Economic Co-operation and Development OFDI outward FDI OFIO Office of the Foreign Investment Ombudsman OHCHR Office of the United Nations High Commissioner for Human Rights OIC Organisation of Islamic Cooperation PPF public pension fund PPP public–private partnership SDGs Sustainable Development Goals SEZ special economic zone SIDS small island developing States SIFA sustainable investment facilitation framework SMEs small and medium-sized enterprises SPAC special purpose acquisition company SWF sovereign wealth fund TIP treaty with investment provision TNI Transnationality Index UN DESA United Nations Department of Economic and Social Affairs UNCITRAL United Nations Commission on International Trade Law UNCTAD United Nations Conference on Trade and Development UNEP United Nations Environment Programme UNIDROIT International Institute for the Unification of Private Law UNODC United Nations Office on Drugs and Crime USMCA United States–Mexico–Canada Agreement WASH water, sanitation and hygiene WIR World Investment Report WTO World Trade Organization World Investment Report 2024 Investment facilitation and digital government ix Table of contents Executive summary. .......................................................................... xi Chapter I International investment trends. ....................................................... 1 A. Foreign direct investment......................................................... 3 1. Global trends. ................................................................................. 3 2. Trends by geography. ..................................................................... 5 3. Trends by project type and sector. ............................................... 21 B. Investment in the Sustainable Development Goals. ................ 29 C. International production. ......................................................... 34 1. Key indicators of international production. ................................... 34 2. Internationalization trends of the largest MNEs. ........................... 36 3. Shifting investment patterns among the top 100 MNEs. .............. 38 Chapter II Investment policy trends................................................................. 45 A. National investment policies................................................... 47 1. Overall trends. .............................................................................. 47 2. Policy measures more favourable to investors. ............................ 50 3. Policy measures less favourable to investors. .............................. 55 4. Outward foreign direct investment policies.................................. 60 B. International investment policies............................................ 65 1. Trends in international investment agreements............................ 65 2. Trends in investor–State dispute settlement. ................................ 73 Chapter III Sustainable finance trends. ............................................................. 77 A. Sustainability-themed capital market products. ...................... 79 1. Sustainable bond markets........................................................... 79 2. Sustainable funds. ........................................................................ 85 B. Sovereign and public institutional investors. ........................... 88 1. Sustainability integration strategies and practices. ...................... 90 2. Sustainability disclosure. .............................................................. 93 C. Policies, regulations and standards........................................ 96 World Investment Report 2024 Investment facilitation and digital government x ONLINE ONLY: Regional Trends Africa Developing Asia Latin America and the Caribbean Structurally weak, vulnerable and small economies: Least developed countries (LDCs) Landlocked developing countries (LLDCs) Small island developing States (SIDS) 1. International sustainability reporting standards. ........................... 96 2. Policymaking at national and regional levels . ............................ 102 Chapter IV Investment facilitation and digital government........................... 107 A. Introduction. .......................................................................... 109 B. Progress on digital investment facilitation worldwide........... 113 1. The wider digital government context........................................ 113 2. The spread and quality of business portals. ............................... 115 3. Foreign investor-specific online procedures. .............................. 119 4. Portal ownership and the role of IPAs........................................ 122 C. Facilitation in national and international investment policies. 125 1. National policies. ........................................................................ 125 2. International investment agreements......................................... 129 D. The impact of investment facilitation and digital government.134 E. From online business facilitation to digital government........ 140 1. The basic architecture of digital government services............... 140 2. Effective implementation. ........................................................... 142 3. Connecting with wider digital government................................. 145 F. Conclusions and policy implications. ..................................... 150 References..................................................................................... 153 Annex tables. .................................................................................. 156 World Investment Report 2024 Investment facilitation and digital government xi Executive summary International investment trends Global foreign direct investment (FDI) in 2023 decreased marginally, by 2 per cent, to $1.3 trillion. This headline figure was affected by wild swings in financial flows through a small number of European conduit economies; excluding the effect of these conduits, global FDI flows were more than 10 per cent lower than in 2022. The global environment for international investment remains challenging in 2024. Weakening growth prospects, economic fracturing trends, trade and geopolitical tensions, industrial policies and supply chain diversification are reshaping FDI patterns, causing some multinational enterprises (MNEs) to adopt a cautious approach to overseas expansion. However, MNE profit levels remain high, financing conditions are easing and increased greenfield project announcements in 2023 will positively affect FDI. Modest growth for the full year appears possible. International project finance and cross-border mergers and acquisitions (M&As) were especially weak in 2023. M&As, which mostly affect FDI in developed countries, fell by 46 per cent in value. Project finance, important for infrastructure investment, was down 26 per cent. Tighter financing conditions, investor uncertainty, volatility in financial markets and – for M&As – tighter regulatory scrutiny were the principal causes of the decline. Greenfield investment project announcements provided a bright spot. Project numbers increased by 2 per cent, with the growth concentrated in manufacturing, interrupting a decade-long trend of gradual decline in the sector. Furthermore, growth was concentrated in developing countries, where the number of projects was up by 15 per cent. In developed countries new project announcements were down 6 per cent. In developed countries, the 2023 trend was strongly affected by MNE financial transactions, partly caused by moves to implement a minimum tax on the largest MNEs. FDI flows in Europe jumped from negative $106 billion in 2022 to positive 16billionbecauseofvolatilityinconduiteconomies.InflowstotherestofEuropeweredown14percent.Inflowsinotherdevelopedcountriesalsostagnated,witha5percentdeclineinNorthAmericaandsizeablefallselsewhere.FDIflowstodevelopingcountriesfellby7percentto867 billion, mainly due to an 8 per cent decrease in developing Asia. Flows fell by 3 per cent in Africa and by 1 per cent in Latin America and the Caribbean. The number of international project finance deals fell by a quarter. Greenfield project announcements in developing countries increased by more than 1,000, but these projects were highly concentrated; South-East Asia accounted for almost half, West Asia for a quarter and Africa registered a small increase, while Latin America and the Caribbean attracted fewer projects. • FDI inflows to Africa declined by 3 per cent in 2023 to $53 billion. Greenfield announcements included several megaprojects, including the largest announcement worldwide – a green hydrogen project in Mauritania. International project finance fell by a quarter in number of deals and by half in value, negatively affecting prospects for infrastructure investment. • FDI in developing Asia fell by 8 per cent to $621 billion. China, the second largest FDI recipient in the world, saw a rare decline in inflows. Sizeable declines were recorded in India and in West and Central Asia. Only South-East Asia held steady. Industrial investment in World Investment Report 2024 Investment facilitation and digital government xii Asia remains buoyant, as shown by greenfield announcements, but the global downturn in project finance also affected the region. • Flows to Latin America and the Caribbean were down 1 per cent, at $193 billion. The number of international project finance and greenfield investment announcements fell, but the value of the latter increased because of large projects in commodity sectors and critical minerals, as well as in renewable energy, green hydrogen and green ammonia. • FDI flows to the structurally weak and vulnerable economies increased. FDI inflows to the least developed countries (LDCs) rose to $31 billion, or 2.4 per cent of global FDI flows. Landlocked developing countries and small island developing States also saw increased FDI. In all three groups, FDI remains concentrated among a few countries. International project finance is relatively more important in the poorest countries, which are therefore disproportionally affected by the global downturn in this form of investment. Industry trends showed lower investment in the infrastructure and digital economy sectors, but strong growth in the global value chain-intensive sectors of manufacturing and critical minerals. Weak project finance markets negatively affected infrastructure investment, and digital economy sectors continued their slowdown after the boom ended in 2022. Global value chain-intensive sectors, including the automotive, electronics and machinery industries, grew strongly, showing the effect of supply chain restructuring pressures. In critical minerals extraction and processing, investment project numbers and values nearly doubled. Global economic fracturing trends are affecting the investment strategies of manufacturing MNEs. The investment behaviour of the top 100 non-financial MNEs shows that, since 2019, the geographical distribution of manufacturing projects, especially in strategic sectors, has shifted towards locations closer to major MNE home markets in Europe and the United States. West Asia, North Africa and Central America are emerging as strategic locations for manufacturing MNEs. International investment in sectors relevant for the Sustainable Development Goals in developing countries declined in 2023. Growth in greenfield project announcements, especially in renewable energy, power and transportation, pushed up the numbers. In value terms, Goals investment in developing countries fell because of the downturn in international project finance, used for larger projects in infrastructure sectors. Project numbers in agrifood systems and in water and sanitation were lower than they were in 2015 when the Goals were adopted. Goals investment is also unequally distributed. The shares of global Goals investment projects attracted by Africa and by Latin America and the Caribbean are smaller than their shares in all projects. Only developing Asia attracts above-average Goals investment. Investment policy trends The number of investment policy measures adopted in 2023 was 25 per cent lower than in 2022 but still in line with the five-year average. Most measures, 72 per cent, were favourable to investors. The overall balance between favourable measures (liberalization, promotion, facilitation) and less favourable ones (restrictions on entry and operation) was unchanged. Developing countries mostly aim to promote and facilitate investment, whereas developed countries lean towards more restrictive measures. In developing countries, 86 per cent of measures were favourable to investors. In developed countries, 57 per cent of measures were less favourable to investors. Most of these concerned restrictions to address national security concerns. Investment facilitation and incentives were the main types of measures favourable to investors in both developed and developing countries. Facilitation measures reached almost 40 per cent World Investment Report 2024 Investment facilitation and digital government xiii of favourable measures and 30 per cent of all measures – a record. For incentives, the services sector and renewable energy were the primary focus in 2023. Heightened caution towards foreign investments in critical sectors persisted in 2023. The introduction or expansion of FDI screening mechanisms accounted for nearly half of the measures less favourable to investors. Four additional countries implemented FDI screening in 2023, with several more expected to follow in 2024. Countries that conduct FDI screening now account for over half of global FDI flows and three quarters of FDI stock. FDI restrictions also increasingly affect outward FDI. Outward FDI policies have evolved over the past decade, reflecting the growing importance of both sustainability and geopolitical considerations in shaping investment policies. In 2023, countries and regions concluded 29 new international investment agreements (IIAs). Traditional bilateral investment treaties accounted for fewer than half of the new treaties; most were broad economic agreements with investment provisions. Efforts to reform the IIA regime are continuing. New treaties tend to include features aimed at safeguarding the right to regulate and they increasingly cover a broader range of issues, including investment facilitation. The recent finalization of the Investment Facilitation for Development Agreement by participating members of the World Trade Organization may provide further impetus for this trend. Reform of the stock of old-generation IIAs continues to be slow. About half of the global stock of FDI is still covered by IIAs that have not been reformed, which expose countries to higher risk of investor–State dispute settlement cases. This share is about two thirds for developing countries and closer to three quarters for LDCs. Only 16 per cent of global FDI stock is today covered by a new-generation IIA; reform efforts have so far had a limited effect on mitigating the risk of ISDS, especially in the poorest countries. The total ISDS case count reached 1,332, with 60 new arbitrations initiated in 2023. About 70 per cent of new cases were brought against developing countries, including three LDCs. International investors in the construction, manufacturing and extractive sectors accounted for over half of the claims in 2023. UNCTAD continues to play a leading role in facilitating IIA reform. It launched the Multi-Stakeholder Platform for IIA Reform during the UNCTAD World Investment Forum to chart the way forward towards an investment regime that puts sustainable development at its core. Sustainable finance trends The sustainable finance market continues to grow, but there are clear signs of a slowdown. In 2023, the value of sustainable investment products, encompassing bonds and funds, increased by 20 per cent to more than 7trillion.However,muchoftheincreasewasdrivenbycumulativeissuanceandrisingvaluations,andsomesegmentsofthemarketstruggled.Sustainablebondsshowedmarginalgrowth.Issuanceclimbed3percentto872 billion, bringing the outstanding value of the market to more than 4trillion.Greenbondswerethemaindriverofgrowth,whileissuanceinothersegments,especiallysocialbonds,fell.Sustainablefundsexperiencedstrongheadwinds.Despitecontinuedgrowthinthenumberoffundsandassetvalues,netinflowsdroppedfrom161 billion in 2022 to $63 billion in 2023. In the principal markets, funds in Europe lost growth momentum and those in the United States saw significant net outflows, exceeding those of the broader fund market. Greenwashing poses the most significant challenge to the sustainable fund market. The average net exposure of green funds to climate-positive assets (low-carbon assets minus fossil fuels) is World Investment Report 2024 Investment facilitation and digital government xiv only about 20 per cent, and fewer than 5 per cent of these funds are free from oil and gas assets. Further systemic efforts are needed to tackle greenwashing, including well-defined product standards, robust sustainability disclosures, external auditing and third-party ratings. Institutional investors made progress on sustainability reporting, but significant gaps remain. In 2023, 58 of the top 100 sovereign wealth and public pension funds monitored by UNCTAD reported on their sustainability performance, up from 55 in 2022. Only a quarter of reporting funds used third-party verification. Institutional investors are not moving fast enough to reorient portfolios. Most reporting funds have set out strategies to address climate change. However, only one in three have set a target for fossil fuel divestment and investment in renewables. Governments in both developed and developing economies are accelerating sustainable finance policymaking. In 2023, 35 economies tracked by UNCTAD, covering the world’s largest financial markets, introduced 94 new measures and initiatives, up from 63 in 2022. Policy measures mostly concerned disclosure rules, new national strategies, frameworks and guidelines, and (financial) sector- and product-specific requirements. Developing countries are becoming increasingly active in sustainable finance policymaking. They accounted for about 60 per cent of new policy measures in 2023. These measures were mostly concentrated in the largest developing economies or financial centres. Developing countries as a group continue to face challenges in leveraging sustainable finance, as evidenced by the persistently low sustainable investment flows. International standards will have significant spillover effects. The new disclosure standards issued by the International Sustainability Standards Board and the European Union will affect firms based outside the main financial markets for which they were primarily developed. Companies in developing countries that are part of the supply chains of firms in those markets will face greater pressure to meet higher sustainability standards, and compliance may become a prerequisite for market access. A key policy challenge is to avoid widening resistance to sustainable investment strategies in financial markets and – more broadly – to sustainability and disclosure requirements. In the United States, 17 states have passed legislation prohibiting fund managers from considering environmental, social and governance factors in their investment decisions or prohibiting states from contracting with asset managers that exclude certain industries, such as fossil fuels, from their portfolios. For firms worldwide, the complexity and compliance costs associated with sustainability reporting are a growing concern. Investment facilitation and digital government Investment facilitation has emerged as a top priority for investment policymakers worldwide. Since the publication of the UNCTAD Global Action Menu on Investment Facilitation in 2016, an international agreement on investment facilitation for development has been negotiated, facilitation has become a mainstay in regional and bilateral trade and investment agreements, and national implementation efforts have proliferated. Business and investment facilitation have become central to both private sector development and FDI attraction in developing countries. Making it easier to establish and operate a business not only attracts foreign investors but also improves the business environment for local firms, supporting the formalization and growth of micro, small and medium-sized enterprises. World Investment Report 2024 Investment facilitation and digital government xv At the core of facilitation efforts are information provision, transparent rules and regulations, and streamlined administrative procedures. Because these elements revolve around information and procedures, digitalization is central to their effective implementation. Business and investment facilitation have thus led to a wave of digital government initiatives, including information portals and online single windows. Such initiatives now make up a significant share of national investment policy measures monitored by UNCTAD; modern IIAs also increasingly encourage digitalization to implement commitments. The number of digital facilitation tools has grown significantly in recent years, and their quality has improved. UNCTAD data show that the number of national government information portals for business and investor registration in developing countries increased from 82 in 2016 to 124; in developed countries, it increased from 43 to 48. In developing countries, the number of online single windows – which allow for multiple procedures to be carried out online – increased from 13 to 67 in the same period; in developed countries it increased from 12 to 28. The quality of portals has also improved, with some in LDCs rivaling those in developed countries, showing that leapfrogging opportunities exist. Challenges remain in building, maintaining and enhancing digital platforms. Despite progress, issues such as outdated information, portal closures and “single window dressing” persist. Continuous updates, clear ownership and adequate resources are essential for the long-term success of digital facilitation platforms. Technical support for developing countries is important; the highest-rated portals in LDCs often were created through development assistance. Digital government tools can have a positive impact on FDI attraction. On average, for each additional point in the quality of digital business and investment facilitation portals (in the rating methodology of the UNCTAD Global Enterprise Registration initiative), developing countries gain about 8 per cent more FDI. This effect is not automatic; it is part of the impact of broader investment climate improvements. Digital business and investment facilitation also boosts formalization and inclusivity. Countries that implement digital single windows see substantial increases in small business registrations. Many new businesses are established by women, young entrepreneurs and populations outside urban centres, indicating that platforms improve access to services, even in countries with a significant digital divide. Governments should adopt a comprehensive approach to digital investment facilitation, avoiding dedicated processes for investment procedures. Progressively incorporating all mandatory procedures for business establishment, such as business registration, tax and social security, and operating licenses, helps capture economies of scale and scope and ensures that benefits extend to all firms, foreign and domestic, large and small. Digital business and investment facilitation can be a stepping stone for wider implementation of digital government. Because the basic architecture of digital government solutions is fundamentally the same across many types of services, platforms can gradually extend beyond the core mandatory procedures for investor entry and business establishment. Other administrative procedures affecting business operations may be sector specific or cover policy areas ranging from the environment to health and safety, labour and social issues. Business and investment facilitation provides a bottom-up avenue to digital government development. Such an approach, starting from basic services for business – usually the first government services to be digitized – and gradually expanding to adjacent policy areas can begin in one or a very few public sector entities, does not necessarily depend on major legislative interventions, is relatively low cost, and adds immediate value to users and revenue-generating potential for government. World Investment Report 2024 Investment facilitation and digital government xvi Such a bottom-up approach provides a valuable complementary route for developing countries. The prevailing guidance on digital government implementation favours a top-down approach based on a national strategy and supported by a digital government authority. Although central steering is necessary to push enabling legislation, budget support and stakeholder engagement, it can lead to lengthy and complex programmes that are often too costly for developing countries to pursue. Online single windows for businesses and investors can add value quickly and cheaply, and gradually expand coverage of services and institutions. Wider implementation of digital government is a natural complement to investment policy. Online information and streamlined processes alone cannot bring the sea change in investment potential that is needed in many developing countries. Surveys of investors and investment promotion agencies consistently show that weaknesses in governance and institutions are among the most important challenges in attracting foreign investment. Digital government, by increasing transparency, improving efficiency and reducing corruption, helps address those weaknesses and support investment for sustainable development objectives. The digital tools for business and investment facilitation included in the UNCTAD Digital Government Platform are operational in more than 60 countries. Looking ahead, UNCTAD will continue to support developing countries and – in collaboration with other international organizations – look for opportunities to maximize the benefits of digital government for the promotion of investment in sustainable and inclusive development. Chapter I International investment trends 2022 2023 -2% Europe North America Africa Developing Asia Latin America and the Caribbean 16 361 53 621 193 Regions FDI value (Billions of dollars) Growth rates Greenfeld projects FDI International project fnance .. -5% -3% -8 -1% -8% 0 +7% +22% -4% -25% -6% -26% -25% -30% FDI value Growth rates 464 867 31 Developed Developing LDCs Greenfeld projects (mostly industry) FDI International project fnance (mostly infrastructure) Income groups +9% -6% -21% -7% +15% -26% +17% +51% -32% Infrastructure Renewable energy WASH Agrifood systems Health and education +8% -5% -17% +13% +6% Infrastructure GVC-intensive industries Semiconductors Digital economy Extractives 0% +27% -1% -46% -9% Greenfeld projects (Number) Cross-border M&As (Value) Industries (Project numbers) SDG sectors (Developing economies, project numbers) International project fnance (Number) FDI (Value) 2022 2023 -23% 2022 2023 +2% 2022 2023 -46% Chapter I International investment trends 3 A. Foreign direct investment Global foreign direct investment (FDI) flows declined in 2023. Investor uncertainty about the state of the economy and the potential impact of economic fracturing trends affected flows in both developed and developing economies. Tighter financial conditions depressed international project finance deals and cross-border mergers and acquisitions (M&As). Greenfield project announcements increased, potentially signalling better prospects going forward. Combining these trends with stabilizing costs of finance makes expectations for 2024 moderately positive. 1. Global trends FDI flows in 2023 amounted to $1.33 trillion, 2 per cent less than in 2022. The headline number was affected by wild swings in a small number of European conduit economies. Excluding the effect of these conduits, global inflows declined by more than 10 per cent. FDI inflows to developing economies, which have been robust over the past few years, declined by 7 per cent in 2023. Flows to developed economies, net of conduits, fell by 15 per cent. They were affected by corporate financial reconfigurations – driven in part by moves to introduce a global minimum tax for large multinational enterprises (MNEs) – and by a big drop in the value of cross-border M&As. M&As, which especially affect FDI in developed countries, ended 2023 at just over half the value seen in 2022. International project finance was also weak, with both the number and the value of deals down by about a quarter. Tighter financing conditions, investor uncertainty, volatility in financial markets and – for M&As – greater regulatory scrutiny were the principal causes of the decline. Conversely, greenfield project announcements increased marginally, in both number and value terms. The growth was largely due to increased announcements in manufacturing industries, in a break with a decade-long trend of gradual decline in the sector. Manufacturing project announcements by Chinese firms were a big contributing factor. The gains in greenfield investment occurred only in developing countries, where the number of projects announced was up by 15 per cent (table I.1). In developed countries, in contrast, new project announcements were down 6 per cent. Diverging movements in greenfield projects and international project finance deals reflect the different drivers of investment in international production and industry (greenfield), on the one hand, and infrastructure industries (project finance) on the other. They also reflect the sensitivity of different investor pools to current financial conditions. MNEs have realized large profits over the past few years (figure I.1), boosting their capacity to finance asset expansions, which also explains the rising greenfield numbers. Project finance is World Investment Report 2024 Investment facilitation and digital government 4 Figure I.1 The profits of the largest multinational enterprises remain high Profits and profitability level of the largest firms Profts (Billions of dollars) Proftability (Percentage) 1 000 2 000 3 000 4 000 9 6 3 2016 2015 2018 2019 2017 2020 2021 2023 2022 Source: UNCTAD, based on data from Refinitiv. Notes: Covers 4,388 MNEs for which data were available for every year in the range. Profitability calculated as the ratio of net income to total sales. Value (Billions of dollars) Number Economic grouping Type of investment 2022 2023 Growth (%) 2022 2023 Growth (%) Developed economies Greenfield projects 687 631 -8 11 112 10 435 -6 International project finance 728 562 -23 1 720 1 357 -21 Cross-border M&As 599 302 -50 6 710 5 862 -13 Developing economies Greenfield projects 622 749 20 6 949 8 007 15 International project finance 573 396 -31 1 138 839 -26 Cross-border M&As 107 76 -29 1 053 855 -19 Table I.1 Announced greenfield projects, international project finance deals and cross-border M&As Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Abbreviations: M&As = mergers and acquisitions. Chapter I International investment trends 5 more dependent on institutional investors and on debt financing, both of which are more sensitive to capital costs and financial market trends. Higher interest rates may also lead governments to delay large projects as they wait for more favourable terms. The global environment for international business and cross-border investment remains challenging in 2024. Economic growth is expected to slow (table I.2). Global economic fracturing trends, trade and geopolitical tensions, industrial policies affecting strategic and manufacturing sectors, and moves by corporates to diversify supply chains are reshaping international production and FDI patterns. These trends are causing some MNEs to adopt a cautious approach to overseas expansion. Nevertheless, profit levels of the largest MNEs remain high, which will continue to be reflected in reinvested earnings – a significant component of FDI. Furthermore, financing conditions are easing after a period of high interest rates, which could support renewed growth of international project finance. The market for M&As is expected to recover, although cross- border transactions may take longer to react. The growth in greenfield project announcements in 2023 will also affect FDI flows as projects are realized over time. Overall, although early indicators for the first quarter of 2024 are still weak, modest growth for the full year appears possible. Variable 2021 2022 2023 2024a Gross domestic product 6.2 3.0 2.7 2.6 Trade in goods 10.0 3.8 -0.6 2.0 Gross fixed capital formation 7.4 -2.9 1.3 2.8 Foreign direct investment 64.7 -16.4 -1.8 Memorandum: Foreign direct investment value (Trillions of dollars) 1.6 1.4 1.3 Table I.2 Growth rates of global gross domestic product, gross fixed capital formation, trade and foreign direct investment (Percentage) Sources: UNCTAD for foreign direct investment, gross domestic product and trade, and IMF for gross fixed capital formation. a Forecast. 2. Trends by geography a. FDI inflows In developed economies, financial transactions by MNEs led to volatility in FDI. Including the effect of conduit flows, the headline number for FDI inflows shows an increase of 9 per cent (net of conduits, FDI declined by 15 per cent) (figure I.2). Developed countries accounted for 35 per cent of global FDI flows. Their share has been in gradual decline. The first time that they registered less than half of global flows was as recent as 2019. Nevertheless, developed economies still attract the majority of greenfield projects and international project finance deals. World Investment Report 2024 Investment facilitation and digital government 6 Inflows to Europe shifted dramatically, from -106billionin2022to16 billion in 2023. Several economies, including Ireland, Luxembourg, the Netherlands, Switzerland and the United Kingdom of Great Britain and Northern Ireland, reported large negative numbers when the 2022 and 2023 inflows are taken into consideration together. Lower negative flows in 2023 had a net positive effect on FDI flows of about $180 billion. Excluding these countries, inflows to the rest of Europe declined by 14 per cent. FDI inflows to North America fell, as did those to most other developed countries. All developed regions experienced a sharp downturn in M&A activity, with the value of cross-border M&As dropping by $300 billion in 2023. The number of greenfield project announcements decreased by 6 per cent in developed economies and the number of project finance deals fell by 21 per cent (table I.3). FDI flows to developing economies decreased by 7 per cent, to $867 billion, or 65 per cent of global flows. Developing Asia, the largest FDI recipient, experienced an 8 per cent decline in inflows, driving the overall result. Inflows to Africa dropped by 3 per cent, while in Latin America and the Caribbean they remained flat. Figure I.2 Foreign direct investment declined in most regions Inflows by economic grouping and region (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 1 332 464 16 361 867 1 356 426 -106 379 930 53 54 World Developed economies Europe North America Developing economies Africa Per cent -2 +9 .. -5 -7 -3 7 193 196 Latin America and the Caribbean -1 7 621 678 Asia -8 2022 Chapter I International investment trends 7 In contrast, inflows to least developed countries (LDCs) increased; their share in global FDI grew from 2 to 2.4 per cent. Greenfield investment in developing countries was a bright spot in 2023, with the number of announcements increasing by 15 per cent and values climbing by 20 per cent. This partially offset declines in international project finance deals, which fell by 26 per cent in number and 31 per cent in value. The overall number of greenfield projects increased by 2 per cent (table I.3). Among developed regions, the number of greenfield projects held only in North America, which was less affected by the downturn in project finance deals as well. In other developed regions, greenfield project numbers were lower. In contrast, almost all developing regions saw growth in greenfield projects. Table I.3 Number of announced greenfield projects and international project finance deals, by economic grouping and region (Number and percentage) Announced greenfield projects International project finance deals Region/economic grouping 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) World 15 514 18 061 18 442 2 2 500 2 858 2 196 -23 Developed economies 10 438 11 112 10 435 -6 1 496 1 720 1 357 -21 Europe 7 545 7 676 7 041 -8 899 1 121 840 -25 European Union 5 913 5 990 5 419 -10 637 833 671 -19 Other Europe 1 632 1 686 1 622 -4 262 288 169 -41 North America 2 084 2 491 2 499 0 372 398 376 -6 Other developed countries 809 945 895 -5 225 201 141 -30 Developing economies 5 076 6 949 8 007 15 1 004 1 138 839 -26 Africa 558 775 830 7 138 178 132 -26 Asia 3 275 4 749 5 798 22 489 624 469 -25 Central Asia 53 49 158 222 24 19 18 -5 East Asia 713 597 703 18 90 95 42 -56 South-East Asia 861 1 103 1 568 42 157 237 135 -43 South Asia 512 1 093 1 167 7 150 223 180 -19 West Asia 1 136 1 907 2 202 15 68 50 94 88 Latin America and the Caribbean 1 241 1 417 1 366 -4 370 334 235 -30 Oceania 2 8 13 63 7 2 3 50 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. World Investment Report 2024 Investment facilitation and digital government 8 The recent pickup in greenfield announcements in developing countries follows a long period of sluggishness and signals a potential recovery (figure I.3). Developing countries accounted for almost half of all announcements at the start of the last decade, but their share had gradually fallen to one third by 2020. However, developing regions have regained momentum over the past few years and the number of projects has grown rapidly following the pandemic, almost doubling from their recent nadir. Developing countries now account for 43 per cent of greenfield project announcements. FDI inflows declined for most reporting economies. About two thirds of developed economies saw declines and about half of developing ones. The United States of America remained the largest FDI recipient, accounting for almost a quarter of the global total (figure I.4). China and Hong Kong, China account for a further 21 per cent. Among the top 20 host economies, the largest absolute drops were registered in France, Australia, China, the United States and India, in that order. Only Singapore registered a significant gain. The United States was the top destination for both greenfield projects and international project finance deals. India and the United Kingdom also appear in the top five destinations for both kinds of FDI. The United Arab Emirates gained two places in the ranking of top destinations for greenfield projects, after entering the top five in 2022. Figure I.3 Greenfield projects in developing economies are regaining lost ground Announcements by economic grouping (Number and percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Developed Developing Share, developing (per cent) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 47 33 43 Chapter I International investment trends 9 Figure I.4 Inflows declined in more than half of the top 20 recipients Foreign direct investment inflows, top 20 host economies (Billions of dollars) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics) and based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. 2023 2022 Top fve recipients by number of projects Greenfeld project announcements United States (1) 311 332 China (2) 163 189 Singapore (3) 160 141 Hong Kong, China (4) 113 110 France (5) 42 76 Brazil (6) 66 73 Australia (7) 30 63 India (8) 28 49 Canada (9) 50 46 Spain (10) 36 45 Sweden (11) 29 45 Mexico (12) 36 36 Japan (13) 21 34 Poland (15) 29 31 Germany (17) 37 27 Indonesia (18) 22 25 United Arab Emirates (21) 31 23 Chile (26) 21 17 Argentina (27) 23 15 Belgium (31) 23 12 (x) = 2022 ranking United States United Arab Emirates United Kingdom India Germany 2 152 1 323 1 184 1 058 1 036 International project fnance deals United States India Italy Spain United Kingdom 334 163 116 107 104 World Investment Report 2024 Investment facilitation and digital government 10 i. Developed economies FDI flows to developed countries increased by 9 per cent in 2023, to $464 billion. However, large fluctuations and negative FDI realizations in several European countries with significant conduit FDI flows over the past two years complicate the picture (figure I.5). Moves to implement a minimum tax on large MNEs in 2024 coincided with a wave of corporate financial restructurings and divestments. Net of the effect of conduit flows, FDI in developed countries was down by about 15 per cent. In the United States, FDI inflows declined by 6 per cent to $311 billion, with a sharp reduction in cross-border M&As, which fell by 40 per cent to $81 billion – half of the average over the past 10 years. Lower deal values in the information and communication technology (ICT) sector explained much of the decline. FDI in Canada increased by 9 per cent to $50 billion, but FDI in other developed countries, including Australia, Japan and the Republic of Korea, dropped sharply. In 2023, the value of M&A sales in developed countries declined by 50 per cent to $302 billion. Most transactions were concentrated in a small group of countries. Almost half of the M&A targets were based in the United States and the United Kingdom. Germany, Canada, Switzerland and France accounted for an additional 30 per cent of deal values. Among the top 10 cross-border M&A transactions, 6 involved acquisitions by investor groups, either with the intent to list companies publicly through special-purpose acquisition company (SPAC) transactions or as part of private equity deals. The financial nature of these deals illustrates the importance that financing conditions have for cross-border M&A trends. Figure I.5 Foreign direct investment inflows turned negative in parts of Europe due to financial restructurings Inflows to developed economies (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 464 59 -42 361 87 426 -85 -21 379 154 Developed economies Other Europe European Union North America Other developed countries Per cent +9 .. .. -5 -44 2022 Chapter I International investment trends 11 The value of greenfield announcements in developed economies fell by 8 per cent. Notably, after a period of very high investment, ICT saw a significant drop in project numbers. Conversely, project numbers in most other sectors increased, particularly in energy and gas supply, which rose by more than half. The largest greenfield projects are illustrative of major trends in international investment. Five projects of the top ten relate to semiconductor and electronics production, reflecting efforts to diversify or de-risk supply chains and to promote domestic production; firms based in Taiwan Province of China were the main investors in three of these projects. Four projects pertained to renewable energy, three of them in battery production. Canada and Japan emerged as top destinations for the largest projects, accounting for 5 of the 10 largest. The downturn in international project finance deals was widespread across most developed economies and industries. However, about 80 per cent of the total drop in deal values was attributed to just three sectors: industrial real estate, power and telecommunication. Renewable energy, typically the largest sector, registered a small gain of 2 per cent, with deal values reaching nearly 250billionoutofatotalof562 billion. The 10 largest international project finance deals in developed economies accounted for more than 20 per cent of the total value of all deals. Most of these were in the energy sector, which is capital-intensive. The top three deals related to renewable energy production, but deals for oil and gas projects were also significant, constituting another 3 of the top 10. Australia emerged as the second largest destination for project finance deals, by value, after the United States. ii. Developing economies FDI inflows to developing economies decreased by 7 per cent in 2023, mainly owing to a rare downturn in Asia. Despite this decline, FDI remained the leading source of external financing for developing economies, accounting for 44 per cent of total financial inflows in 2023, with remittances, development assistance and portfolio investment flows making up the rest. Although the number and value of announced greenfield projects increased, these gains were offset by a sharp drop in project finance deals, with their value falling by almost $200 billion compared with 2022. Cross-border M&A sales typically represent a much smaller share of FDI in developing countries than in developed ones. Still, the value of M&A sales in developing economies in 2023 dropped by $31 billion (to $76 billion), which explains about half of the overall decline in FDI inflows. Despite the drop, several large transactions took place. The largest M&A sale in 2023 was a $23 billion stock swap between a Vietnamese electric vehicle maker and a United States-based SPAC. Singapore also registered several multibillion-dollar M&A sales, including SPAC transactions. Most of the growth in greenfield projects in developing economies was in manufacturing, in terms of both project values and numbers. Over the past two decades, project numbers in the manufacturing sector have gradually declined and the services sector has become more prominent. The increase in 2023 was a welcome break in the trend, given the importance of manufacturing projects for economic growth, industrial development and the participation of developing countries in global value chains (GVCs). In particular, the automotive sector registered strong growth. Notable projects included a 10billionexpansionofMalaysianautomakerProton(foreignownedinpartbyGeely(China)),a9 billion joint venture to establish a battery supply chain in Indonesia and a 6.4billionelectricvehicleproductionfacilityinMorocco.WhilemostinvestmentwasinAsia,thevalueandnumberofmanufacturingprojectannouncementsinAfricaandinLatinAmericaandtheCaribbeanalsogrew.RegionaltrendsandfactsheetsondevelopingregionsavailableonlineWorldInvestmentReport2024Investmentfacilitationanddigitalgovernment12Thedownturnininternationalprojectfinancedealswaswidespreadacrossmostregionsandindustries.Renewableenergyprojectscontinuedtoaccountforalargeshareofdealsindevelopingeconomies,comprisingalmost45percentofallprojectsannounced.Still,asindevelopedeconomies,therewasanotabledeclineinsuchdealsindevelopingeconomies,witha24percentdropinthenumberanda31percentdropinvalue.Thedownturnalsoaffectedmegaprojects.In2022,fiverenewableenergyprojectsvaluedatmorethan5 billion were announced; in 2023, there were no deals of this magnitude. (a) Africa FDI inflows to Africa declined by 3 per cent in 2023, to $53 billion (figure I.6). The number and value of project finance deals fell, while outcomes for greenfield announcements were mixed across countries. Cross-border M&A sales, which accounted for about 15 per cent of FDI inflows to Africa in recent years, remained flat at $8.5 billion. European investors remain the largest holders of FDI stock in Africa, holding three of the top four spots (the Netherlands at 109billion,Franceat58 billion, the United States at 46billionandtheUnitedKingdomat46 billion). The value of greenfield projects announced in Africa fell to 175billion,from196 billion in 2022. However, most countries registered increases in project numbers, with the overall number of project announcements in the region rising by 7 per cent to more than 800. If executed, these projects could generate an additional 200,000 jobs in the region. The largest year-to-year increases in project value were in chemicals (to 13billion)andelectronics(to7.6 billion), while Figure I.6 Foreign direct investment to most regions in Africa declined Inflows to Africa (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 53 13 13 6 11 7 54 15 13 7 12 9 7 Africa North Africa West Africa Central Africa East Africa Southern Africa Per cent -3 -12 -1 -17 -3 +22 2022 Chapter I International investment trends 13 project values for electricity and gas supply projects dropped by 33billioncomparedwith2022.Thisdropaloneexplainsmuchoftheoveralldeclineingreenfieldvalues.Theregionattractsagrowingshareofglobalmegaprojects,withsixvaluedatmorethan5 billion. The largest greenfield announcement for any country in 2023 was a green hydrogen project in Mauritania, expected to generate $34 billion in investment (several multiples of the country’s gross domestic product). Several other large hydrogen projects were also announced: The Suez Canal Economic Zone completed agreements for green ammonia and green hydrogen projects in Egypt totalling $10.8 billion. Three energy producers separately announced green hydrogen projects in South Africa totalling 7.1billion,andtherewassubstantialinvestmentinMoroccoaswell.ValuechainsforelectricvehicleshavealsopromptedinvestmentinAfrica.Amongthelargestdeals,aChinesemanufacturerannouncedplanstoestablisha6.4 billion electric vehicle battery manufacturing facility in Morocco. The estimated value of international project finance deals in Africa declined by 50 per cent in 2023, to 64billion,followinga20percentdropin2022.Industriesrelatedtorenewableenergyandpowergenerationregisteredlargedropsinbothvaluesandnumbers.However,momentumcontinuedinsomepartsofthesector.Alongwiththegreenenergyprojectsmentionedearlier,aninvestorgroupannouncedadealforgreenhydrogenproductiontotalling4 billion in Egypt, and another group is planning a 2billionhydrogenprojectinMorocco.Africaalsoattracted10.8 billion in project finance for wind and solar electricity production, with the largest projects located in Egypt, South Africa and Zimbabwe. The African Continental Free Trade Agreement (AfCFTA) Investment Protocol adopted in 2023 is expected to contribute to growing intraregional FDI. The share of intraregional projects, though still relatively low, is higher in services and selected manufacturing industries (with 20 per cent of projects by investors from Africa) than in resource-based processing industries (with only 13 per cent of projects originating from the region). This indicates the pool of investors undertaking projects within the region is large for some sectors. Also, there is an opportunity to expand intraregional investment in processing industries as part of the general drive to increase value addition. (b) Developing Asia FDI flows to developing Asia receded in 2023 but remained elevated, at $621 billion (figure I.7). The region was by far the largest recipient of FDI, accounting for nearly one half of global inflows. East and South- East Asia were the main recipients. Flows declined in East Asia, with a significant drop in China breaking a decade-long growth trend. In South-East Asia, inflows remained stable as a result of robust economic growth and extensive GVC linkages. The decline in flows to West Asia was moderate, whereas South and Central Asia registered sizeable declines, especially in India and Kazakhstan. M&A sales, which usually constitute 10 to 15 per cent of FDI in developing Asia, declined by almost $30 billion in 2023 to 57billion,representingabouthalfofthetotaldropinFDIinflowstotheregion.TheoverallvalueandthenumberofgreenfieldprojectannouncementsindevelopingAsiaincreasedsignificantlyin2023,by44percentand22percent,respectively.South−EastAsiasawa42percentincreaseinannouncements,particularlyinelectronicsandvehicleproduction.Projectsinthesesectorsareexpectedtocreatenearly145,000jobsintheregion(outofanestimated1.4millionjobsexpectedtobecreatedindevelopingAsiaasawhole).Asiacontinuedtoattractmegaprojects,with6ofthe10largestprojectsworldwidelocatedindevelopingAsia,including4inSouth−EastAsia.Indonesiawasatopdestinationforannouncedgreenfieldprojectsbyvalue.NotableprojectsincludedupstreaminvestmentsWorldInvestmentReport2024Investmentfacilitationanddigitalgovernment14byChineseglassandsolarmanufacturerXinyiGrouptotalling11 billion. In addition, a consortium of European and Indonesian companies is developing a 9billionbatterysupplychainforelectricvehicles.ThenumberofinternationalprojectfinancedealsindevelopingAsiadeclinedby25percent.WestAsiawastheonlyexception;totaldealsthereincreasedto94in2023from50in2022,withvaluesgrowingby32percentto57 billion. Saudi Arabia, Türkiye and the United Arab Emirates all saw higher numbers of deals. Elsewhere in Asia, most countries registered lower numbers. An important trend in the region as a whole was the decline in international project finance in renewable energy (along with most industrial sectors) and the increase in petrochemicals. (c) Latin America and the Caribbean In 2023, FDI in Latin America and the Caribbean remained stable, totalling $193 billion (figure I.8). There was considerable heterogeneity across countries. In South America, FDI in Argentina, Chile and Guyana accelerated. This offset lower values in Brazil and Peru. Brazil remains the largest recipient in South America. In Central America, Mexico accounted for the bulk of foreign investment, with stable FDI inflows. In the Caribbean, the Dominican Republic continued its growth trend, with inflows rising 7 per cent year on year. M&A sales, which typically account for only a small share of FDI in Latin America and the Caribbean, declined by $4 billion in 2023, to 11billion.Thenumberofannouncedgreenfieldprojectsdecreasedby4percentin2023,andthenumberofprojectfinancedealsdroppedby30percent.However,theestimatedvalueofannouncedgreenfieldprojectsincreased,primarilydrivenbylargeprojectsinBrazilandChile.DemandforcommoditiesandcriticalmineralsFigureI.7ForeigndirectinvestmentinflowsdeclinedacrossmostofAsiaInflowstodevelopingAsia(Billionsofdollarsandpercentagechange)Source:UNCTAD,FDI/MNEdatabase(www.unctad.org/fdistatistics).2023202262128622636657678315223587210DevelopingAsiaEastAsiaSouth−EastAsiaSouthAsiaWestAsiaCentralAsiaPercent−8−9+1−37−9−27ChapterIInternationalinvestmenttrends15continuestodrivealargeshareofgreenfieldinvestmentintheregion.Theprimarysectoraccountedfor23percentofprojectvaluesoverthepasttwoyears,comparedwithlessthan10percentinotherdevelopingregions.Investmentintheseindustriescanbesensitivetoswingsincommodityprices.Investmentinrenewableenergywasprominent,with4ofthetop10announcedprojects(byvalue)inproductionofgreenhydrogenorgreenammonia.Overall,greenfieldprojectsareexpectedtocreatemorethan300,000jobsintheregion.Mostlargeprojectsareundertakenbyinvestorsfromoutsidetheregion.Only2of19megaprojectsvaluedatmorethan1 billion were undertaken by MNEs based in the region. The global slowdown in international project finance deals affected most subregions and countries in Latin America and the Caribbean. Among major FDI recipients, only Chile posted higher project numbers than in 2022. The downturn affected several industries, with renewable energy among the worst affected: there were 40 per cent fewer deals and a 16billiondropinthevalueofannouncedprojectsinrenewablescomparedwith2022.(d)Structurallyweak,vulnerableandsmalleconomiesWhileFDItomiddle−incomedevelopingcountrieshasbeenrobust,low−incomecountriesandvulnerablegroupsreceiveacomparativelysmallshareofglobalFDIinflows.Theyfacepressinginfrastructureneeds,somobilizingexternalinvestorscouldhelpthesecountriesmakefasterprogresstowardsachievingtheSustainableDevelopmentGoals.In2023,FDIinflowstoLDCsincreasedto31 billion, or 2.4 per cent of global FDI flows (figure I.9). Comparing that with the LDC share in the world population of 14 per cent implies large disparities in per capita terms. The same is true of landlocked developing countries (LLDCs), which accounted for 7 per cent of the global population but only 1.8 per cent of FDI. Figure I.8 Foreign direct investment to Latin America and the Caribbean remained stable Inflows to Latin America and the Caribbean (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 2022 193 143 47 4 196 146 46 4 Latin America and the Caribbean South America Central America Caribbean Per cent -1 -2 +1 +6 World Investment Report 2024 Investment facilitation and digital government 16 Although project finance deals are a small share of all FDI, the typical project financed is large. An analysis comparing the relative contribution of greenfield projects, M&As and project finance deals to total announcement values over the past 10 years shows that LDCs and LLDCs are relatively more dependent on international project finance than are other developing economies, in terms of both numbers and values. For this reason, they are more exposed to the recent downturn in project finance deals. (e) Least developed countries FDI to the 45 LDCs increased 17 per cent in 2023, to 31billion.Flowsremainedconcentrated,withthetopfiverecipients(Cambodia,Ethiopia,Bangladesh,UgandaandSenegal,inthatorder)accountingforabout50percentofthetotal.ThegrowthofFDIinLDCshaslaggedthatofothersourcesofexternalfinanceoverthelastdecade,andthesharesofofficialdevelopmentassistanceandremittancesaresignificantlyhigherthanindevelopingeconomiesoverall(figureI.10).Nonetheless,FDIisanimportantsourceoffinanceforLDCs,asitisoftenmoredirectlytargetedtoproductivecapacitycreation,infrastructureassetsandeconomicactivitiesthatcansupportindustrialtransformationandgreaterparticipationinGVCs.ThenumberandvalueofgreenfieldprojectannouncementsinLDCsincreasedsubstantiallyin2023(by51percentandalmost300percent,respectively).Alargepartofthejumpinvaluesisexplainedbythe34 billion green hydrogen project in Mauritania. Excluding this outlier, announced greenfield project values rose by 51 per cent, to 42billion.AswithFDI,justafewcountriesexplainthebulkofgreenfieldprojectannouncementsandexpenditures.Guinea,theDemocraticRepublicoftheCongo,Ethiopia,MozambiqueandBangladesh(inthatorder)weretheleadingdestinationsintermsofprojectvalues.Combined,thesecountriesaccountedforabout60percentofthetotalprojectvaluesforLDCsin2023(excludingtheoutlierdealinMauritania).TheprimarysectorhasaccountedforaboutonefourthofgreenfieldprojectvaluesinLDCsoverrecentyears.Fordevelopingcountriesoverall,itsshareisFigureI.9Inflowsinstructurallyweak,vulnerableandsmalleconomiesincreasedInflowstoleastdevelopedcountries,landlockeddevelopingcountriesandsmallislanddevelopingStates(Billionsofdollarsandpercentagechange)Source:UNCTAD,FDI/MNEdatabase(www.unctad.org/fdistatistics).Abbreviations:LDCs=leastdevelopedcountries,LLDCs=landlockeddevelopedcountries,SIDS=smallislanddevelopingStates.202320223124827247LDCsLLDCsSIDSPercent+17+3+15ChapterIInternationalinvestmenttrends17onlyabout10percent.ThishighlightsthatLDCsaresignificantlyexposedtoglobalcommoditycycles,notonlyfortradebutalsoforinvestment.InternationalprojectfinancedealsinLDCsfellby24percentinvalueand32percentinnumberin2023.ThelackofprojectfinancingforsectorsrelevanttotheSustainableDevelopmentGoalswasparticularlyacute,withatotalofjust14 billion – a significant drop compared with previous years. Over the past decade, the number of project finance deals has gradually increased, while the number of announced greenfield projects has declined (figure I.11). Some 32 per cent of international investment projects in LDCs were initiated using project finance in 2022, compared with less than 15 per cent in other developing countries. As a consequence, although the 2023 downturn in project finance affected all countries, LDCs were among the worst affected. Figure I.10 The composition of financial flows to least developed countries differs from that of flows to other developing economies Shares across categories of external financial flows, 2023 (Percentage) Sources: UNCTAD FDI/MNE database (www.unctad.org/fdistatistics), IMF balance-of-payments statistics, World Bank KNOMAD (Global Knowledge Partnership on Migration and Development) database and OECD. 20 40 60 80 100 44 11 12 34 20 39 41 Foreign direct investment Remittances Developing economies LDCs Foreign portfolio investment Offcial development assistance World Investment Report 2024 Investment facilitation and digital government 18 (f) Landlocked developing countries FDI inflows to the 32 landlocked developing countries (LLDCs) rose by 3 per cent in 2023, to 24billion.Flowsremainedconcentratedinafeweconomies,withthetopfiverecipients(Ethiopia,Kazakhstan,Uganda,MongoliaandUzbekistan,inthatorder)accountingforabout55percentoftotalFDItothegroup.AlargeshareofFDItoLLDCsoriginatesfromjustafewinvestorcountries.Chinawasthehomecountryofthelargestinvestorsbyfarin2022,atabout20 billion (with 7billionofFDIstockinKazakhstanalone);itwasfollowedbyThailand,CanadaandtheNetherlands.Theincreaseinannouncedgreenfieldprojectvalueswasmostpronouncedinmanufacturing,wherethetotaljumpedby20 billion, in large part because of a single 7.7billionprojectannouncedforapolyethyleneproductionprojectinKazakhstan.Overall,thegainsingreenfieldannouncementsforLLDCsoutweighedthedownturnininternationalprojectfinancedeals.KazakhstanandUzbekistanwerethetopdestinationsforgreenfieldprojectsin2023,receivingtogetheralargeshareofthetotalvalue(53percent)andnumber(40percent).Inadditiontothepolyethyleneproductionproject,KazakhstanenteredintoapowerpurchaseagreementwithTotalEnergies(France)fora1.4 billion onshore wind farm and battery energy storage system. The Uzbekistan Government awarded contracts for several solar projects, which are expected to generate 4billionininvestment.TheglobaldownturninthenumberandvalueofinternationalprojectfinancedealsaffectedLLDCs.Overall,thenumberofsuchdealsdeclinedby33percentandvalueswere13percentlowerthanin2022.Therewereafewexceptions.ActivitypickedupinLatinAmerica,mainlyinthePlurinationalStateofBoliviawithastringofdealsforlithiumextractionandprocessingthattotalled3.7 billion. In addition, the value of deals in renewables increased by 24 per cent to 15billion,withprojectsinKazakhstanandUzbekistanaccountingforabouthalfofthetotal.ThelargestprojectsinAfricawereincoppermining,witha2 billion expansion in Zambia and a 1.9billionacquisitioninBotswana.FigureI.11InternationalprojectfinancedealshavebecomerelativelymoreimportantinleastdevelopedcountriesTypesofinternationalinvestmentinleastdevelopedcountries(Number)Source:UNCTAD,basedoninformationfromTheFinancialTimes,fDiMarkets(www.fDimarkets.com)andRefinitiv.201120122013201420152016201720182019202020212022202301002003004005006002011201220132014201520162017201820192020202120222023020406080100120140a.GreenfeldprojectsLineartrendb.InternationalprojectfnancedealsLineartrendChapterIInternationalinvestmenttrends19(g)SmallislanddevelopingStatesFDIinflowstothe29smallislanddevelopingStates(SIDS)roseby15percentto8.3 billion in 2023 – about 0.6 per cent of global FDI. Divestments and the resulting negative inflows in several countries affected outcomes in 2022 more than in 2023. Putting these cases aside, actual growth in 2023 was about 10 per cent. The Dominican Republic accounted for more than half of FDI inflows to SIDS in 2023. Greenfield project announcements were up for most SIDS. There were strong gains for the transportation and storage sector, with project values up by 350millionandthenumberofprojectsdoublingto10.Hospitalityaccountedforabout30percentofgreenfieldprojectsannouncedoverrecentyears,butvaluesfellbyalmost50percentto930 billion in 2023, with a large drop in project numbers as well (down 33 per cent). Volatility in some sectors reflects unusually high investment in 2022 as project backlogs resolved following the pandemic. The number of international project finance deals in SIDS increased by 18 per cent in 2023, and their value also increased strongly. With the small number of deals (49 from 2021 to 2023), a few large deals caused major fluctuations. Three distinct investment streams explained most deals: renewable energy, leisure and hospitality, and oil and gas (along with petrochemicals). Maldives accounts for most projects in the hospitality sector. Other projects were more distributed. b. FDI outflows In 2023, FDI flows from developed economies increased by 4 per cent to $1.1 trillion. As with FDI inflows, corporate restructurings in Europe affected FDI outflows. Several investment-hub countries with significant conduit FDI reported large negative outflows, albeit less negative than in 2022 (i.e. a net positive gain). Excluding the effect of these conduits, global outflows were about 10 per cent lower. The United States and Japan were the home countries of the largest investors. Outward FDI increased by 10 per cent from the United States and by 14 per cent from Japan, going against the overall trend for developed countries. Outward investment from European countries fell by 11 per cent (excluding five conduit countries). Germany, Sweden and Spain are home to large outward investors, and outflows declined from all three (figure I.12). Conversely, FDI outflows from France, another top home country for investors, increased by about one third. Looking at the 20 largest economies by outward FDI flows, those in Asia now account for almost half (9 total), with the relative ranks of India and Taiwan Province of China both rising in 2023. The value of cross-border M&As originating from developed countries dropped by 53 per cent in 2023 due, in part, to tighter financial conditions. The downturn was general across developed economies, including in Europe, Australia, Canada and the United States. Results for greenfield projects were more heterogeneous. MNEs based in North America reduced their number of projects by 18 per cent. Numbers were flat in Europe but increased for other developed economies. FDI outflows from developing economies slowed by 11 per cent in 2023, to $491 billion. The decrease was general across most regions, except South-East Asia. Prospects appear stronger, as greenfield projects announced by MNEs based in developing countries increased by 23 percent in number and by 35 per cent in value. The value of cross-border M&As originating from developing countries – which amount to only about one quarter of those originating in developed countries – was resilient, increasing by 25 per cent. In large part, these results were driven by a rebound in activity by Chinese MNEs. World Investment Report 2024 Investment facilitation and digital government 20 Figure I.12 Nine economies in Asia are among the top 20 home economies of outflows Foreign direct investment outflows, top 20 home economies (Billions of dollars) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). Note: Negative outflows result from divestments and the repayment of intracompany loans. 2023 2022 (x) = 2022 ranking 184 162 Japan (3) 148 163 China (2) 105 -74 Switzerland (157) 104 106 Hong Kong, China (6) 101 146 Germany (4) 90 83 Canada (8) 72 53 France (11) 63 52 Singapore (12) 47 62 Sweden (10) 35 66 Republic of Korea (9) 30 43 Spain (13) 30 32 Brazil (15) 29 12 Russian Federation (29) 25 16 Taiwan Province of China (22) 22 25 United Arab Emirates (17) 21 25 Malta (18) 16 27 Saudi Arabia (16) 15 6 Denmark (36) 13 15 India (23) 404 366 United States (1) Chapter I International investment trends 21 The number of greenfield projects announced by Chinese MNEs almost doubled compared with 2022, explaining half of the total increase for developing countries. In part, this doubling reflects the project backlog following the pandemic, but investment patterns also changed in 2023. Most of the increase in projects announced by Chinese MNEs were in South-East Asia and concentrated in manufacturing industries, particularly computers, electrical equipment, motor vehicles and other transport. The number of greenfield projects by Chinese MNEs in developed economies was stable, at a relatively low level compared with earlier years. Other developing countries also contributed to the rise in greenfield announcements. Greenfield project numbers increased by 21 per cent for MNEs based in Africa and by 18 per cent for those in developing Asia (excluding China). The number of greenfield projects announced by MNEs in Latin America and Caribbean fell 19 per cent. 3. Trends by project type and sector Greenfield project announcements – mostly concentrated in industrial sectors – increased in both value and number in 2023 (figure I.13). The increase in value followed already strong growth in 2022, fuelled by a few very large announcements, including in renewable energy projects. Values in both years ended well above the average for the last decade. Project finance – mostly in infrastructure sectors – declined. Greenfeld projects International project fnance deals Cross-border M&As 2014 2016 2018 2020 2022 0 5 000 10 000 15 000 20 000 6 717 18 442 2 196 2014 2016 2018 2020 2022 0 200 400 600 800 1 000 1 200 1 400 1 600 a. Value (Billions of dollars) b. Number Figure I.13 Announced greenfield projects have regained momentum in recent years Types of investment projects Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Abbreviations: M&As = mergers and acquisitions. World Investment Report 2024 Investment facilitation and digital government 22 Infrastructure projects have a significant debt component and are thus more sensitive to interest rate changes. Total values remained high compared with the average before 2021, when international project finance took off. Fewer deals in services, particularly in the ICT sector, explain a large part of the drop in cross-border M&A values. a. Project types i. Greenfield investment The overall increase in greenfield announcements was powered by a significant rise in the number of manufacturing projects (table I.4). This marked a notable departure from the long-term decline in manufacturing share. Supply chain diversification pressures explained much of the increase, with most GVC-intensive sectors registering growth. Announcements of manufacturing projects by Chinese investors in South-East Asia accounted for one third of the total increase. The announced value of greenfield projects rose by 5 per cent to $1.4 trillion – the highest level ever recorded – again mostly due to the expansion of manufacturing projects among developing economies. The automotive, metals, petroleum, and chemicals sectors all expanded. Only the ICT sector registered lower project numbers and values, after a period of unusually rapid growth between 2020 and 2022. ii. International project finance In 2023, the number of international project finance deals declined by 26 per cent to $958 billion (table I.5). Nevertheless, project finance deals have grown over the past 10 Table I.4 Announced greenfield projects by sector and top industries Sector/industry Value (Billions of dollars) Growth (%) Number Growth (%) 2022 2023 2022 2023 Total 1 309 1 380 5 18 061 18 442 2 Primary 108 66 -39 128 149 16 Manufacturing 485 611 26 6 142 7 521 22 Services 715 703 -2 11 791 10 772 -9 Top 10 industries in value terms Energy and gas supply 381 365 -4 586 879 50 Electronics and electrical equipment 215 183 -15 1 200 1 408 17 Information and communication 129 110 -14 5 131 3 339 -35 Automotive 61 91 50 729 977 34 Construction 69 72 4 218 358 64 Basic metal and metal products 49 70 42 241 336 39 Transportation and storage 57 69 20 997 1 306 31 Extractive industries 107 65 -40 97 117 21 Coke and refined petroleum 18 58 216 41 78 90 Chemicals 27 57 111 488 590 21 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Chapter I International investment trends 23 years and are well above their 2015 nadir of $400 billion. Following a boom in 2022, the number and value of announcements in industrial real estate fell sharply, though they remain at historically high levels. The average cost of debt has substantially increased. The most common reference rates for deals all increased sharply over the course of 2022 and early 2023. International project finance deals in renewable energy – the biggest sector – also declined, with a 12 per cent drop in announced values in 2023. This mostly occurred in developing countries, where declines in oil and gas and in transport infrastructure were also severe. Both the number and the value of public–private partnership announcements fell in 2023, further contributing to the decline. Over the past 10 years, the value of such announcements averaged about $65 billion, whereas in 2023 the total was $6 billion. Similarly, their share in the number of total project finance deals averaged about 5 per cent but fell to less than 1 per cent in 2023. iii. Cross-border mergers and acquisitions Cross-border M&A sales were down by 46 per cent (table I.6). This decline primarily derives from the services sector, where values dropped by more than half and numbers fell by one fifth. A significant part of the decline in services occurred in the ICT sector, which experienced a boom during the pandemic. Both the number and the value of cross-border M&As in manufacturing remained flat. M&A values for the primary sector also normalized after quintupling in 2022. The number of M&A sales decreased across all major industries except for extraction and automobiles. The $23 billion reverse merger of VinFast Auto in Viet Nam with a SPAC based in the United States accounts for a large part of the uptick in the automobile sector. Table I.5 International project finance deals by top industries Industry Value (Billions of dollars) Growth (%) Number Growth (%) 2022 2023 2022 2023 Total 1 301 958 -26 2 858 2 196 -23 Top 10 industries by number Renewable energy 418 368 -12 1 454 1 177 -19 Industrial real estate 266 146 -45 308 231 -25 Power 134 79 -41 193 149 -23 Residential/commercial real estate 67 43 -36 228 129 -43 Telecommunication 119 82 -31 140 111 -21 Oil and gas 93 72 -22 114 103 -10 Transport infrastructure 52 33 -36 111 81 -27 Petrochemicals 69 59 -15 83 77 -7 Mining 42 47 11 88 51 -42 Water and sewerage 18 12 -37 35 27 -23 Source: UNCTAD, based on data from Refinitiv. World Investment Report 2024 Investment facilitation and digital government 24 Several factors explain the drop in M&A activity overall, including tight financial conditions and uncertainty in financial markets. Greater scrutiny from antitrust bodies and foreign investment regulators also affected M&As in the United States, the biggest market. b. Selected industries i. Infrastructure International project finance is the main funding source for infrastructure industries, and the decline in the value and number of project finance deals in 2023 affected this sector in particular (table I.7). The number of announced greenfield infrastructure projects rose, driven by renewables. However, across infrastructure industries, the drop in the value of project finance deals outweighed the gains in greenfield project values. Most infrastructure projects were in renewable energy, constituting more than 45 per cent of announcements and accounting for 65 per cent of estimated project outlays. Both the number of projects and the total project value have grown rapidly in this category, from fewer than 700 announcements in 2015 to more than 2,000 in 2023. There is evidence that investors switch between project finance and greenfield FDI as financial conditions change. When debt finance is costlier and project finance is below trend, greenfield project announcements tend to increase. Table I.6 Net cross-border M&A sales by sector and top industries Sector/industry Value (Billions of dollars) Growth (%) Number Growth (%) 2022 2023 2022 2023 Total 707 378 -46 7 763 6 717 -13 Primary 122 36 -71 389 505 30 Manufacturing 142 141 -1 1 406 1 431 2 Services 442 201 -54 5 968 4 781 -20 Top 10 industries in value terms Information and communication 166 67 -60 1 799 1 432 -20 Extractive industries 121 33 -73 216 400 85 Chemicals 15 32 108 147 132 -10 Pharmaceuticals 36 31 -12 169 129 -24 Automotive 8 31 273 59 62 5 Professional services 23 29 25 730 594 -19 Utilities 18 18 -5 279 229 -18 Trade 27 17 -35 592 523 -12 Food, beverages and tobacco 21 13 -41 157 156 -1 Finance and insurance 88 12 -87 602 539 -10 Source: UNCTAD, based on data from Refinitiv. Chapter I International investment trends 25 ii. Global value chain-intensive industries GVC-intensive industries registered a significant increase in investment projects (table I.8). Greenfield project announcements for the automotive, machinery and textile sectors were all up. Project values for semiconductors declined, but mainly after exceptionally high numbers in 2021 and 2022 as MNEs responded to global semiconductor shortages and concerns about supply chain bottlenecks. In the automotive sector, growth is driven by strong demand for hybrid and fully electric vehicles, and by several new firms entering global markets. The GVCs needed to build electric vehicles (EVs) are also spurring new investment in mining, processing and battery production. A recent UNCTAD analysis examines how economic fracturing is affecting international production in GVCs (UNCTAD, 2024d). Since the 2010s, GVCs have undergone significant restructuring, partially reversing the earlier trend towards offshoring. This shift has been driven by several factors, including technological advancements, policy changes, sustainability concerns and Table I.7 Investment project announcements in infrastructure (Millions of dollars, number and percentage) Industry Announced greenfield projects International project finance deals 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Infrastructure industries Value 265 712 497 837 506 811 2 848 256 722 677 562 380 -22 Number of projects 2 179 2 377 2 775 17 1 724 1 898 1 518 -20 Powera Value 6 538 8 775 13 537 54 199 493 134 319 78 977 -41 Number of projects 50 52 70 35 154 193 149 -23 Renewable energy Value 141 198 372 441 352 883 -5 506 693 417 889 367 815 -12 Number of projects 515 560 859 53 1 355 1 454 1 177 -19 Transportb Value 36 579 53 335 68 421 28 61 549 51 959 33 229 -36 Number of projects 763 988 1 298 31 105 111 81 -27 Telecommunicationc Value 81 397 63 287 71 970 14 80 521 118 511 82 359 -31 Number of projects 851 777 548 -29 110 140 111 -21 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. a Excluding renewable energy. b Transport services for greenfield projects and transport infrastructure for project finance. c Including information services activities. World Investment Report 2024 Investment facilitation and digital government 26 supply chain resilience needs. Robotics and automation are reducing the share of labour in total production costs, enabling the reshoring of production processes. Rising trade and investment interventionism is evident, along with a shift towards regional economic cooperation. Large-scale public interventions, such as the Inflation Reduction Act of the United States and the Recovery and Resilience Facility of the European Commission, are reshaping the FDI landscape with numerous incentives for investment in targeted industries. Finally, sustainability concerns, including carbon border adjustments, are also likely to affect trade flows and investment decisions. iii. Digital industries Following the pandemic, digital industries expanded rapidly. In 2023, the number of greenfield project announcements returned to close to pre-pandemic levels (table I.9). The number of greenfield projects fell by half. Declines were general across all digital industry subgroups. The introduction of advanced large language models over the past two years has led firms in some digital industries to pause investment as they adjust to the new technology. Developing countries that rely on offshore digital services (e.g. call centres or software programming) face the growing risk that automation could harm prospects for new investment projects. Table I.8 Announced greenfield projects in global value chain-intensive industries (Millions of dollars, number and percentage) Industry 2021 2022 2023 Growth, 2022–2023 (%) Global value chain-intensive industries Value 255 426 302 371 314 039 4 Number of projects 3 264 3 505 4 441 27 Electronics and electrical equipment Value 192 678 214 518 182 574 -15 Number of projects 1 116 1 200 1 408 17 Semiconductors Value 125 161 109 478 55 231 -50 Number of projects 114 142 140 -1 Automotive Value 40 846 60 567 90 979 50 Number of projects 725 729 977 34 Machinery and equipment Value 9 490 14 815 23 424 58 Number of projects 656 751 985 31 Textiles, clothing and leather Value 12 411 12 470 17 062 37 Number of projects 767 825 1 071 30 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com). Chapter I International investment trends 27 Digitalization is also a factor in reshaping GVCs. Along with the growth of services, the growth of digital industries is transforming manufacturing. Data-driven tools allow for real-time analysis and optimization of maintenance and logistics. E-commerce platforms blur the line between physical products and services, facilitating the sale of both and often bundling them together. Finally, digital technologies enable the remote provision of service, reducing the need for a physical presence close to manufacturing facilities or final sales points. These factors have increased the share of services activities within manufacturing, and lead to more asset-light international investment. iv. Extractive sectors and critical minerals Greenfield project announcements in mining and critical minerals (including processing) increased significantly in 2023 (table I.10), doubling in both their number and their value. The growth in investment in critical minerals for the energy transition and the decline in new investment in oil and gas extraction show how climate goals are reshaping investment patterns. One third of greenfield projects in critical minerals were invested in by Chinese firms, mostly for the extraction, processing and production of materials for the battery supply chain. Australia, the Republic of Korea, Table I.9 Greenfield project announcements in digital industries (Millions of dollars, number and percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com). Note: For the classification of digital industries see WIR 2017 (UNCTAD, 2017). 2021 2022 2023 Growth, 2022–2023 (%) Digital industries Value 33 035 34 518 20 382 -41 Number of projects 378 344 187 -46 Digital content Value 2 084 515 121 -77 Number of projects 44 37 12 -68 Digital solutions Value 3 090 3 842 2 262 -41 Number of projects 48 61 51 -16 E-commerce Value 25 229 23 935 17 178 -28 Number of projects 232 190 102 -46 Internet platforms Value 2 632 6 226 822 -87 Number of projects 54 56 22 -61 World Investment Report 2024 Investment facilitation and digital government 28 Canada and the United Kingdom were other important investor home countries. The United States, Indonesia and Canada attracted the most projects overall. The highest project values were in Indonesia, Chile and the United States, in that order. Three quarters of projects were in developing countries; about half were in processing or production of materials. Ten projects were announced in LDCs, two of which including a processing or manufacturing component. International project finance in the extractive sector is generally deployed for larger projects. The average estimated value of these projects in 2023 was close to 1billion,whichcomparedwithanaveragevalueofabout500 million for greenfield projects. The highest total values of international project finance deals were announced in Chile, Indonesia, Zambia, Botswana and Argentina, in that order. Table I.10 Investment project announcements in extractives and critical minerals (Millions of dollars and percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Announced greenfield projects International project finance deals 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Extractive industries Value 12 655 107 256 64 589 -40 242 825 134 906 118 652 -12 Number of projects 61 97 117 21 246 202 154 -24 Oil and gas Value 6 112 89 567 25 850 -71 198 306 92 756 72 072 -22 Number of projects 23 58 47 -19 124 114 103 -10 Mining Value 6 542 17 689 38 740 119 44 519 42 150 46 580 11 Number of projects 38 39 70 79 122 88 51 -42 Memorandum: Critical minerals (including processing) Value 13 106 30 396 57 964 91 19 553 24 430 23 230 -5 Number of projects 56 61 114 87 28 27 28 4 Chapter I International investment trends 29 B. Investment in the Sustainable Development Goals The drop in international project finance will exacerbate the 4trilliongapininvestmentneededtomeettheSustainableDevelopmentGoalsindevelopingcountries.Severalsectorsimportantforsuchinvestmentsawadeclineinprojectnumbersin2023;twoofthem,agrifoodsystemsandwaterandsanitation,attractedfewerprojectsin2023thanin2015whentheGoalswereadopted.Thepastyearmarkedthemid−pointofthe2030AgendaforSustainableDevelopment.WIR2023updatedtheestimatefortheGoalsinvestmentgapfordevelopingcountriesto4 trillion, from $2.5 trillion in 2015 (UNCTAD, 2023f). Between 2015 and 2023, the overall number of projects in Goals-relevant sectors grew about 4 per cent annually, outpacing overall growth in numbers of deals (at 3 per cent). However, these gains occurred in just a few Goals- relevant sectors, mainly infrastructure and renewable energy (table I.11). Furthermore, investment has been unequal across countries and LDCs still account for only a small share of Goals-relevant investment. Table I.11 Developing countries: investment in sectors relevant to the Sustainable Development Goals (Number and percentage) 2015 2022 2023 Growth, 2015–2023 (%) Growth, 2022–2023 (%) Infrastructurea 730 945 1 022 40 8 Renewable energy 372 687 655 76 -5 Water, sanitation and hygiene (WASH) 32 36 30 -6 -17 Agrifood systemsb 368 305 346 -6 13 Health and education 277 317 337 22 6 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com) and Refinitiv. a Including transport infrastructure, power generation and distribution (except renewables) and telecommunication. b Including agricultural production and processes; fertilizers, pesticides and other chemicals; research and development; and technology. World Investment Report 2024 Investment facilitation and digital government 30 Most Goals-relevant investment is in infrastructure sectors, which were heavily exposed to the global decline in international project finance in 2023. This had a significant negative effect on total Goals investment flows. International project finance deals in Goals-relevant sectors in developing economies fell by 36 per cent in value and 28 per cent in number (table I.12). Declines in renewable energy, power generation and transport infrastructure were the main contributors. Collectively, the value of project finance deals in these sectors fell by almost $100 billion compared with 2022, marking the second consecutive year of declines. Table I.12 Sectors relevant to the Sustainable Development Goals: announced international project finance deals in developing economies (Millions of dollars, number and percentage) Goals-relevant sector Developing economies Least developed countries 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Total Value 442 629 313 161 200 064 -36 55 102 26 742 14 154 -47 Number of projects 641 724 524 -28 55 55 36 -35 Powera Value 145 722 63 548 40 632 -36 42 148 4 764 766 -84 Number of projects 60 67 50 -25 6 8 1 -88 Renewable energy Value 217 440 175 502 121 623 -31 7 800 11 849 10 078 -15 Number of projects 443 500 378 -24 34 31 28 -10 Transport infrastructure Value 29 408 28 514 8 858 -69 3 637 5 103 .. .. Number of projects 58 58 26 -55 7 5 .. .. Telecommunicationb Value 25 013 21 009 14 356 -32 749 320 2 367 639 Number of projects 38 43 35 -19 3 2 4 100 Water, sanitation and hygiene (WASH) Value 11 947 14 475 9 942 -31 179 2 458 522 -79 Number of projects 16 21 19 -10 2 5 1 -80 Food and agriculture Value 9 678 7 452 2 974 -60 .. 2 231 421 .. Number of projects 12 22 11 -50 .. 3 2 .. Health Value 2 253 1 300 1 678 29 .. 16 .. .. Number of projects 6 5 5 0 .. 1 .. .. Education Value 1 167 1 360 .. .. 589 .. .. .. Number of projects 8 8 .. .. 3 .. .. .. Source: UNCTAD, based on data from Refinitiv. a Excluding renewable energy. b Including information services activities. Chapter I International investment trends 31 Greenfield investment provided some counterweight, as the value of cross- border greenfield project announcements for Goals-relevant sectors grew by 14 per cent in 2023 (table I.13). Project numbers increased even more, to 19 per cent. Still, a few sectors explain most of the growth. Transport services accounted for about one half of the increase in project numbers and values. Renewable energy accounted for about one quarter. At the same time, the estimated value of international investment in agrifood, health and education, and WASH (water, sanitation and hygiene) declined compared with 2022. Raising investment in these sectors is key to achieving the Goals, and the needs are substantial. Table I.13 Sectors relevant to the Sustainable Development Goals: announced greenfield projects in developing economies (Millions of dollars, number and percentage) Goals-relevant sector Developing economies Least developed countries 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Total Value 126 820 261 481 297 746 14 10 147 9 437 49 157 421 Number of projects 1 312 1 566 1 866 19 73 66 91 38 Powera Value 4 173 4 080 7 155 75 2 000 1 865 671 -64 Number of projects 20 17 29 71 1 3 1 -67 Renewable energy Value 56 040 176 342 183 327 4 4 809 4 824 41 614 763 Number of projects 149 187 277 48 13 13 24 85 Transport services Value 14 438 23 347 39 730 70 436 776 4 849 525 Number of projects 275 435 599 38 22 18 31 72 Telecommunicationb Value 29 441 25 672 39 502 54 2 018 917 1 359 48 Number of projects 295 325 283 -13 20 12 13 8 Water, sanitation and hygiene (WASH) Value 4 127 1 619 1 208 -25 136 139 75 -46 Number of projects 19 15 11 -27 1 1 1 0 Food and agriculture Value 11 900 19 829 17 041 -14 426 739 437 -41 Number of projects 275 283 335 18 7 14 14 0 Health Value 5 679 9 668 8 866 -8 187 171 109 -36 Number of projects 194 207 227 10 3 4 3 -25 Education Value 1 021 925 916 -1 136 7 44 535 Number of projects 85 97 105 8 6 1 4 300 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com). a Excluding renewable energy. b Including information services activities. World Investment Report 2024 Investment facilitation and digital government 32 LDCs accounted for only a small share of Goals-relevant investment among developing countries. The combined value of Goals-relevant greenfield investment and international project finance deals in developing countries reached 500billionin2023.Ofthis,63 billion went to LDCs (about 13 per cent). A $34 billion green hydrogen project in Mauritania accounted for more than half the total. The downturn in project finance deals also disproportionately affected LDCs and the number of projects fell by 35 per cent compared to 2022. Still, a few Goals-relevant sectors performed well: renewable energy saw net gains in project values and numbers in LDCs, as did telecommunication, where numbers and values increased for both greenfield investment and project finance deals. The distribution of Goals investment across developing regions is also unequal; only developing Asia attracts above-average greenfield projects and international project finance in Goals-relevant sectors – the share of the region in the global number of Goals projects was higher in 2023 than its share in all projects (figure I.14). Other developing regions not only attract less investment overall, but even lower levels of Goals investment. Africa remains one of the most underserved regions and its share of international investment projects is low. However, it has attracted sizeable investment in power, infrastructure and renewable energy; over the last three years, it accounted for about 30 per cent, on average, of all Goals- relevant investment values in developing countries. In 2023, the region’s share was only slightly lower (27 per cent). Yet there is less progress in other Goals-relevant sectors in Africa. This is particularly true for health (about 5 per cent of total value in developing countries), but also for more capital-intensive sectors such as telecommunication and transport (about 15 per cent for each). Figure I.14 Only developing Asia attracts above-average investment for the Sustainable Development Goals Shares in numbers of investment projects, by region and economic grouping (Percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Note: Shares are calculated by sector. Share in total projects Share in Goals projects 5.4 25.4 4.8 30.4 2.2 1.6 9.6 7.8 Africa Developing Asia Latin America and the Caribbean Least developed countries Chapter I International investment trends 33 WIR 2023 identified gaps of $500 billion in annual investment for WASH and 300billionforagrifoodsystems(UNCTAD,2023f).Asmentioned,thenumberofdealsinthesesectorsislessthanin2015.ThelackofforeignparticipationinWASHprojectsisaparticularareaofconcern.IthampersprogresstowardsGoal6,whichtargetsuniversalaccesstosafedrinkingwater,sanitationandhygiene.In2023,therewereonly11greenfieldprojectannouncementsrelatedtoWASH,amountingto1.2 billion in developing countries, and only one announcement in LDCs. Project finance and public–private partnerships are more important in WASH, but there were large declines in the value of WASH-related international project finance deals in 2023, including public–private partnerships, with only one deal among LDCs. World Investment Report 2024 Investment facilitation and digital government 34 C. International production International production continues to expand, but investment patterns and GVCs are shifting under the influence of economic fracturing trends. The overall transnationality of the top 100 MNEs still increased marginally in 2023. However, they are beginning to alter their international footprint, bringing strategic activities closer to home and considering options to de-risk supply chains. 1. Key indicators of international production Despite the lacklustre growth of international investment in the last decade, international production through the networks of MNEs remains an important part of the globalized economy (table I.14). The value of FDI flows is about 5 per cent of gross fixed capital formation, production of foreign affiliates as a share of global output is more than 6 per cent, and the sales of foreign affiliates are higher than the value of global exports, confirming the importance of FDI as a modality to reach overseas markets. Furthermore, the global production networks of MNEs are estimated to govern about 80 per cent of global trade. However, significant changes in the global economy are reshaping international production networks and GVCs. A recent UNCTAD report on global economic fracturing and shifting FDI patterns (UNCTAD, 2024d) identifies several key trends. First, it shows three types of divergence. The growth of FDI and GVCs has lost pace with GDP and trade – their growth paths have disconnected. There is a widening gap in investment trends between the manufacturing and services sectors. And investment patterns in China have delinked from the rest of the world. Second, it points out that, in recent years, geopolitical differences and global crises have led to a transition from divergence to fracturing. This leads to more volatile investment patterns and shifting home- and host-country relationships, and it causes geopolitical factors to become increasingly important in investment decisions, at times overriding economic considerations. Third, it shows that the sustainability imperative and the drive to stimulate investment in the Sustainable Development Goals are opening up new opportunities for investment-driven industrial development, particularly in environmental technologies. However, it also shows that these opportunities are available to only a small group of countries with larger markets. In many smaller developing countries, and especially LDCs, marginalization and vulnerability continue to grow. Chapter I International investment trends 35 Table I.14 Selected indicators of foreign direct investment and international production (Billions of dollars at current prices and number) Sources: UNCTAD, FDI/MNE database, IMF (2024), information from The Financial Times, fDi Markets (www. fDimarkets.com) and Refinitiv. Notes: Not included are the value of worldwide sales by foreign affiliates associated with their parent firms through non-equity relationships and the value of sales of parent firms themselves. Worldwide sales, gross product, total assets, exports and employment of foreign affiliates are estimated by extrapolating worldwide data of foreign affiliates of MNEs from countries for which data are avaiable, on the basis of three-year average shares of those countries in worldwide outward FDI stock. Abbreviations: FDI = foreign direct investment, M&As = mergers and acquisitions. a Based on data from 168 countries for income on inward FDI and 142 countries for income on outward FDI in 2023, in both cases representing more than 90 per cent of global inward and outward stocks. b Calculated only for countries with both FDI income and stock data. The stock is measured in book value. Item 1990 2005–2007 (average) 2020 2021 2022 2023 FDI inflows 205 1 415 985 1 622 1 356 1 332 FDI outflows 244 1 464 780 1 882 1 575 1 551 FDI inward stock 2 196 14 573 41 893 47 156 44 375 49 131 FDI outward stock 2 255 15 296 40 718 43 386 40 570 44 381 Income on inward FDIa 82 1 123 2 173 2 883 3 002 2 498 Rate of return on inward FDIb 5.4 9.6 6.8 8.2 8.2 6.0 Income on outward FDIa 128 1 235 1 954 2 857 2 923 2 516 Rate of return on outward FDIb 8.4 10.7 5.8 7.7 7.8 6.4 Announced greenfield projects .. .. 641 830 1 309 1 380 International project finance deals .. .. 585 1 440 1 301 958 Cross-border M&As 98 729 475 737 707 378 Sales of foreign affiliates 4 801 19 758 31 298 33 194 .. .. Value added (product) of foreign affiliates 1 074 4 662 6 547 7 030 .. .. Total assets of foreign affiliates 4 649 47 065 97 467 91 386 .. .. Employment by foreign affiliates (thousands) 20 449 49 780 82 405 74 402 .. .. Memorandum: Gross domestic product 22 612 52 680 84 961 96 488 100 135 104 476 Gross fixed capital formation 5 838 12 482 22 055 25 270 26 142 27 161 Charges for the use of intellectual property, receipts 31 191 507 615 590 460 World Investment Report 2024 Investment facilitation and digital government 36 2. Internationalization trends of the largest MNEs The average transnationality index of the top 100 non-financial MNEs – the weight of their overseas assets, sales, and employees in their global operations – increased marginally in 2023 (table I.15). This increase was driven by MNEs in the automotive industry, where the transition to EVs and new technologies attracted more foreign investment. Falling revenues in other sectors and several MNEs’ divestments in the Russian Federation held back the index. The 12 car producers in the top 100 significantly expanded their international Table I.15 Internationalization levels of top 100 MNEs increased marginally in 2023 Internationalization statistics of 100 largest non-financial MNEs, worldwide and from developing economies Source: UNCTAD. Notes: Data refer to fiscal year results reported between 1 April of the base year and 31 March of the following year. Complete 2023 data for the 100 largest MNEs from developing economies are not yet available. Abbreviations: MNEs = multinational enterprises, TNI = Transnationality Index. a Revised results b Preliminary results. Variable 100 largest MNEs, global 100 largest MNEs, developing economies 2021a 2022a Growth, 2021–2022 (%) 2023b Growth, 2022–2023 (%) 2021a 2022 Growth (%) Assets (Billions of dollars) Foreign 10 449 10 127 -3.1 10 230 1.0 2 953 2 896 -1.9 Domestic 8 902 10 566 18.7 10 665 0.9 7 054 8 694 23.3 Total 19 351 20 693 6.9 20 895 1.0 10 007 11 590 15.8 Foreign as share of total (%) 54 49 49 30 25 Sales (Billions of dollars) Foreign 6 703 7 438 11.0 6 965 -6.4 2 272 2 490 9.6 Domestic 4 949 6 744 36.3 6 596 -2.2 4 094 5 523 34.9 Total 11 651 14 182 21.7 13 562 -4.4 6 366 8 013 25.9 Foreign as share of total (%) 58 52 51 36 31 Employment (Thousands) Foreign 8 998 9 096 1.1 9 553 5.0 4 064 4 150 2.1 Domestic 11 102 11 316 1.9 10 606 -6.3 9 265 9 665 4.3 Total 20 100 20 413 1.6 20 159 -1.2 13 328 13 815 3.7 Foreign as share of total (%) 45 45 47 30 30 Unweighted average TNI 62 61 62 48 46 Median TNI 63 63 66 47 45 Chapter I International investment trends 37 networks, focusing on the United States and China, the two largest EV markets. Since passage of the Inflation Reduction Act of 2022 in the United States, top automotive MNEs have announced greenfield projects in the EV and battery supply chain amounting to nearly 17billion.InChina,thecompetitivenessoflocalbrandsledsome,suchasFord(UnitedStates)andHondaMotors(Japan),toscalebackinvestment.However,otherMNEssuchasStellantis(Italy)andVolkswagen(Germany)startedmorejointventurestoleveragelocaltechnologicaladvancements.Forinstance,in2023,Stellantisinvested1.5 billion in Chinese EV start-up Leapmotor, and Volkswagen invested $1 billion in Horizon Robotics, a Beijing-based manufacturer of electronic components, to strengthen its position in the autonomous driving and EV markets. The number of technology MNEs in the top global rankings remained steady at 14 companies, with S&P Global (United States) entering the list as Legend Holdings (China) exited. S&P Global bolstered its capabilities by merging with IHS Markit (United Kingdom) in a $43 billion transaction. Key trends driving investment in the technology industry are the competition to acquire expertise in artificial intelligence and machine learning and to consolidate market presence across neighbouring industries, resulting in more deals. While most of these deals occurred within home economies, larger ones implied an increase in foreign assets. The $75 billion acquisition of video game maker Activision Blizzard by Microsoft (both United States) led to a 22 per cent increase in Microsoft’s foreign assets. Not all technology MNEs have expanded their foreign operations. Apple (United States) scaled down its operations in China, diversifying its supply chain. SAP (Germany) divested its stake in Qualtrics (United States) of approximately $12 billion to focus on its core services. In 2023, the pharmaceutical industry saw a modest expansion of its international footprint, with 10 MNEs driving growth through strategic acquisitions. Similar to developments in the technology sector, many of these transactions occurred within the United States but significantly influenced the international profile of the acquiring companies. For instance, the 43billionmergerofPfizer(UnitedStates)withSeagen(UnitedStates)ledtoa15percentincreaseinforeignassets.The7.1 billion acquisition of Telavant (United States) by Roche (Switzerland) reinforced the position of Roche in the United States market. The internationalization rate of the remaining 21 manufacturing MNEs in the top 100 (light and heavy industry) remained stable. British American Tobacco (United Kingdom) reduced its foreign assets by 20 per cent, while Philip Morris International (United States) bolstered its global presence with a 15billionacquisitionofSwedishMatch(Sweden).Siemens(Germany)ledindigitaltransformation,acquiringBrightlySoftware(UnitedStates)fornearly1.9 billion. In the extractive industries, most of the 15 MNEs in the top 100 held back from pursuing large-scale international investment in 2023. Notable exceptions were Rio Tinto and Shell (both United Kingdom), which actively engaged in strategic acquisitions and new ventures. Rio Tinto finalized the acquisition of copper and nickel miner Turquoise Hill (Canada) for nearly 3.3billion,toenhanceitsportfolioofcriticalmineralsfortheenergytransition.RioTintoannouncedinitiativestoincreaseitsproductionofcopperandlithiumforthesamereason.Shellhasalsoexpandedoperationsinviewoftheenergytransition,exemplifiedbyitsacquisitionofSprngEnergy(India),whichdevelopsandoperatesrenewableenergyfacilities,forabout1.5 billion. The latter part of 2023 and early 2024 saw several more announcements from mining companies about deals intended to boost investment in critical minerals. The telecommunication sector saw significant portfolio shifts in foreign assets. Vodafone (United Kingdom) exited markets in Ghana and Hungary and sold its operations in Italy. Deutsche Telekom Supply chain restructuring is affecting the international footprint of technology MNEs World Investment Report 2024 Investment facilitation and digital government 38 (Germany) and Orange (France) focused on expansion in more profitable regions, including North America, Africa and the Middle East. The utilities sector experienced several reconfigurations that affected its internationalization rate. EDF (France) was fully nationalized, and Enel (Italy) continued strategic divestments, generating $1.3 billion from the sale of its business in Romania. Among construction companies, Vinci (France) moved up the ranking of the top 100 with strategic expansions in airport concessions and energy ventures. A.P . Møller–Maersk (Denmark) exited the ranking after reshuffling operations in East Asia. Finally, the ranking of the top 100 MNEs was also affected by divestments or exits from the Russian Federation. OMV (Austria) dropped out of the ranking after suffering losses due to the expropriation of its stake in the Yuzhno-Russkoye oil and gas field. Between 2022 and 2023, MNEs in the ranking made 36 significant divestments from the Russian Federation, with the largest write-downs and charges concentrated among MNEs in the oil and gas and extractive industries. Emerging-economy MNEs favoured greenfield investment over equity acquisitions. TSMC (Taiwan Province of China), CATL (China) and Zijin Mining Group (China) – in that order by investment size – announced large-scale projects in developed economies. Starting in 2021, TSMC has launched greenfield projects first in the United States, then in Japan and Germany. In 2020 CATL invested over $5 billion in Indonesia and almost 7.5billioninHungary,formingmultiplejointventureswithtopautomotiveMNEs.ZijinMiningGrouphasinvestedmorethan5 billion in Serbia and expanded its global footprint by developing mines in Argentina and Kazakhstan. 3. Shifting investment patterns among the top 100 MNEs UNCTAD recently published a diagnostic of 10 major trends in global FDI patterns, examining the effects of long-term structural changes in international production and the more recent pressures caused by economic fracturing (box I.1). This section looks at how the trends observed in that diagnostic are reflected in the investment behaviours of the top 100 MNEs. The main drivers of the structural changes in FDI patterns are technological developments, most visible in high- technology industries; sustainability trends, evident in intense investment activity in environmental technologies and critical minerals; the push for supply chain resilience, which affects most GVC- intensive industries; and geopolitical and trade tensions, felt across all strategic sectors. These sectors include industries such as high-technology, semiconductors, pharmaceuticals, instruments and machinery manufacturing, environmental technologies and other activities deemed essential for the future competitiveness of countries and which therefore play a key role in their industrial and trade policies (IMF, 2023). Over the last 10 years, two thirds of greenfield investment by the top 100 MNEs related to setting up services subsidiaries (figure I.15). Even within manufacturing sectors often considered strategic such as automotive and pharmaceuticals, more than half of the greenfield projects focused on establishing sales and marketing offices, support and technical services centres, or other professional services, thus making these projects less sensitive. The effects of fracturing are mostly seen in the remaining projects, in physical manufacturing activities. The deceleration of global FDI after 2010 is also reflected in the decreasing total number of deals and projects undertaken by top MNEs. The number of greenfield projects announced in the last five years (2019–2023) was about 10 per cent lower than in the preceding five years (2014–2018). While the overall number of projects has declined, notable shifts in their regional distribution have emerged. Critical minerals are driving major cross-border investment deals among top MNEs Chapter I International investment trends 39 Trend 1: Long-term FDI stagnation The long-term trend in cross-border investment shows that a slowdown in global FDI started in about 2010. It no longer keeps pace with global trade and GDP . Trade within global value chains (GVCs) also slowed, confirming the close link between FDI and GVCs. Trend 2: The increasing weight of services The overall stagnation in FDI conceals sectoral differences. Cross-border investment in services flourishes while manufacturing lags. This reflects a global shift towards more services-centric and asset-light investment. Trend 3: The deglobalization of manufacturing (from an FDI perspective) Manufacturing FDI, stagnant for two decades, showed negative growth after the outbreak of the COVID-19 pandemic. Although global manufacturing activity and investment remain robust, their international component is shrinking, suggesting a trend towards deglobalization. Trend 4: The growing ends of the smile curve The transition from manufacturing to services is part of a broader change in the role of FDI in global value creation. Cross-border investment is moving from the centre to the two ends of the “smile” curve, most notably towards services in business and information and communication technology upstream and in marketing downstream. Trend 5: Convergence of sectoral patterns across regions All regions are feeling the effects of the transition towards services-oriented, asset-light FDI. Consequently, traditional differences in sectoral patterns between developed and developing regions are increasingly blurring. Trend 6: The diminishing role of FDI in China The regional rebalancing of global FDI has been significantly influenced by the declining share of China as a recipient country. Despite waning interest from multinational corporations in initiating investment projects in China, the country continues to maintain a dominant position in global manufacturing and trade, signifying a transformation in its global production model. Trend 7: Unstable investment relationships Heightened geopolitical tensions are exacerbating the volatility of investment sources and destinations, and the susceptibility of traditional investment links to disruptions. Instability in investment relationships limits the capacity of developing countries to strategically capitalize on diversification opportunities arising from shifts in investment patterns. Trend 8: Fracturing along geopolitical lines Geopolitical differences are causing a fracturing trend in global FDI, with the reduction in investment between geopolitically distant countries highlighting the significant influence of such differences on investors’ location choices, overshadowing traditional determinants of FDI. Trend 9: The sustainability imperative driving new FDI sectors FDI in environmental technologies stands out as the main pocket of growth outside services. Since 2010, while manufacturing investment stagnated across all industries, the number of greenfield projects along the entire value chain of environmental technologies sectors has increased steadily. Trend 10: The increasing concentration of FDI and marginalization of developing countries Amid historical shifts and economic fracturing, the share of greenfield projects in smaller developing countries and least developed countries is diminishing. This trend exacerbates the marginalization and vulnerability of those countries, as FDI becomes increasingly concentrated in developed and emerging economies. Source: UNCTAD (2024d). Box I.1 Global economic fracturing and shifting FDI patterns: 10 major trends World Investment Report 2024 Investment facilitation and digital government 40 Until 2018, manufacturing projects were predominantly directed towards developing economies, with East Asia and South-East Asia being key destinations. In services, however, more than a third of projects were concentrated in Europe. Within the manufacturing sector, strategic projects – often involving high-value activities – were relatively more concentrated in developed economies and East Asia. Since 2019, the geographical distribution of manufacturing projects has shifted towards locations closer to MNE home markets, especially in strategic sectors (figure I.16). Europe and North America have emerged as primary destinations – unsurprisingly, considering that the majority of MNEs in the ranking are from the United States (19), Europe (53) and Japan (10) – with Central America (including Mexico), North Africa, and West and Central Asia also gaining traction. This trend reflects a strategic pivot towards regionalization and nearshoring, driven by the need to enhance supply chain resilience and reduce geopolitical risks. Figure I.15 Manufacturing activities represent about one third of projects by top 100 multinational enterprises Greenfield projects, by type and industry, 2014–2023 Source: UNCTAD, based on information from the Financial Times, fDi Markets (www.fDimarkets.com). Notes: Refers to the ranking of top 100 multinational enterprises in WIR 2023. Manufacturing includes several activities normally classified as services but physical asset-heavy in nature, in the construction, electricity, extraction and infrastructure segments. Strategic manufacturing includes activities in environmental technologies, explaining their presence in extractive industries and utilities. “Services” includes all remaining services-related business activities and services activities in typical manufacturing industries (e.g. sales offices of car manufacturers). 0% 20% 40% 60% 80% 100% Strategic manufacturing Other manufacturing Services Automotives Sector Number of enterprises Number of projects Pharmaceuticals Heavy industry Extractives Technology Utilities Trade Light industry Transport and logistics Telecommunication Other Total 48 52 12 1 826 9 527 9 1 035 16 1 035 14 2 720 11 835 6 491 9 769 4 798 6 761 4 256 100 10 787 43 57 41 13 46 9 49 42 9 91 7 65 28 19 3 2 1 79 56 42 99 100 27 15 58 18 15 66 Chapter I International investment trends 41 Figure I.16 Manufacturing projects by top 100 multinational enterprises moved closer to headquarters Shares of selected regions/subregions in types of manufacturing projects, difference between 2019–2023 and 2014–2018 (Percentage points) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Notes: Refers to the ranking of top 100 multinational enterprises in WIR 2023. Manufacturing includes several activities normally classified as services but physical asset-heavy in nature, in the construction, electricity, extraction and infrastructure segments. Caribbean economies are included in Central America. Other regions and subregions (developed Asia and Oceania) are not included as there were no significant changes in the share of projects attracted. Strategic manufacturing Non-strategic manufacturing Africa East Asia South-East Asia South Asia West and Central Asia Europe Central America South America North America -8 -6 -4 -2 0 2 4 6 8 10 12 14 0.3 -5 -5 -2 -4 -7 -2 -3 0.2 -0.1 7 13 1 -5 -0.3 4 3 5 World Investment Report 2024 Investment facilitation and digital government 42 In contrast, the number of strategic manufacturing projects in East Asia decreased. Among the top MNEs, the largest manufacturing investors in China include the electronics company Hon Hai Precision Industry (Taiwan Province of China), the chemicals company BASF (Germany) and a range of car manufacturers such as Toyota (Japan), Volkswagen and BMW (both Germany) and Samsung Electronics (Republic of Korea). These companies have historically maintained significant manufacturing operations in China. However, since 2019 they have halved their greenfield investment in the country in favour of partnerships with local manufacturers, especially in the EV market. Among these companies, Hon Hai Precision Industry and Samsung Electronics have reassessed their manufacturing footprint in China because of trade tensions. A significant portion of their products, especially chips and high- technology electronics, are produced in fabrication plants in China and exported to the United States. Hon Hai reduced its greenfield projects in China from 23 to 6, while Samsung reduced its from 9 to 1. Both companies have started investing in new manufacturing facilities in their home markets and in other countries such as Viet Nam, India and Mexico – in order of investment size. Hon Hai Precision Industry tripled the number of manufacturing projects in Viet Nam. The share of strategic manufacturing investment in Central America has increased. Manufacturers in the automotive industry, such as Robert Bosch (Germany), Toyota Motor (Japan) and Volkswagen (Germany), have chosen to invest in Mexico, largely for its proximity to the United States and its market access under the United States–Mexico–Canada Agreement (USMCA). MNEs in the pharmaceutical and medical instrument industries, including Bayer (Germany), Medtronic (Ireland) and Johnson & Johnson (United States), have targeted Costa Rica for investment projects. North Africa and West and Central Asia have also emerged as strategic locations for manufacturing MNEs, offering proximity to both European and Asian markets. In North Africa, Morocco and Egypt stand out as key investment destinations. Morocco has attracted projects by automotive MNEs including Stellantis (Italy) and Renault (France). Egypt has attracted not only automotive MNEs such as BMW and Robert Bosch (both Germany) and Nissan (Japan) but also pharmaceutical companies such as GlaxoSmithKline (United Kingdom) and electronics producers such as Samsung Electronics (Republic of Korea). In West and Central Asia, Türkiye attracted the largest share of manufacturing projects. The decreasing share of manufacturing projects in South-East and South Asia might seem counterintuitive. However, the top 100 MNEs had already established a significant presence in ASEAN by the early 2010s. This is the case, for example, for the two leading investors in manufacturing MNEs in South-East Asia: Toyota Motors (Japan) and Samsung (Republic of Korea). From 2011 to 2013, Toyota announced 23 manufacturing projects in South-East Asia. This number declined to 13 projects during 2014–2019 and dropped farther to only 5 projects since then. Similarly, Samsung experienced a peak of 10 projects in South-East Asia during 2014–2019, but this number fell to 4 projects in the following years. Of the top manufacturing investors in South-East Asia, only Hon Hai Precision Industry (Taiwan Province of China) started reconfiguring its supply chain in the last five years, increasing its number of projects in the region from 3 during 2011–2019 to 12 since then. Greenfield projects in services activities have also shifted closer to home economies (figure I.17) with one notable exception. Over the last 10 years, about 10 per cent of services projects have been aimed at establishing regional headquarters and back-office functions. MNEs from Europe and North America have increasingly established regional headquarters throughout developing Asia, particularly Investment projects by top 100 MNEs in strategic manufacturing sectors are moving closer to home Chapter I International investment trends 43 Figure I.17 Top multinational enterprises are establishing regional headquarters closer to key markets Shares of selected regions/subregions in types of services projects, difference between 2019–2023 and 2014–2018 (Percentage points) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Notes: Projects aimed at setting up headquarters include the following business activities: headquarters, business services, shared and technical services. Caribbean economies are included in Central America. Other regions (developed Asia and Oceania) are not displayed as there were no significant changes in the share of projects attracted. Headquarters and back offce functions All other services Africa East Asia South-East Asia South Asia West and Central Asia Europe Central America South America North America -6 -4 -2 0 2 4 6 8 2.2 -1.6 2.7 -5.4 -5.5 -3.4 -4.7 -3.4 -0.4 1.5 6.5 6.3 1 -0.4 -0.1 2.3 0.8 -0.4 World Investment Report 2024 Investment facilitation and digital government 44 in East Asia. These regional hubs provide essential services and can help mitigate risks to local operations from geopolitical and trade tensions as well as supply chain disruptions. Specifically for investment in large markets, many MNEs are establishing almost autonomous subsidiaries that produce for the domestic rather than the global market. For example, the pharmaceutical MNE AstraZeneca (United Kingdom) announced five projects in China to set up headquarter offices and back-office functions. Its business there would become a legal entity listed in Hong Kong, China or Shanghai and controlled by the MNE. Consistent with the global FDI slowdown and similar to the trend observed in greenfield investment, the number of equity acquisitions since 2019 also decreased, by a little more than 10 per cent. M&As often respond to different drivers than greenfield investment. Importantly, acquisitions can be subject to screening and approval procedures. M&A deals traditionally are more prevalent in developed economies, and this concentration has only increased in the last five years, particularly for MNEs in strategic industries. Trends in M&As are consistent with those seen in greenfield projects. MNEs have decreased their shares of equity acquisitions in manufacturing companies in East Asian economies. However, the value of deals in the subregion has increased, driven largely by significant investment in the automotive sector, targeting Chinese producers. Although the number of transactions has fallen, their strategic importance and associated financial commitment have risen. Divestment trends among the top 100 MNEs do not reveal any clear relocation strategy. On the contrary, the number of divestments from China has decreased since 2019, indicating that MNEs recognize the strategic importance of maintaining a presence in the world’s second-largest economy, not only to tap into its large market but also to benefit from its advanced manufacturing capabilities and extensive supply chains. Regional headquarters functions are proliferating to increase regional autonomy and mitigate risks Chapter II Investment policy trends FDI stock covered by old-generation IIAs Not covered New-generation Old-generation Developed Developing Least developed 71% 65% 46% 137 national measures Key trends: facilitation and entry restrictions on the rise Less favourable measures by type Old-generation agreements cover half of global foreign direct investment stock – with greater exposure for developing countries Developing countries continue to prioritize investment attraction Share of measures more favourable to investors Developed countries Developing countries 43% 86% 68% 32% Treatment and operation Entry restrictions More favourable measures by type Countries with FDI screening 39% 33% Incentives 14% 12% 2% Promotion Liberalization Other Facilitation 2014 2023 +141% 17 41 2023 agreements address new investment governance issues, yet old-generation ones persist, raising the risk of investor–State disputes Commitments in 2023 IIAs Global FDI stock: IIA coverage Parties involved in 2023 cases 2023 cases: top sectors 16 15 Protection 14 9 Facilitation Liberalization Cooperation 75% 30% 25% 70% Developing Developed Respondent Claimant Construction Oil, gas, coal, mining Manufacturing 12 10 10 60 new ISDS cases 29 IIAs signed 49% 16% 35% Chapter II Investment policy trends 3 A. National investment policies 1. Overall trends The number of investment policy measures adopted in 2023 remained consistent with the five-year average, despite declining by 25 per cent compared with 2022. In developing countries, most measures aimed at promoting and facilitating investment. Developed countries continued to introduce restrictive measures to address national security concerns related to investment. In 2023, 73 countries introduced a total of 137 policy measures affecting foreign direct investment (FDI), a 25 per cent decrease from 2022 but in line with the five-year average (figure II.1). The majority — 72 per cent — were favourable to investors (70 per cent in 2022) (box II.1). This confirms a return to the pre-pandemic distribution between policy measures more and less favourable to investors. Figure II.1 Lower numbers of new investment policy measures in 2023 Nature of measures, worldwide (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 50 100 150 200 2022 2021 2023 2019 2018 2020 2016 2015 2014 2017 58 17 15 88 16 15 88 24 27 99 23 22 69 29 18 67 20 20 79 50 30 63 41 13 123 53 7 99 38 90 119 139 144 116 107 159 117 183 137 More favourable Less favourable Neutral/indeterminate World Investment Report 2024 Investment facilitation and digital government 4 The analysis of national investment policy trends in this chapter is based on official measures affecting FDI adopted by United Nations Member States, as compiled in the UNCTAD Investment Policy Monitor database. These encompass measures explicitly targeting FDI (FDI-specific), as well as general investment measures with a clear impact on foreign investment (FDI-related). The measures are either reported directly to UNCTAD by Member States through annual surveys or identified by UNCTAD researchers through publicly accessible sources (such as government websites and specialized policy databases). The analysis excludes restrictive economic measures that affect investment. The classification of measures as more or less favourable is based solely on their potential impact on investors. The types of measures included in each category are described in box table II.1.1. When a measure – for example, the adoption of an investment promotion strategy – contains more than one component, such as incentives and facilitation, these components are analysed separately. This classification does not reflect any value judgement by UNCTAD on the merit or suitability of the measure. Box table II.1.1 Classification of measures Source: UNCTAD. Abbreviations: FDI = foreign direct investment, SEZ = special economic zone. Category Type of measure More favourable Liberalization Privatization Lifting of entry restrictions (e.g. opening of sectors to FDI) and entry conditions (e.g. minimum capital requirement) Removal (total or partial) of FDI screening or approval mechanisms Other (e.g. liberalization of land access) Facilitation Streamlining of investment procedures (e.g. one-stop shops) Greater transparency of investment-related laws and procedures (e.g. information portals) Services by investment promotion agencies and other entities to assist investors (e.g. linkages programmes, investor visa facilitation and alternative dispute resolution mechanisms) Promotion Establishment of investment promotion agencies or other institutions with a remit as investment promoters Adoption of investment promotion strategy and plans Public–private partnership initiatives, auctions and concessions Outward FDI promotion initiatives Incentives Tax and financial incentives for investment Other incentives (e.g. citizenship by investment programmes) SEZ-related incentives Other Enhanced investor treatment and protection guarantees Easing of labour or migration regulations concerning foreign hires and key personnel Removal of operational restrictions on investment (e.g. local content requirements) Less favourable Entry Entry restrictions (e.g. total and partial ban on FDI in specific sectors) Entry conditions (e.g. minimum investment threshold, joint venture requirements or State participation in strategic sector) Introduction or expansion of screening mechanisms for national security Treatment and operation Foreign exchange restrictions Restrictions on foreign hires and key personnel Removal or reduction of investment incentives Post-establishment local content requirements or prioritization of national companies in procurement Other measures reducing guarantees for investment treatment and protection Restrictions on outward FDI Box II.1 Methodology for analysing national investment policy trends Chapter II Investment policy trends 5 Significant differences persist between developing and developed countries (figure II.2). Developing countries continue to prioritize investment attraction as part of their economic development strategies. The proportion of policies more favourable to investors in developing countries has remained stable at well above 80 per cent since 2014, except for a low point registered during the pandemic. In 2023, 86 per cent of the measures adopted by developing countries were favourable to investors. Initiatives to promote and facilitate investment by simplifying or streamlining administrative processes and introducing incentive schemes were among the measures most frequently adopted (see section A.2). In contrast, in developed countries, policies more favourable to investors, which represented between half and two thirds of the total in the mid- 2010s, started to decline in importance well before the pandemic. They reached an all-time low of 17 per cent in 2020 and have since stabilized at about 40 per cent of the total. In 2023, measures less favourable to investors adopted by developed countries made up two thirds of the world total. Many of these policies related directly or indirectly to national security concerns regarding foreign ownership of critical infrastructure, core technologies, or other sensitive assets (see section A.3). African countries were the most active in adopting new investment policy measures in 2023, followed closely by developing countries in Asia. Africa and developing Asia also produced the highest share of policy measures more favourable to investors. Among developed regions, Europe led in the adoption of new investment policy measures, despite a decrease compared with 2022. Most new measures were less favourable to investors. The number of new investment policy measures in North America and other developed regions also declined significantly. Three quarters of them were less favourable to investors (figure II.3). Figure II.2 Developing countries continue prioritizing investment attraction Share of policy measures more favourable to investors in total measures (Percentage) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 10 20 30 40 50 60 70 80 90 Developing countries 86 World 72 Developed countries 43 World Investment Report 2024 Investment facilitation and digital government 6 2. Policy measures more favourable to investors In 2023, investment facilitation measures and incentives remained the primary components of investment attraction initiatives in developed and developing countries. Facilitation measures reached a record 39 per cent of the measures favourable to investors. Over the last decade, the investment policy landscape has evolved significantly, with noticeable shifts not only in the distribution between measures more and less favourable to investors but also in their composition (figure II.4). A marked change has been the diminishing prominence of liberalization measures, especially following the pandemic. In the period from 2014 to 2019, liberalization measures constituted approximately 40 per cent of the total – peaking at 44 per cent in 2018. Yet from 2020 to 2022, they represented less than a quarter and in 2023 further declined to a mere 12 per cent. In contrast, the weight of investment incentives has increased significantly since the pandemic. Prior to 2020, measures related to the introduction of incentives represented about a quarter of all favourable measures. They have since grown to over a third of favourable measures, indicating a strategic pivot towards using incentives as a tool to foster investment. This trend is occurring despite ongoing international tax reforms that should make fiscal incentives a less effective tool for the attraction of FDI from large multinational enterprises (MNEs). Investment facilitation and investment promotion measures also display a notable upward trend since the pandemic. Together with incentives, they were all complementary components of country efforts to promote economic recovery and resilience. In 2023, investment facilitation and investment promotion initiatives reached record shares of 39 and 14 per cent of all favourable measures, respectively. Investment promotion measures were fuelled Figure II.3 Africa and developing Asia adopted the most investment policy measures in 2023 Nature of measures by region, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. More favourable Less favourable Africa Developing Asia Europe Latin America and the Caribbean Other developed countries 34 4 33 4 16 19 14 5 2 6 Chapter II Investment policy trends 7 Figure II.4 Investment policy shifts from liberalization to facilitation Measures more favourable to investors by category (Percentage) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 20 40 60 80 100 2014 2015 2017 2019 2021 2023 2016 2018 2020 2022 23 26 39 5 7 24 23 39 6 8 31 19 39 7 4 33 23 34 5 5 24 28 36 7 5 24 35 23 8 10 25 34 23 10 8 28 38 16 12 6 39 33 12 14 2 Facilitation Incentives Liberalization Promotion Other 23 26 44 2 5 Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Figure II.5 Investment facilitation is important across regions Measures more favourable to investors by category and region, 2014–2023 (Percentage) 50 100 29 41 16 8 6 29 18 37 8 8 26 40 19 13 2 26 32 30 6 6 Africa Developing Asia Latin America and the Caribbean countries Developed Facilitation Incentives Liberalization Promotion Other by an increase in the adoption of new investment promotion strategies and the creation of new investment promotion agencies (IPAs). The regional breakdown of policy measures more favourable to investors adopted in the last decade reveals important differences (figure II.5). In Africa and in Latin America World Investment Report 2024 Investment facilitation and digital government 8 and the Caribbean, incentives were the most common policy initiative, accounting for approximately 40 per cent of all measures in both regions. In contrast, Asia favoured liberalization, which accounted for 37 per cent of the measures, notably higher than in Africa (16 per cent) and in Latin America and the Caribbean (19 per cent). Investment facilitation measures consistently represented more than a quarter of the total across all regions. This underscores the widespread recognition of investment facilitation as a cornerstone of investment attraction efforts globally. a. Facilitation In 2023, investment facilitation measures reached a peak, constituting 39 per cent of the policy measures more favourable to investors implemented by countries worldwide, 45 per cent of the measures adopted by developed countries and 38 per cent of those adopted by developing ones. Investment facilitation measures fall into three main categories: transparency, streamlining and facilitation services. Transparency measures aim at improving the clarity and accessibility of laws and procedures related to investment. They made up 21 per cent (12) of the facilitation measures in 2023. Streamlining measures encompass initiatives designed to enhance the efficiency of procedures related to investments. They accounted for almost 1 Accessible at https://investmentpolicy.unctad.org/investment-policy-monitor. half (27) of the facilitation measures. Facilitation services are provided by IPAs, special economic zones or other administrative entities. They constituted 28 per cent (16) of the total (figure II.6). The introduction of single windows for investment figured prominently among the facilitation measures adopted in 2023. For instance, Egypt introduced a single- approval system for investment projects, encompassing various licences and permits relevant to investment activities. (Unless indicated otherwise, all examples provided in this section, including additional information and links to official sources, can be found in the UNCTAD Investment Policy Monitor database).1 The General Authority for Investment and Free Zones also announced plans to launch an online platform for company establishment. Uruguay introduced an online single window for investment, integrating various services related to company establishment and operation. Uzbekistan established a physical one-stop shop to assist investors upon entry and facilitate visa processes. Transparency measures included the introduction of information portals for foreign investors. Jordan and Mexico, for example, unveiled platforms providing detailed investment procedures, opportunities and incentives. Additional measures involved initiatives to clarify investment- related procedures. For instance, the Figure II.6 Streamlining of administrative procedures is top priority Investment facilitation measures by category, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Streamlining Other 27 Transparency 12 Facilitation services 16 2 Investment facilitation measures hit record high (39%) Chapter II Investment policy trends 9 Kingdom of the Netherlands and the United Kingdom issued guidance on the approval processes of their FDI screening regimes. Facilitation services ranged from assistance in obtaining specific permits to comprehensive support for foreign investors. Chile implemented a multi- agency cooperation agreement involving the Foreign Investment Promotion Agency, the National Immigration Service and the Economic Development Agency to streamline visa services for foreign investors and skilled professionals. Malaysia introduced a dedicated visa facilitation service for strategic investors identified by the Malaysian Investment Development Authority. Uzbekistan introduced the position of “investment managers” within the Ministry of Investments, Industry and Trade, to provide dedicated support to investors throughout the project life cycle, from resolving land acquisition issues to securing necessary permits. The rise in investment facilitation initiatives is discussed in greater detail in chapter IV. b. Incentives The introduction or expansion of investment incentives represented one third of the policy measures more favourable to investors in 2023 in both developed and developing countries. Although the number of new incentives decreased in comparison with 2022, it remained significantly higher than the average for the decade. Investment incentive measures encompass tax and financial incentives, including incentives related to special economic zones, alongside other types, such as infrastructure facilities or visa and work permits (e.g. citizenship-by-investment programmes). Approximately 50 per cent of the sector- specific incentives introduced in 2023 aimed at promoting investment in the services sector, followed by manufacturing and agriculture (figure II.7). This confirms a growing focus on promoting investment in services, illustrated by the increase in the share of new incentives for the services sector from 35 per cent of non-industry- specific incentives in 2014–2018 to 46 per cent in 2019–2023. New incentives for manufacturing and agriculture remained stable at 31 per cent and 15 per cent, respectively. New incentives for extractive industries declined from 19 per cent in 2014–2018 to 9 per cent in 2019–2023. As in 2022, the push for renewable energy investment stood out as the primary focus of new incentives enacted in 2023. Italy, Nigeria and South Africa adopted a range of fiscal and non-fiscal incentives aimed at encouraging investments in renewable energy. Canada and Egypt introduced an investment tax credit and other fiscal incentives focused specifically on the promotion of green hydrogen. New incentives in manufacturing also aimed to support clean technologies, as well as high-tech manufacturing. For instance, France introduced a tax credit for producing batteries, solar panels, wind turbines and heat pumps. The United Figure II.7 Sector-specific incentives primarily target services Incentive schemes by sector, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Agriculture 4 Manufacturing 11 Services 16 Cross-industry 27 Renewable energy: key target of incentives in 2023 World Investment Report 2024 Investment facilitation and digital government 10 Kingdom established new green freeports offering several fiscal incentives for advanced manufacturing and the production of renewable energy equipment. Israel offered a tax credit in the high-technology sector. Mexico launched incentives for nearshoring in semiconductors, electromobility and medical devices. c. Promotion Investment promotion measures accounted for 14 per cent of all measures more favourable to investors in 2023. They included the formulation of new national investment policies and investment promotion strategies, the establishment or strengthening of investment promotion institutions and the adoption of public–private partnership (PPP) initiatives (figure II.8). In recent years, several countries have adopted national investment policy documents to emphasize investment- related priorities and introduce measures to improve investment attraction. Notable examples include Kenya in 2019, Jamaica in 2020, El Salvador and New Zealand in 2021 and Australia in 2022. In 2023, Nigeria and Pakistan also introduced national investment policies. Both outlined comprehensive frameworks for regulating and promoting investments, identifying target sectors for investment attraction and enhancing the coordination among various entities involved in investment promotion at different levels of Government. The national investment policies of both Kenya and Nigeria were prepared with technical assistance from UNCTAD. Enhancing the coordination and effectiveness of investment promotion activities was also the key objective behind the creation or strengthening of investment promotion institutions in 2023. In Botswana, for instance, four investment- related institutions were merged into the Botswana Investment and Trade Centre. Egypt established a Supreme Council for Investments under the chairmanship of the country’s president. Papua New Guinea passed reforms to strengthen the Investment Promotion Authority, including through improved inter-agency coordination on investment matters. In addition, several investor targeting strategies were implemented in 2023. Jordan introduced the Investment Promotion Strategy for 2023–2026, entrusting all international promotion activities to specialized marketing agencies charged with identifying potential investors and conducting focused campaigns in select countries. China launched the Invest in China initiative, targeting foreign investment from specific countries. Costa Rica debuted an FDI strategy aimed at attracting investment beyond the capital’s metropolitan area. Efforts to foster investment through PPPs were undertaken by Ecuador, Ethiopia, Kenya, Peru and the Russian Federation. Ecuador rolled out a new PPP framework, and Ethiopia introduced a mechanism for direct PPP negotiations with foreign firms. Kenya encouraged the development and operation of port infrastructure through PPPs. Peru made land access easier for PPP investors. The Russian Federation strengthened its PPP Figure II.8 Adoption of new strategies leads investment promotion efforts Measures by type, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Investment promotion institutions 4 Public–private partnership initiatives 5 Investment promotion strategies 11 National investment policies on the rise Chapter II Investment policy trends 11 framework to reduce investment risks and initiated an electronic tender process. d. Liberalization Liberalization initiatives accounted for 12 per cent of all measures more favourable to investors in 2023. All of them were adopted by developing countries. The removal of FDI entry restrictions and conditions represented the majority of liberalization measures, followed by the removal of restrictions on foreign exchange, privatization initiatives and liberalization of land access (figure II.9). As in the case of incentives, though most measures were cross-sectoral, sector- specific liberalization initiatives concerned primarily services. For instance, Ethiopia allowed foreign investment in digital payment systems. India permitted foreign lawyers and law firms to “practice foreign law within the country” (i.e. to advise clients on the international elements of mergers and acquisitions or appear as arbitrators). Nigeria opened its electricity sector to FDI at the state level, granting each state the authority to create an independent electricity market within its jurisdiction. Figure II.9 Most liberalization measures lifted entry restrictions Liberalization measures by type, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Privatizing 2 Easing access to land 1 Relaxing foreign exchange restrictions 3 Easing entry conditions 3 Lifting entry restrictions 8 3. Policy measures less favourable to investors Heightened caution towards foreign investments in critical sectors persisted in 2023. New or expanded FDI screening mechanisms accounted for nearly half of the measures less favourable to investors (45 per cent). Four additional countries implemented FDI screening in 2023, and several others will follow in 2024. A series of global crises, including the pandemic, have intensified geopolitical tensions, disrupted global supply chains and raised food and energy prices. This has led to greater caution towards foreign investment in sectors that are essential for national and economic security, prompting many countries, particularly developed ones, to tighten regulations on foreign investment. FDI-specific restrictions, which accounted for the minority of measures unfavourable to investors a decade ago, have since represented about 60 per cent of the total number of measures, with peaks of more than 80 per cent during the pandemic (figure II.10). World Investment Report 2024 Investment facilitation and digital government 12 FDI entry restrictions represented the majority of the measures less favourable to investors over the last decade. These primarily involved the adoption of investment screening mechanisms in developed regions, especially Europe. Other entry-related measures adopted by both developed and developing countries included primarily restrictions on foreign ownership of land and limitations on foreign investment in strategic sectors (e.g. financial services, mining, media or transport). Tax-related measures, e.g. the removal or reduction of investment incentives, accounted for the bulk of treatment and operation measures affecting FDI. a. Investment screening for national security Nearly half of the investment policy measures less favourable to investors adopted in the last decade concerned investment screening for national security. As documented in recent World Investment Reports and in a dedicated issue of the Investment Policy Monitor (UNCTAD, 2023d), screening has been the largest category among all less favourable measures adopted by countries since 2017, except in 2022, when tax measures predominated (UNCTAD, 2023f). In 2023, this trend persisted, with investment Figure II.10 Entry restrictions remain prominent Policy measures less favourable to investors by category (Percentage) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 2014 2016 2018 2020 2022 2023 2021 2019 2017 2015 20 40 60 80 100 23 18 59 50 12 38 42 25 21 12 48 17 13 22 49 10 10 31 55 10 35 80 2 4 14 61 20 7 12 36 6 9 49 52 8 16 24 FDI entry FDI treatment and operation General investment entry General investment treatment and operation Chapter II Investment policy trends 13 Figure II.11 Screening regimes continue to expand Countries introducing or expanding security-related investment screening (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 5 10 15 20 25 30 35 40 45 2006 1995– 2005 2008 2010 2012 2014 2016 2018 2020 2022 2023 2021 2019 2017 2015 2013 2011 2009 2007 3 2 1 1 3 1 1 1 1 4 4 3 2 4 1 5 3 5 17 5 12 5 13 2 11 4 Expands screening Introduces screening Cumulative number of countries with screening 1 screening accounting for 45 per cent of all measures less favourable to investors. New FDI screening regimes were implemented in Belgium, Estonia, Luxembourg and Sweden, bringing the total number of countries with comprehensive FDI screening regimes to 41 (figure II.11). Of these, 26 are in Europe. Collectively, countries that conduct FDI screening for national security now represent more than half of global FDI flows and three quarters of FDI stock. As in previous years, countries continued to address vulnerabilities in their existing FDI screening mechanisms by covering a broader range of transactions to improve the detection of potential risks related to FDI. Only a limited number of countries report on their screening mechanisms. Table II.1 displays data compiled by UNCTAD from country surveys and official sources. UNCTAD has previously pointed out the lack of a standardized methodology for collecting data on screened projects, highlighting the variety in metrics and reporting periods employed by various screening authorities (UNCTAD, 2023f). Despite these methodological differences, discernible trends emerge. In the majority of countries for which historical data are available, there has been an uptick in the number of projects subject to review. The rejection rate remains low, at less than 1 per cent in most countries. Transactions that underwent screening for national security concerned a variety of sectors, including defence and security, energy and utilities, critical infrastructure, automotives, financial services, health care and pharmaceuticals, electronics and semiconductors, media, communication and Internet services, and metals and mining. The growing number of cases screened by authorities across several jurisdictions inevitably signifies a growing burden on administrative resources and World Investment Report 2024 Investment facilitation and digital government 14 Table II.1 Screened investment projects on the rise but low rejection rates Source: UNCTAD, based on official sources and country inputs. a The total number of cases screened by the end of the period may include cases carried over from previous periods, depending on the methodology employed by each country. b For Germany, the number of projects modified or authorized with conditions includes prohibitions, side conditions, public legal contracts and administrative orders. c In the United Kingdom, the review mechanism applies equally to domestic and foreign parties. The cumulative number of cases is subject to continuous adjustment as a result of verification processes, which may result in discrepancies with case numbers reported in previous years. Country Period Screeneda Authorized Modified or authorized with conditions Rejected Withdrawn Australia 4/2020–3/2021 .. 28 4 .. .. 7/2021–6/2022 .. 75 39 .. .. 7/2022–6/2023 .. 100 18 .. .. Belgium 7/2023–12/2023 32 26 .. 0 .. Canada 2022 35 24 0 3 8 2023 27 16 0 0 3 Czechia 2022 13 7 0 0 3 2023 28 20 0 0 1 Finland 2019 15 .. .. 0 .. 2020 15 .. .. 0 .. 2021 32 .. .. 0 .. 2022 34 .. .. 0 1 2023 39 .. .. 0 0 France 2021 328 57 67 .. .. 2022 325 61 70 .. .. Germanyb 2019 106 .. 12 .. .. 2020 160 .. 12 .. .. 2021 306 .. 14 .. .. 2022 306 .. 12 .. .. 2023 257 .. 10 .. .. Italy 2019 83 39 13 0 .. 2020 342 135 40 2 .. 2021 496 183 26 3 1 2022 608 242 18 4 3 Malta 2021 81 2 6 2 0 2022 22 0 10 1 3 2023 20 1 2 0 3 Spain 2019 6 6 0 0 0 2020 37 34 3 0 1 2021 57 51 6 0 1 2022 78 67 9 1 1 2023 108 94 10 0 4 United Kingdomc 1/2022–3/2022 209 3 0 0 .. 4/2022–3/2023 776 757 9 5 11 United States 2019 231 .. 28 2 12 2020 313 .. 16 2 9 2021 436 .. 26 0 11 2022 440 .. 46 1 20 Chapter II Investment policy trends 15 case management. In response, in 2023, some countries established procedures such as pre-authorization and consultation (e.g. Denmark and Spain). Others introduced fees for FDI screening (e.g. Germany and Romania). The trend towards the adoption of FDI screening regimes will continue in the coming years. The screening regimes of Bulgaria and Singapore entered into force in March 2024. The regime in Ireland is expected to become operational before the end of the year. The European Union has also put forward a reform proposal aimed at revising the current framework.2 It emphasizes the need for all member States to adopt ex ante screening mechanisms and suggests extending the scope of the screening regimes to cover intra-European Union transactions controlled by foreign investors. Bilateral initiatives also play a role in the expansion of FDI screening. They focus predominantly on establishing formal or informal mechanisms for exchanging information relating to national security and investment. In December 2023, Mexico and the United States signed a memorandum of intent to create a bilateral working group for regular exchanges of information.3 The United States and the European Union have created a working group on investment screening to promote best practices and develop a holistic policy approach to addressing risks pertaining to specific sensitive technologies.4 b. Other entry-related measures Other types of entry restrictions on investment accounted for 23 per cent of the measures less favourable to investors 2 European Commission, 2024, Proposal for a regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council, COM(2024 23 final, 2024/0017 (COD), https://circabc.europa.eu/ui/ group/aac710a0-4eb3-493e-a12a-e988b442a72a/library/f5091d46-475f-45d0-9813-7d2a7537bc1f/ details?download=true. 3 United States, Department of the Treasury, 2023, Secretary of the Treasury Janet L. Yellen and Mexico’s Secretary of Finance and Public Credit Rogelio Ramírez de la O announce intent to establish bilateral working group on foreign investment review, 7 December. See https://home.treasury.gov/news/press-releases/jy1965. 4 European Commission, Working Group 8 – Investment Screening, Part of EU–US Trade and Technology Council, https://futurium.ec.europa.eu/en/EU-US-TTC/wg8. in 2023, with a significant emphasis on enhancing State control over extractive industries. Key examples included the National Lithium Strategy in Chile, mandating State majority ownership throughout the lithium production cycle, and the revised Mining Code of Mali, granting the State a 10 per cent stake in new mining ventures. Mining law reforms in Mexico tightened concession conditions and removed the expropriation rights of concessionaires for mining exploitation. Panama introduced a moratorium on new metallic mineral concessions. Concerns regarding foreign investors’ ownership of certain types of property also prompted various countries to enact new prohibitions. Canada, for instance, restricted the purchase of residential properties by foreign investors. The Russian Federation limited foreign ownership of news aggregators, and the United States imposed restrictions on foreign acquisition of agricultural and forest properties, as well as land or property near military installations and critical infrastructure. c. Investor treatment and operation The remaining one third of policy measures less favourable to investors in 2023 (12 measures) comprised various treatment and operation provisions adopted by both developing and developed countries that aimed to address a diverse array of specific policy concerns. The extractive sector was often affected by these measures. For instance, Chad nationalized the assets of Esso Exploration and Production Chad, and Mali abolished several tax incentives previously available to mining companies. Countries with FDI screening represent more than half of global FDI flows, three quarters of FDI stock World Investment Report 2024 Investment facilitation and digital government 16 In line with the recent trend towards more stringent controls on outbound investment, three countries introduced measures to address concerns directly related to outward FDI (OFDI). South Africa established an approval requirement for transfers abroad of capital funds in amounts greater than R1 million per year (approximately $50,000) and increased related documentation requirements. Spain expanded the mandatory reporting of OFDI to encompass new types of transactions. The United States introduced outbound investment controls on certain transactions relating to national security technologies and products. From near the end of 2023 into the early months of 2024, at least 26 countries, primarily developed economies in Europe, 5 Based on data from OECD Pillar Two Country Tracker and Pillar Two Navigator, available at oecdpillars.com. enacted laws to implement the global minimum tax as outlined in the Pillar II reform of the Organisation for Economic Co-operation and Development (OECD).5 Known as the Global Anti-Base Erosion Model Rules, the objective is to ensure that MNEs contribute a minimum amount of tax on earnings within each operating country (UNCTAD, 2023f). The reform targets multinationals with annual revenues above €750 million, enabling jurisdictions to levy a top-up tax to achieve a minimum effective rate of 15 per cent on income taxed below this threshold. These developments are not captured in the Investment Policy Monitor database because of its methodological specifications (see box II.1). 4. Outward foreign direct investment policies The global landscape of OFDI promotion, facilitation and regulation has undergone substantial changes since the early 2000s. These changes reflect the evolving patterns of global investment and production, the sharpening focus on sustainability and the heightened geopolitical tensions and gradual shift from liberalization to regulation that have characterized FDI policies over the past decade. a. Promotion and facilitation of outward investment As highlighted in a recent issue of the Investment Policy Monitor (UNCTAD, 2024b), OFDI promotion and facilitation policies have been a significant component of economic strategies of developed countries for several decades. At least 31 of them (79 per cent of the total tracked) have adopted initiatives to promote outbound investment. Support for companies that are investing abroad typically serves two main objectives: the development and internationalization of domestic businesses, particularly small and medium-sized enterprises (SMEs), and the promotion of international cooperation and development efforts. The number of developing countries that have adopted OFDI promotion mechanisms has expanded in line with their expanding role as sources of investment. At least 19 developing countries (14 per cent) have established formal mechanisms to promote OFDI, including 11 countries in Asia, 6 in Africa, and 2 in Latin America and the Caribbean (figure II.12). Four principal types of direct promotion instruments to support OFDI exist: fiscal and Chapter II Investment policy trends 17 financial support, investment guarantees, investment facilitation services and direct capital participation. Facilitation services are the most widespread, adopted by 23 per cent of countries globally, including 64 per cent of developed countries and 11 per cent of developing countries. These services may include providing advisory assistance, supporting participation in international events, coordinating economic missions abroad, connecting with partners in the host country, training, and preparing feasibility and country risk analyses. Fiscal or financial support encompasses loans, grants and tax incentives for companies that venture into OFDI. Loans are usually provided by home-country export promotion agencies, development banks or similar institutions. They generally offer better conditions than market standards or support projects that might otherwise struggle to secure private financing. This type of support is common in developed countries (62 per cent) but rare in developing countries (10 per cent). Foreign investment insurance or guarantees secure some level of political risk protection for domestic firms investing in more unpredictable and volatile markets. They are offered by 18 per cent of countries globally – 67 per cent of developed countries and 5 per cent of developing countries. Direct capital participation through State- sponsored programmes is offered in 49 per cent of developed countries and 3 per cent of developing countries (figure II.13). These programmes enable domestic firms to invest abroad by providing patient capital through direct equity participation and private enterprise funds. These are made available through import–export banks, development banks or dedicated funds targeting particular sectors, countries or types of firms, such as SMEs. A growing number of countries are leveraging OFDI as a tool to further the goals of the 2030 Agenda. Among the 50 countries worldwide with OFDI promotion mechanisms, 18 developed countries (58 per cent) and 5 developing countries (26 per cent) have put in place at least one instrument specifically designed to encourage OFDI in developing countries. In addition, numerous developed countries, especially in Europe, have integrated OFDI promotion schemes into their broader development assistance strategies. They actively engage the private sector in development cooperation initiatives, so as to capitalize on its strengths and capabilities to advance development goals, while promoting growth and global competitiveness of domestic firms. Consequently, OFDI promotion schemes often incorporate criteria that emphasize the benefits to the host country, particularly as regards investments that target developing countries (figure II.14). Figure II.12 Outward investment promotion and facilitation schemes introduced mainly in developed countries Countries with a scheme, 2023 (Number) Source: UNCTAD. Latin America and the Caribbean 2 Africa 6 Developing Asia 11 Developed countries 31 More countries using outward investment as a tool for Agenda 2030 World Investment Report 2024 Investment facilitation and digital government 18 Figure II.14 Leveraging promotion of outward investment to achieve the Sustainable Development Goals Criteria for accessing support schemes, by economic grouping (Percentage) Source: UNCTAD. Developed countries Developing countries Investment in developing economies Host-country benefts Sustainability 58 26 52 16 39 11 Figure II.13 Facilitation is the main support tool worldwide for outward investment Tools offered and share of countries using them, 2023 (Percentage) Source: UNCTAD. Developed countries Developing countries World Fiscal/fnancial support 62 10 21 Direct capital participation 49 3 13 Investment facilitation services 64 11 23 Investment guarantee 67 5 18 Chapter II Investment policy trends 19 b. Regulation and screening of outward investment OFDI promotion and regulation policies often coexist within the same country. Historically, restrictions on OFDI were mainly observed in developing countries and related to balance- of-payments risks (UNCTAD, 2024b). In the early 2000s, the liberalization of OFDI gained momentum, as countries increasingly removed foreign exchange restrictions. In the last decade, by contrast, an observable shift in the regulatory approach to OFDI has seen restrictions increase by nearly one third in both developing and developed countries (figure II.15). This increase can be partially explained by growing concerns over money- laundering practices, tax evasion and other illicit financial flows disguised as FDI. It was accentuated by the coronavirus pandemic of 2019, which led to a general slowdown in both inward and outward liberalization efforts. Finally, in recent years, concerns have been brought forward related to the potential risks that OFDI could pose to national and economic security, particularly in relation to strategic sectors and technologies. 6 President of the United States, 2023, Addressing United States investments in certain national security technologies and products in countries of concern, Presidential Documents: Executive Order 14105 of August 9, 2023, Federal Register, 88:154, https://www.federalregister.gov/documents/2023/08/11/2023-17449/ addressing-united-states-investments-in-certain-national-security-technologies-and-products-in. In 2023, restrictions on OFDI were in place in nearly half (95) of the world’s economies, including a majority of developing countries and least developed countries. The most common involve either the necessity for investors to secure prior approval for their projects (69 per cent of countries with OFDI restrictions) or to register their planned OFDI with authorities (14 per cent). Total bans on OFDI are in place in only three countries: Ethiopia, Nepal and the Syrian Arab Republic. Screening mechanisms for OFDI based on national security concerns are also gaining traction. While some Asian countries have implemented them for decades (e.g. China, India and Japan), the focus on the security aspects of OFDI has recently broadened to include other major sources. Since 2020, the United States has introduced several initiatives to monitor and regulate OFDI, culminating in an executive order aimed at scrutinizing investments in key national security technologies in certain countries (August 2023).6 In January 2024, the European Commission responded to growing national security concerns related to OFDI by proposing a framework to monitor outbound investment in critical sectors Figure II.15 Outward investment restrictions on the rise Measures by nature and economic grouping (Percentage) Sources: UNCTAD, based on Investment Policy Monitor database and IMF Annual Report on Exchange Arrangements and Exchange Restrictions database, both accessed on 31 March 2024. Less favourable More favourable Developing countries 1999–2010 2011–2022 1999–2010 2011–2022 Developed countries 22 78 49 51 21 79 54 46 World Investment Report 2024 Investment facilitation and digital government 20 such as advanced semiconductors and biotechnology. Member States have been tasked to provide initial risk assessments by mid-2025. Based on these assessments, the Commission will advise member States 7 European Commission, 2024, White paper on outbound investments, 24 January, https://circabc.europa.eu/ ui/group/aac710a0-4eb3-493e-a12a-e988b442a72a/library/51124c0d-58d8-4cd9-8a22-4779f6647899/ details?download=true. on the extent to which existing tools can mitigate these risks and whether additional proportionate policy actions are warranted at the European Union or national level.7 Chapter II Investment policy trends 21 B. International investment policies 1. Trends in international investment agreements In 2023, new-generation international investment agreements (IIAs) included innovative provisions on investment facilitation and cooperation and tended to safeguard States’ right to regulate. However, old-generation IIAs still cover about half of global FDI stock, making IIA reform more urgent. The year was also marked by intensified efforts to reform the IIA and ISDS regimes. a. Conclusion and termination of investment agreements In 2023, countries and regional organizations concluded at least 29 IIAs – 12 bilateral investment treaties (BITs) and 17 treaties with investment provisions (TIPs). This brought the size of the IIA universe to 3,291 (2,831 BITs and 460 TIPs), according to the UNCTAD IIA Navigator (figure II.16). Figure II.16 Agreements from the 1990s and 2000s dominate the international investment agreements universe (Annual number of agreements signed) Source: UNCTAD, IIA Navigator database, accessed 25 March 2024. Note: The UNCTAD IIA Navigator is updated continuously as new IIA-related information becomes available. Abbreviations: IIA = international investment agreement. 50 100 150 200 250 1959 2023 2018 2013 2008 2003 1998 1993 1988 1983 1978 1973 1968 1963 IIAs in force IIAs signed, not in force IIAs terminated Number of IIAs in force 2 608 World Investment Report 2024 Investment facilitation and digital government 22 100 200 300 400 1994–2003 2004–2013 2014–2023 Total number of IIAs terminated 585 In addition, at least 15 IIAs entered into force and 4 were terminated in 2023, bringing the total number of IIAs in force to at least 2,608 by the end of the year. These IIAs are largely dominated by old-generation treaties, signed in the 1990s and 2000s. The total number of terminations reached at least 585 by 2023; about 70 per cent of these IIAs were terminated in the last decade (figure II.17). Under sunset clauses, IIAs may continue to protect investments in existence at the time of termination or withdrawal and grant investors access to investor–State dispute settlement (ISDS) for up to 20 years afterward. IIAs signed and/or adopted in 2023 cover a range of investment governance issues that go beyond protection, such as investment facilitation, cooperation or liberalization (figure II.18). Notably, the majority of TIPs signed or adopted in 2023 included commitments on facilitation or cooperation. About half contained protection or liberalization provisions. In the Agreement Establishing the African Continental Free Trade Area (AfCFTA), the Protocol on Investment – adopted in February 2023 – provides an example of this nascent shift (box II.2). Newly concluded protection-focused IIAs continued the trend towards safeguarding States’ right to regulate as well as reforming or omitting ISDS. It remains to be seen whether these refinements will be interpreted in line with the treaty parties’ intent in ISDS. A lot remains to be done to focus the coverage of IIAs on sustainable investment and foster responsible business conduct by investors. New IIAs also commonly continue to bind countries for long periods of time, limiting their ability to adapt to changing economic realities and new regulatory imperatives (figure II.19). The reform of old-generation IIAs continues to advance at a slow pace. Only 19 per cent of the IIAs signed since 2020 replace an old-generation IIA; 39 per cent ensure that the reformed provisions they contain would be effectively applied where parallel old-generation IIAs exist. Source: UNCTAD, IIA Navigator database, accessed 25 March 2024. Abbreviations: IIAs = international investment agreements. Figure II.17 Terminations of investment agreements reach nearly 600 (Annual number of terminations) Chapter II Investment policy trends 23 The Investment Protocol to the AfCFTA, which involves 54 countries, is the first megaregional IIA covering the African continent in its entirety. It was adopted by the Heads of the State and Government during the Assembly of the African Union on 18–19 February 2023. The Protocol builds on existing investment treaty reform objectives and best practices recognized by the African Union and the regional economic communities, as well as UNCTAD. UNCTAD’s work on IIA reform is recognized in the preamble of the Protocol. The Protocol provides a balanced approach to international investment governance and contains the following elements: • Proactive promotion and facilitation commitments for investment that fosters sustainable development • Refined investment protection provisions that preserve the contracting parties’ right and duty to regulate in the public interest and are extended to sustainable investments only • A dedicated chapter on investment and sustainable development, with proactive commitments on climate action, health and pandemics, human capital development and technology transfer • Enforceable investor obligations related to environmental and labour protection, human rights, the rights of local communities, transparent corporate governance, tax and non-interference in local governance • Firm commitments on technical assistance and capacity-building for contracting parties, as well as support for implementation by the Pan-African Trade and Investment Agency established under the Protocol. Upon entry into force, the Protocol will consolidate the IIA regime in Africa. Under its terms, 183 intra-African BITs will be replaced and regional economic organizations in Africa undertake to harmonize regional IIAs with the content of the Protocol. UNCTAD is a member of the task force that assisted the AfCFTA Secretariat in the negotiation of the Investment Protocol and continues to assist in the negotiation of the Investment Dispute Settlement Annex to it. Source: UNCTAD. Box II.2 AfCFTA Investment Protocol (2023) Figure II.18 Content of investment agreements is becoming more diverse (Number of agreements signed in 2023 by type of commitment) Source: UNCTAD, IIA Navigator database, accessed 25 March 2024. Notes: Based on 22 IIAs (14 TIPs and 8 BITs) signed and/or adopted in 2023 for which text or other public information on content is available. Cooperation commitments refer to the establishment of institutional frameworks to cooperate on investment activities (investment committee) and/or undertakings to conduct joint activities on investment in one or more economic sectors. Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with investment provisions. BITs TIPs Cooperation 5 11 Protection 8 7 Facilitation/promotion 4 10 Liberalization 1 8 World Investment Report 2024 Investment facilitation and digital government 24 IIAs in force cover 65 per cent of global FDI stock. TIPs, which include regional and megaregional agreements and relate to a broad range of economic issues beyond investment disciplines, account for the largest share – 53 per cent. BITs, which typically include investment protection provisions only and apply bilaterally, cover about 7 per cent. The remaining 5 per cent are covered simultaneously by a TIP and a BIT (figure II.20). The coverage of TIPs has increased by at least 10 per cent in the past decade, following the growing relevance of regional investment policymaking. Old-generation IIAs, which provide broad and unrefined provisions that often expose host countries to greater risk of ISDS, cover 49 per cent of the total global FDI stock. For 53 countries, more than 80 per cent of total FDI stock is covered by an old-generation IIA. The exposure to ISDS is overall higher for developing economies and LDCs. Old-generation IIAs cover 65 Figure II.19 Recently signed investment agreements include reform features Agreements signed between 2020 and 2023 with selected reform features (Percentage) Source: UNCTAD. Note: Based on 36 IIAs concluded in 2020–2023 for which texts are available, not including agreements that lack investment protection provisions. Abbreviations: IIA = international investment agreement, ISDS = investor–State dispute settlement. a The IIAs counted contain reform language for five or more key substantive provisions, including at least a circumscribed fair and equitable treatment standard and a clarified indirect expropriation clause, or a general exceptions clause with other reformed clauses, in line with the UNCTAD IIA Reform Accelerator (UNCTAD, 2020a). Right-to-regulate safeguards Promotion/facilitation commitments ISDS reformed Importation excluded Duration/survival clause of fewer than 10 years Old-generation IIA(s) replaced Investor obligations Scope defned by reference to sustainability 72 64 50 39 31 19 14 3 Selected features of IIAs Right-to-regulate safeguards. Reforms language of the majority of key substantive IIA provisions, as defned in the UNCTAD IIA Reform Accelerator, including those most often invoked in ISDS.a Duration/survival clause of fewer than 10 years. Provides for initial duration of validity and survival clause of fewer than 10 years or omits them. ISDS reformed. Contains procedural improvements, limits the access to ISDS for certain types of claims or omits ISDS altogether. Old-generation IIA(s) replaced. Provides for the termination or suspension of at least one IIA upon entry into force. Promotion/facilitation commitments. Includes commitments to transparency and/or the improvement of the regulatory environment, stakeholder engagement on investment policies or cooperation. Investor obligations. Contains obligations applicable to investors, such as responsible business conduct, avoiding corruption, environmental management and the like. Importation of elements from unreformed IIAs excluded. Excludes application of most-favoured-nation and non-derogation provisions to obligations in other IIAs. Scope defned by reference to sustainability. The IIA scope of coverage is defned by reference to "sustainable development" and/or "sustainable investment". Chapter II Investment policy trends 25 per cent of developing countries’ FDI stock. This is 16 per cent higher than the global average and more than 20 per cent higher than the share for developed economies. The difference is even higher for LDCs, for which old-generation treaties cover 71 per cent of FDI stock (figure II.21). IIA terminations and replacements since 2012 have affected the IIA coverage of about 13 per cent of the total FDI stock.8 Following terminations, 6 per cent of the stock is no longer covered; 4 per cent relates to developed economies and 2 per cent to developing economies. The remaining 7 per cent are now covered by a new-generation IIA. Barely any 8 Analysis based on 424 IIAs (415 BITs and 9 TIPs) terminated since 2012 (including IIAs that were terminated by mutual consent, unilaterally terminated, expired or replaced by a new treaty). FDI stock of LDCs has been affected by terminations or replacements. Taken together, these data suggest that to date IIA reform has had a limited effect on mitigating the risk of ISDS in developing countries and has largely left the FDI stock of LDCs subject to old-generation IIAs. Old-generation IIAs have served as the basis for almost all ISDS cases to date (about 97 per cent), and developing countries have been respondents in the majority of them (about 62 per cent). Of these, at least 58 cases based on old- generation IIAs were initiated against LDCs. ISDS proceedings represent a significant financial risk for developing countries and TIPs 53 None 35 BITs and TIPs 5 BITs 7 Figure II.20 Investment agreements in force cover 65 per cent of global stock of foreign direct investment Share of stock covered, by type of IIA (Percentage) Sources: UNCTAD, IIA Navigator database, accessed 25 March 2024, and IMF Coordinated Direct Investment Survey database, accessed 19 March 2024. Notes: FDI stocks estimated on the basis of information about 193 United Nations Member States’ shares of world FDI inward stock for 2022. Does not include confidential and unspecified stock data. Analysis based on 2,429 IIAs in force (2,220 BITs and 209 TIPs) with substantive investment commitments. For TIPs that include a relevant regional economic integration organization, only the FDI stock of members for which the IIA is in force was counted. Excludes the Energy Charter Treaty (1994) in view of its sector-specific scope. Abbreviations: BIT = bilateral investment treaty, FDI = foreign direct investment, IIA = international investment agreement, TIP = treaty with investment provisions. World Investment Report 2024 Investment facilitation and digital government 26 LDCs, in particular. The average amount sought by investors in ISDS cases is $1.1 billion and the average amount awarded is 385million.InatleasteightISDScasesdevelopingcountrieswererequiredtopaycompensationofmorethan1 billion. At the end of 2023, the amount that LDCs were required to pay totalled 595million,withonecasealoneaccountingfor270 million. b. Other developments relating to investment rule-making The withdrawals of France, Germany and Poland from the Energy Charter Treaty (ECT) (1994) became effective in 2023. At least three more countries have deposited notices to exit the ECT over concerns related to climate change, and the European Parliament voted in favour of the withdrawal of the European Union in April 2024. The trend towards negotiating flexible international instruments aimed at channelling investment towards the green economy also continued. Partners concluded negotiations on the Clean Economy Agreement in the context of the Indo-Pacific Economic Framework for Prosperity. Figure II.21 Old-generation investment agreements cover the majority of foreign direct investment stock in developing and least developed countries Stock covered, by economic grouping and generation of agreement (Percentage) Sources: UNCTAD, IIA Navigator database, accessed 25 March 2024, and IMF Coordinated Direct Investment Survey database, accessed 19 March 2024. Notes: FDI stocks estimated on the basis of information about 193 United Nations Member States’ shares of world FDI inward stock for 2022. Does not include confidential and unspecified stock data. Analysis based on 2,429 IIAs in force (2,220 BITs and 209 TIPs) with substantive investment commitments. For TIPs that include a relevant regional economic integration organization, only the FDI stock of members for which the IIA is in force was counted. Excludes the Energy Charter Treaty (1994) in view of its sector-specific scope. Where a new- generation IIA coexists with an old-generation IIA covering the same FDI stock without suspending its effect, the relevant FDI stock is considered covered by an old-generation IIA. Abbreviations: BIT = bilateral investment treaty, FDI = foreign direct investment, IIA = international investment agreement, TIP = treaty with investment provisions. 49 16 35 45 18 37 65 8 27 71 2 27 World Developed Developing (except least developed) Least developed Old-generation New-generation Not covered Chapter II Investment policy trends 27 The year witnessed the first outputs of the work of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III on ISDS reform. In July 2023 the UNCITRAL Commission adopted the Model Provisions and the Guidelines on Mediation for International Investment Disputes, and the Code of Conduct for Arbitrators in International Investment Dispute Resolution. In April 2024, Working Group III finalized the draft statute for the establishment of an advisory centre on investment disputes. The text of the Investment Facilitation for Development Agreement was made public on 25 February 2024 by the ministers of 123 participating members of the World Trade Organization. The status of the text in relation to the Organization’s architecture remains to be determined. The UNCTAD World Investment Forum 2023 took place in Abu Dhabi on 16–20 October 2023 ahead of the twenty-eighth Conference of the Parties (COP28). At the Forum investment policymakers and experts discussed urgent reforms of the IIA regime in light of the climate crisis, resulting in the launch of the UNCTAD Multistakeholder Platform for IIA Reform (box II.3). Work on diverse aspects of international investment governance continued in a number of international forums (table II.2). Notably, Brazil – which holds the Group of 20 Presidency in 2024 – identified sustainable development in IIAs as one of the key priorities for the Group of 20 Trade and Investment Working Group. The events in the IIA track at the UNCTAD World Investment Forum 2023 brought together key actors in IIA reform: High-level IIA conference 2023 (18 October 2023). Investment policymakers and experts from governments, international organizations, think tanks, academia and the private sector noted the challenges that the current IIA regime may pose to climate action, explored options for aligning IIAs with climate mitigation and adaptation goals, and called for the urgent reform of the stock of old-generation treaties. Based on requests by participants to identify ways to fast-track investment treaty reform for sustainable development and climate action, UNCTAD launched a Multi-Stakeholder Platform for IIA Reform. International policy developments in investment facilitation (19 October 2023). The session united key actors in investment facilitation from Governments, development partners, private sector representatives and regional/international organizations, to analyse global trends and challenges in investment facilitation policies for sustainable development. Speakers welcomed UNCTAD’s policy options for facilitating investment in sustainable development, part of the IIA Issues Note Investment Facilitation in IIAs: Trends and Policy Options (UNCTAD, 2023a). Regional sessions (16–18 October 2023). Three sessions co-organized with key regional partner organizations complemented the UNCTAD World Investment Forum IIA track and highlighted the role that such organizations can play in shaping coherent international investment policies among their members: • D-8 Organization for Economic Cooperation – UNCTAD Guiding Principles for Investment • AfCFTA Investment Protocol: towards a new generation of investment policies in Africa • Islamic Development Bank–UNCTAD Investment Policy Principles Source: UNCTAD. Notes: For more information on the UNCTAD World Investment Forum, see https:// worldinvestmentforum.unctad.org/wif-events-programme?event=80. For information on the UNCTAD Multi-Stakeholder Platform for IIA Reform, see https://investmentpolicy.unctad.org/news/ hub/1732/20231020-launch-of-multi-stakeholder-platform-for-investment-treaty-reforms. Box II.3 UNCTAD World Investment Forum 2023 – IIA track highlights World Investment Report 2024 Investment facilitation and digital government 28 Table II.2 Work relating to investment rule-making in international forums, 2023–2024 Source: UNCTAD, based on various sources. Abbreviations: ICC = International Chamber of Commerce, IIA = international investment agreement, ISDS = investor–State dispute settlement, OECD = Organisation for Economic Co-operation and Development, OHCHR = Office of the United Nations High Commissioner for Human Rights, OIC = Organisation of Islamic Cooperation, UNCITRAL = United Nations Commission on International Trade Law, UNIDROIT = International Institute for the Unification of Private Law, WTO = World Trade Organization. Organization/initiative IIA-related coverage Most recent outputs/events Americas Partnership for Economic Prosperity Financing/investment for sustainable infrastructure East Room Declaration (November 2023) Asia-Pacific Economic Cooperation Sustainability considerations for investment policy San Francisco principles on integrating inclusivity and sustainability into trade and investment policy (November 2023) Draft legally binding instrument on the right to development Right to regulate Draft instrument presented to Human Rights Council (September 2023) Interaction with the scope of IIAs Group of 20 Trade and Investment Working Group Sustainable development in IIAs Second meeting (April 2024) Investment facilitation in IIAs UNCTAD-OECD Report mapping of sustainable development and investment facilitation provisions in IIAs by Group of 20 members and invited countries (April 2024) Investment Facilitation for Development, WTO Investment facilitation Joint Ministerial Declaration on the Investment Facilitation for Development Agreement by participating countries (February 2024) OECD Work Programme on the Future of Investment Treaties IIAs and climate change OECD Investment Treaty Conference (March 2024) IIA reform OHCHR Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment ISDS Report on risks of ISDS for the right to a healthy environment (July 2023) Safe, clean, healthy and sustainable environment OIC Intergovernmental Experts Group on ISDS ISDS, permanent mechanism Second expert meeting (September 2023) OIC investment agreement UNCITRAL Working Group III ISDS reform Model provisions and guidelines on mediation, and codes of conduct for arbitrators and judges adopted by the UNCITRAL Commission (July 2023) Draft statute of advisory center for ISDS finalized (April 2024) UNCTAD IIA reform for sustainable development First meeting of Multi-stakeholder Platform for IIA Reform (February 2024) Policy analysis, technical assistance, consensus building Capacity-building and technical assistance on IIA reform provided for more than 90 countries UNIDROIT and ICC Working Group International investment contracts (codification) Second working group meeting (March 2024) Chapter II Investment policy trends 29 2. Trends in investor–State dispute settlement The total ISDS case count reached 1,332, with 60 new arbitrations initiated in 2023. About 70 per cent of them were brought against developing countries, including three LDCs. Investors in construction, manufacturing and extractives accounted for over half of the claims. a. New cases initiated in 2023 In 2023, 60 known treaty-based ISDS cases were initiated – 48 cases at the International Centre for Settlement of Investment Disputes (ICSID) and 12 cases before other forums (figure II.22). As some arbitrations can be kept confidential, the actual number of arbitrations filed in 2023 (and previous years) is likely to be higher. In the past 10 years, the total number of ISDS cases has more than doubled. There were fewer than Figure II.22 Investor–State dispute settlement cases surpassed 1,300 at the end of 2023 (Annual number of known treaty-based cases) Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024. Notes: Information has been compiled from public sources, including specialized reporting services. UNCTAD statistics do not cover investor–State cases that are based exclusively on investment contracts (State contracts) or national investment laws, or cases in which a party has signalled its intention to submit a claim to ISDS but has not commenced the arbitration. Annual and cumulative case numbers are continually adjusted as a result of verification processes and may not match exactly case numbers reported in previous years. Abbreviations: ICSID = International Centre for Settlement of Investment Disputes, ISDS = investor–State dispute settlement. 20 40 60 80 100 1987 1993 1997 1995 2001 1999 2005 2003 2007 2015 2013 2011 2009 2017 2021 2019 2023 ICSID Non-ICSID Cumulative number of known ISDS cases 1 332 World Investment Report 2024 Investment facilitation and digital government 30 600 known ISDS cases at the end of 2013, against more than 1,300 at the end of 2023. To date, 132 countries and one economic grouping are known to have been respondents to one or more ISDS claims. The new cases in 2023 were initiated against 37 countries and one economic grouping (the European Union). About 70 per cent of them were brought against developing countries, including LDCs (Myanmar, Senegal and the United Republic of Tanzania). Mexico was the most frequent respondent, with 10 new known cases. Honduras faced five cases, followed by Argentina and the Bolivarian Republic of Venezuela with three cases each. The largest share of claims was directed at countries in Latin America and the Caribbean, with about half of the 60 cases. In regional terms, between 1987 and 2023, respondent States in Europe and in Latin America and the 9 Fossil fuel-related cases include those related to mining of coal and lignite; extraction of crude petroleum and natural gas; power generation from coal, oil and gas; transportation and storage of fossil fuels; and manufacture of coke and refined petroleum products. Caribbean each accounted for about 30 per cent of the total 1,332 known ISDS cases. Developed-country claimants brought most – about 75 per cent – of the 60 known cases in 2023. The highest numbers of cases were brought by claimants from the United States (13), the United Kingdom (8) and Switzerland (5). Between 1987 and 2023, claimants invoking the IIAs of five countries – the United States, the Kingdom of the Netherlands, the United Kingdom, Germany and Spain – initiated about 45 per cent of the 1,332 known ISDS cases. The ISDS cases filed in 2023 involved disputes related to several economic sectors (figure II.23). Construction, manufacturing and extractive industries accounted for over half of them, with 10 or more cases each. By the end of 2023, investors had filed a total of 235 fossil fuel-related cases,9 making such activities Construction Manufacturing Mining, oil, gas and coal extraction Transportation and storage Financial and insurance services Supply of electricity, gas and related Real estate WASH and waste management Information and communication Agriculture, forestry and fshing Tourism and sports 12 10 10 7 6 6 5 3 2 2 2 Figure II.23 Construction, manufacturing, and extraction activities account for over half of investor–State cases filed in 2023 (Number of known cases by sector) Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024. Note: Some cases concerned multiple sectors. Abbreviations: WASH = water, sanitation and hygiene. Chapter II Investment policy trends 31 among those most frequently brought to the ISDS system. Construction and manufacturing activities, which commonly involve lengthy and asset-intensive projects, are typically prone to litigation risk. About 70 per cent of investor–State arbitrations in 2023 were brought under BITs and TIPs signed in the 1990s or earlier. In combination, the North American Free Trade Agreement (NAFTA) (1992) and the Agreement between Canada, the United States and Mexico (USMCA) (2018) were the IIAs most frequently invoked in 2023. They gave rise to 11 cases based on so-called “legacy claims” under the NAFTA. Five cases were based on the ECT (1994), followed by the Central America–Dominican Republic Free Trade Agreement (FTA) (2004) with three cases and the Association of Southeast Asian Nations–Australia–New Zealand FTA (2009) with two cases. Between 1987 and 2023, about 20 per cent of the 1,332 known ISDS cases invoked either the ECT (162 cases) or the NAFTA (92 cases). b. Outcomes of investor–State dispute settlement In 2023, ISDS tribunals rendered at least 49 known substantive decisions in investor– State disputes, 28 of which were in the public domain at the time of writing. Ten of the public decisions principally addressed jurisdictional and preliminary objections. In four of them, tribunals dismissed such objections (at least in part) and continued the arbitration proceedings; in six of them, tribunals upheld the objections and ceased the proceedings for lack of jurisdiction or admissibility. Another 18 public decisions were rendered on the merits, with 9 holding the State liable for IIA breaches and 9 dismissing all investor claims. In addition, six publicly available decisions in annulment proceedings at ICSID were rendered. In all of them, the ad hoc committees of ICSID rejected the applications for annulment. By the end of 2023, at least 958 ISDS proceedings had been concluded, leading to different results (figure II.24). Figure II.24 Outcomes of investor–State dispute settlement cases can differ greatly Share of concluded cases, 1987–2023 (Percentage) Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024. a Decided in favour of neither party (liability found but no damages awarded). Decided in favour of State 38 Breach but no damagesa 3 Discontinued 13 Settled 18 Decided in favour of investor 28 World Investment Report 2024 Investment facilitation and digital government 32 Newly concluded IIAs increasingly incorporate proactive commitments aimed at improving the investment climate in the contracting parties. They increasingly steer towards investment facilitation commitments (see chapter IV.C). There is growing interest also in establishing continuous cooperation mechanisms for investment activities, sometimes geared towards specific development objectives. The majority of investment protection elements in newly concluded IIAs also continued to include refinements, clarifications and flexibility mechanisms that aim to preserve countries’ right to regulate in the public interest. IIA reform continues to advance at a slow pace, accentuating the dichotomy in the IIA regime between newer and older treaties. Old-generation IIAs continue to dominate the regime as much in terms of number of IIAs in force as in coverage of FDI stock. They also continue to form the basis of most ISDS cases. Developing countries – and LDCs in particular – are the most disadvantaged by the slow pace of reform, as their exposure to the risks of ISDS is significantly higher than that of developed economies. In addition, the dichotomy is producing a progressively more complex IIA regime with overlapping and sometimes contradictory commitments, making it difficult for countries to navigate, especially developing ones and least developed ones. UNCTAD’s Multi-Stakeholder Platform for IIA Reform, established in 2023 as an outcome of UNCTAD’s World Investment Forum, aims to fast-track IIA reform and underscores the importance of providing an inclusive forum that promotes the alignment of investment governance with sustainable development priorities. Since 2012, UNCTAD has played a leading role in facilitating IIA reform action by developing core policy guidance tools. UNCTAD will continue to work with all stakeholders to build the capacity of country negotiators and policymakers to ensure that the IIA regime works for – rather than impedes – sustainable development objectives. * * * Chapter III Sustainable finance trends Regulations and standards are proliferating; greenwashing remains a challenge Stock exchanges help drive sustainability disclosure The sustainable finance market grew but signs of a slowdown persist More institutional investors reported on sustainability performance in 2023 Sustainable bond market Sustainable fund market Sustainable finance regulation Sustainability disclosure Global issuance, 2023: 872billionCumulativeissuancesince2018:4 trillion 2022 2023 63 94 Green Social Sustainability Sustainability- linked 587 154 109 22 Market value, 2023: $3 trillion +7% Net inflows ($ billions) -89% 2018 2019 2020 557 2021 161 2022 63 2023 58 public pension funds and sovereign wealth funds report… 50% growth in sustainable finance measures, 2023 Developing economies: 60% of new policies 59% provide written guidance 31% enforce mandatory rules …but only 17 target fossil fuel divestment and renewables investment Top 100 58 42 17 countries adopted new ISSB standards Greenwashing: only 20% of “green fund” portfolios are exposed to climate-positive assets provide training 66% 3% 12% Chapter III Sustainable finance trends 79 A. Sustainability-themed capital market products The sustainable finance market continues to grow. In 2023, the value of sustainable investment products, encompassing bonds and funds,1 reached more than 7trillion,a20percentincreasefrom2022.Althoughthepictureisnuanced,theoverallpositivetrendinthesustainablefinancemarketpointstocontinuedinvestorconfidenceandtheresilienceofsustainableinvestmentstrategies.Sustainablebondswerethemaindriverofgrowthinsustainablecapitalmarketproducts.Issuanceclimbedto872 billion, a 3 per cent rise from 2022, bringing the cumulative value of the market since 2018 to more than 4trillion.Despitecontinuedgrowthinnumberandassetvalue,though,sustainablefundsexperiencedstrongheadwindsin2023.Netinflowsdroppedfrom161 billion in 2022 to $63 billion in 2023. Greenwashing remains the most significant challenge to the sustainable fund market. 1. Sustainable bond markets 1 This chapter covers publicly traded sustainable finance products only, namely bonds and funds. It excludes derivatives whose value may be unrealized, as well as voluntary carbon markets, whose value - for now - remains insignificant Global issuance of green, social, sustainability and sustainability-linked bonds (box III.1) has grown fourfold since 2018. As a share of global bond markets, the sustainable segment represented 5 per cent in 2023, unchanged from 2022. This consistent share as well as record levels of outstanding bonds and increased annual issuance of sustainable bonds signal the rising importance of such bonds as a mechanism for financing sustainable development. However, the near-record levels of issuance of green bonds and sustainability-linked bonds were offset by falls in issuance of social and sustainability bonds – partly related to the phasing out of social and sustainability bonds related to the coronavirus disease (COVID-19) pandemic (generally referred to as COVID-response bonds) – which contributed to a slowing in the five-year compound annual growth rate of the sustainable bond segment (figure III.1). World Investment Report 2024 Investment facilitation and digital government 80 Box III.1 What is the difference between green, social, sustainability and sustainability-linked bonds? All four types of sustainable bonds are fixed-income securities designed to target sustainable outcomes while offering a financial return to investors. Green, social and sustainability bonds are generally tied to the financing of a specific project or use of proceeds, whereas sustainability-linked bonds instead integrate in their design a level of sustainability performance (such as greenhouse gas (GHG) emissions). Green bonds raise funds specifically for projects with environmental benefits, such as renewable energy or pollution prevention, with issuers providing transparency on how the proceeds are used. These bonds are typically linked to assets and backed by the issuer’s balance sheet. Historically, the focus has been on direct financing of physical assets and projects and indirect financing thereof (e.g. loans to suitable assets or projects). Social bonds raise funds for projects with positive social outcomes, such as education, health care, affordable housing and employment generation, especially for underserved or marginalized communities. Issuers of social bonds also commit to transparency regarding the use of proceeds and the impact of the projects funded, ensuring that investors can see the social benefits derived from their investments. Sustainability bonds combine elements of both green and social bonds to finance projects with both environmental and social benefits. The proceeds from these bonds are used to fund a diverse range of initiatives, such as renewable energy projects, water conservation, sustainable agriculture, affordable housing and health-care facilities. Sustainability bonds are also designed for investors looking to support comprehensive projects that contribute to the Sustainable Development Goals. Like green and social bonds, issuers of sustainability bonds provide transparency and reporting on the allocation of proceeds and the impact of the projects financed, ensuring accountability and alignment with sustainability objectives. Sustainability-linked bonds tie the cost of financing to key performance indicators of sustainability. These bonds differ from green, social and sustainability bonds in their structure and objectives. Whereas traditional green, social and sustainability bonds focus on financing or refinancing projects that have specific environmental or social benefits, sustainability-linked bonds are uniquely characterized by their performance-based approach. The financial or structural characteristics of the bond (such as the interest rate) are directly linked to the issuer’s achievement of predefined sustainability targets. Transparency and credibility are maintained through regular reporting on progress towards the targets and through third-party verification to ensure objectives are met, making these bonds a powerful tool for promoting sustainability in finance. Sources: UNCTAD and Climate Bonds Initiative. Figure III.1 The sustainable bond market recovered in 2023, aided by green bond growth Global sustainable bond issuance by year and by category (Billions of dollars and percentage year-on-year growth) Source: UNCTAD, based on information from Climate Bonds Initiative. 227 358 716 1 015 843 872 587 154 109 22 +27% +58% +100% +42% -17% +3% +15% -7% -31% +83% 2018 2019 2020 2021 2022 2023 Green Social Sustainability Sustainability- linked Total sustainable bond market 25% CAGR 2018−2023 $4 trillion cumulative issuance since 2018 Chapter III Sustainable finance trends 81 Issuers based in Europe account for 46 per cent of the global market, with 2023 issuance up slightly from 2022 (figure III.2). The Asia-Pacific region accounted for a third of total issuance, a rise of nearly 40 per cent from 2022. Issuers in North America accounted for 11 per cent of the global market in 2023. Supranational issuance, which is an important source of sustainable bonds, fell to 24billionin2023,from106 billion in 2022, a drop of 77 per cent. Reflecting this regional distribution, the euro is the most common currency used for sustainable debt issuance, accounting for over 40 per cent of total cumulative issuance to date (in equivalent United States dollars). This is followed by the dollar (30 per cent), renminbi (9 per cent) and pound sterling (4 per cent), with the remaining 17 per cent in other currencies. Developing countries that issue bonds in major reserve currencies while generating revenues in local currencies encounter currency mismatch risks. Investors, especially large institutional ones, often have better access to a variety of financial instruments such as futures, options or swaps, allowing them to hedge against these currency risks. However, this hedging can lead to demand for higher yields to compensate for the additional risks, ultimately increasing the costs of financing. The involvement of international development finance institutions such as the World Bank, the International Finance Corporation and regional development banks can be crucial in mitigating these risks and reducing the financing costs linked to currency mismatches in bond issuances (UNCTAD, 2023f). In addition, deepening local capital markets and issuing debt instruments in local currencies can also be effective, ensuring that sustainable bonds make a greater contribution to sustainable outcomes. In terms of cumulative issuance (outstanding debt), supranational issuance remains larger than any single country and thus an important generator of finance for sustainable projects. As a group, developing countries remain underrepresented in global sustainable bond markets, even compared with traditional bond markets, although China and Chile rank among the top 15 issuers for cumulative sustainable bond issuance, with 431billionand53 billion, respectively, at the end of the third quarter of 2023. Their sustainable bond issuance has been helped by strong policy support Figure III.2 European issuers of sustainable bonds lead the market Global sustainable bond issuance by region, 2023 (Billions of dollars and percentage change from 2022) Source: UNCTAD, based on information from Climate Bonds Initiative and Environmental Finance. a Percentage change not available because data source and coverage for 2022 differed. Asia-Pacifc North America Latin America and the Caribbean Supranational Africaa 288 Europe 405 97 54 24 4 +0.75% +39% -28% +74% -77% World Investment Report 2024 Investment facilitation and digital government 82 for the growth of local and international markets (Climate Bonds Initiative, 2023). Financial and non-financial corporate entities were the largest issuers of sustainable bonds in 2023, followed by government- backed entities (figure III.3). Among the latter, public pension and sovereign wealth funds (PPFs and SWFs) have become more active issuers of sustainable debt as well as more active buyers. Sovereign issuers, the next largest issuer type, account for one tenth of total cumulative issuance of sustainable bonds but about two thirds of the overall debt market, suggesting that there is significant potential to expand the share of sovereign debt in sustainable bond markets (Climate Bonds Initiative). a. Green bonds The value of green bonds issued grew 15 per cent to 587billionin2023,from509 billion in 2022, representing two thirds of sustainable bond issuance. Looking at use of proceeds categories, this strong growth – reversing 2022 trends – was mainly driven by increases in the energy, transport, information and communication technology, waste and industry sectors (figure III.4). The increase was also supported by a recovery in sustainable bonds issued by financial corporates to 163billion,eclipsingtherecordhighsof2021,andbynon−financialcorporatesto172 billion, which was just short of the 2021 high point of 174billion.Notably,sovereignissuancejumped45percentto120 billion in 2023, up from 83billionin2022andsurgingpastthepreviousall−timehighin2021of92 billion (figure III.5). In a year of declining values for some sustainable equity investments, the rising demand for green bonds in 2023 could be the result of investors looking for lower- risk routes to gain exposure to sustainable sectors and/or emerging markets, in addition to a general rebalancing towards fixed income in an environment of higher interest rates. Research by the Climate Bonds Initiative has shown that investors are willing to absorb a “greenium” (lower yield and/or higher price) that is usually associated with green bonds, indicating the strength of demand for green versus traditional bonds (Climate Bonds Initiative, 2021). On the supply side, the rise in sovereign issuance may be helping countries to diversify their investor base and provide credibility to green policies. Figure III.3 Corporate issuers dominated sustainable bond issuance in 2023 Global sustainable bond issuance by issuer type (Billions of dollars) Source: UNCTAD, based on information from Climate Bonds Initiative. Green Sustainability-linked Social Sustainability Non-fnancial corporate 172 22 13 2 Financial corporate 163 25 1 17 Government-backed entity 73 91 11 Sovereign 120 25 7 6 Development bank 48 15 10 Local government 18 12 18 Chapter III Sustainable finance trends 83 b. Social, sustainability and sustainability-linked bonds The values of both social and sustainability bond issuance both fell in 2023. Social bonds issuance declined by 7 per cent, from 165billionto153 billion, while that of sustainability bonds fell by 30 per cent, from 157billionto109 billion. Despite the growing awareness of climate and environmental sustainability issues and the opening of more investment opportunities in social and sustainable projects, both types of bonds continued falling to pre- pandemic levels of issuance (figure III.6). The fall is likely directly related to recovery Figure III.4 Energy, transport and buildings accounted for 75 per cent of the green bond market in 2023 Global green bond issuance by sector (Percentage) Source: UNCTAD, based on information from Climate Bonds Initiative. Energy Transport Green buildings Land use and marine resources Water Waste Climate adaptation and resilience Information and communication technology Industry 35 22 18 6 6 5 4 2 2 Figure III.5 Sovereign issuance of green bonds saw the largest gains in 2023 Green bond market size by type of issuer (Billions of dollars and percentage change from 2022) Source: UNCTAD, based on information from Climate Bonds Initiative. +35% +13% +45% -26% +2% – Non-financial corporate 172 Financial corporate 163 Sovereign 120 Government-backed entity 73 Development bank 48 Local government 12 World Investment Report 2024 Investment facilitation and digital government 84 from the pandemic, during which the value of COVID-response bonds surged – momentum that has now subsided. Nevertheless, together these two categories still represent 38 per cent of cumulative sustainable bond issuance since 2018. In contrast, the annual issuance of sustainability-linked bonds increased 83 per cent, from 12billionin2022to22 billion in 2023. This continues a constant annual increase since the introduction of the first such bond by Enel (Italy) in 2019, bringing cumulative issuance of such bonds to 47billion.Unlikegreen,socialandsustainabilitybonds,sustainability−linkedbondsarenottiedtouseofproceeds.Thispotentiallygivesissuersmoreflexibilitybutmayalsocallintoquestionthesustainabilityimpactofthisdebtinstrument,reflectedintheloweralignmentofthiscategorywithsustainabilityscreeningcriteria(forfurtherdiscussion,seeWIR2020(UNCTAD,2020).LatinAmericaandtheCaribbeanistheonlyregionwherethevalueofoutstandingsocial,sustainabilityandsustainability−linkedbondsishigherthanthatofgreenbonds;theyaccountformorethan90percentoftotalcumulativeissuance,accordingtotheClimateBondsInitiative.DespitesocialbondissuancetherebeingonaparwiththatinEuropeandinAsia,theregioncouldbemissingoutonconsiderablefinancingopportunitiesinthegreenbondsegment,especiallyinsectorssuchasenergy,transportandindustry.In2023,socialbondsweremorefavouredbygovernment−backedentitiesandfinancialcorporateentities.Sustainabilitybondsweremorepopularwithlocalgovernment,non−financialcorporatesandsovereignissuers.Sustainability−linkedbondswereoverwhelminglyfavouredbynon−financialcorporatesandsovereignlenders.FigureIII.6Socialandsustainabilitybondissuancecontinuedtodeclinein2023(Billionsofdollars)Source:UNCTAD,basedoninformationfromClimateBondsInitiative.15391568238169212199165157154109SocialSustainability2018201920202021202220231.5 trillion cumulative issuance since 2018 -7% combined CAGR 2020–2023 Chapter III Sustainable finance trends 85 2. Sustainable funds a. Market trends The sustainable fund market continued to expand in 2023, albeit at a slower pace. The number of sustainability-themed funds worldwide reached 7,485, up 7 per cent from 2022. These funds remain highly concentrated in Europe and the United States, representing 73 per cent and 9 per cent of the global market, respectively. The share of the market in the rest of the world increased slightly, from 16 per cent to 19 per cent, with growth witnessed in Australia and Canada and in developing Asia (figure III.7). The total assets of sustainable funds reached almost 3trillionin2023,mainlydrivenbyrisingsharepricesinequitymarkets,inparticularinEuropeandtheUnitedStates.Europeremainsbyfarthelargestmarket,withassetsofnearly2.5 trillion, or 85 per cent of the global market. The value of sustainable funds in the United States increased from 286billionin2022to324 billion in 2023, representing about 11 per cent of the global market. The market share in the rest of the world remains at about 5 per cent. Although the increasing number and value of sustainable funds indicate continued growth, sustainable funds faced a challenging environment in 2023. High interest rates, lagging performance, lukewarm demand and rising concerns about greenwashing issues all contributed to growing uncertainties in the market. As a result, the number of new launches has continued to drop, from a record high of 240 in the fourth quarter of 2021 to 121 in the fourth quarter of 2023. In total, 565 launches were recorded in 2023, down from 682 in 2022. The decline was more than offset by the restructuring of conventional funds into sustainable ones, in particular in Europe, leading to continued expansion of the universe of sustainable funds. Sustainability-themed funds remain an important tool to tilt capital markets Figure III.7 The market value of sustainable funds recovered in 2023, reaching a record high (Billions of dollars and number) Source: UNCTAD, based on Morningstar data. 277 262 302 389 428 673 1 460 2 231 2 078 2 492 49 51 63 82 89 140 236 74 357 286 324 40 56 68 91 106 83 112 1 714 7 485 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Europe United States Rest of the world Number of sustainable funds World Investment Report 2024 Investment facilitation and digital government 86 towards more sustainable investment and thus direct capital to sectors and areas that can contribute to sustainable development. Net investment flows to sustainable funds also continued to drop, from 161billionin2022to63 billion in 2023, marking a significant decrease from the record of 557billionsetin2021(figureIII.8).Throughout2023,Europeansustainablefundsreceivednetinvestmentinflowsof76 billion, nearly halved from the 149billionof2022.Inadditiontoachallengingmacroeconomicenvironmentandpersistentgeopoliticalrisks,someinvestorshaveremainedcautiousaboutenvironmental,socialandgovernance(ESG)investingbecauseoftheoverallunderperformancein2022andlukewarmreturnsfrompopularsustainableinvestmentassets,suchasrenewables,in2023.However,comparedwithannualoutflowsof50 billion from European conventional funds, the European sustainable fund market has remained relatively resilient, demonstrating continued interest by investors in this asset category. The investment momentum in sustainable funds in the United States reversed completely in 2023. Following a surge in inflows in 2020 and 2021 (290billionand472 billion, respectively), new inflows plummeted to only 3billionin2022.Moreover,2023markedthefirstannualoutflows,whichtotalled13 billion. In addition to dismal returns, persisting greenwashing concerns and a backlash against sustainable investment strategies in the United States market (see section C.2) also contributed to a chilling effect on demand. In terms of financial performance, sustainable equity funds underperformed relative to conventional funds for the second consecutive year (Henry and Furdak, 2024). Article 9 funds, the “dark green” products known for their commitment to specific sustainable investment objectives and substantive approach to sustainability integration under the European Union Sustainable Finance Disclosure Regulation (SFDR), underperformed their benchmark by more than 6 per cent in 2023. Article 8 funds, the “light green” products that take environmental or social sustainability into consideration in asset allocation, also underperformed, but by a narrower margin of less than 1 per cent. Only Article 6 funds, which do not incorporate sustainability considerations into their investment strategies beyond basic ESG risk assessments, nearly matched their benchmarks. Figure III.8 Net flows to sustainable funds continued their slide in 2023 (Billions of dollars) Source: UNCTAD, based on Morningstar data. a The figure for 2022 has been updated since its publication in WIR 2023. 28 24 33 72 60 159 352 557 161 63 2014 2015 2017 2016 2018 2019 2020 2021 2022a 2023 Chapter III Sustainable finance trends 87 This disparity in performance may be attributed to short-term market dynamics that work against some popular sectors in sustainable investments. Renewable energy, for example, has been particularly affected by elevated interest rates, since the sector is particularly characterized by higher upfront costs and lower operational expenses over time. Such short-term fluctuations should not overshadow the long-term benefits of sustainable investing, underscoring the importance of taking a long-term perspective. b. The greenwashing challenge As sustainable investment products gain popularity, concerns about greenwashing are also growing. Greenwashing poses the most significant challenge to the sustainable fund market, primarily because of the lack of specific product standards for sustainable funds, including in leading markets. UNCTAD analysis of global green funds published in WIR 2023 revealed that their average net exposure to climate- positive assets (low-carbon assets minus total fossil fuels) is slightly more than 20 per cent, casting doubt on their proclaimed green credentials. According to Morningstar data, just over 20 per cent of Article 9 funds reported minimum sustainable investments aligned with the European Union taxonomy between 0 and 10 per cent, and only 8 per cent target taxonomy-aligned investments of at least 10 per cent. Meanwhile, only 4 per cent are completely free from oil and gas investments, and 15 per cent allocate more than 5 per cent of their assets to oil and gas as of December 2023 (Bioy et al., 2024). These figures suggest that, even among products regarded as “dark green”, a substantial portion might not live up to their sustainability claims. It is not surprising that concerns about greenwashing have dampened investor demand, partly explaining the loss of momentum in investment within the European market and leading to outflows in the United States market. The persistence of greenwashing has demonstrated that more systemic efforts are needed to tackle the issue. In response to concerns about the implementation of the SFDR, in December 2023 the European Union Commission launched a consultation with the industry and other stakeholders on a general review of the regulation, focusing on bringing more clarity and credibility to the sustainable fund market so as to tackle greenwashing concerns. This consultation addresses critical issues such as the interaction with the European Union taxonomy and other sustainable finance legislation, potential changes to disclosure requirements and the establishment of a categorization system for financial products. In parallel, the European Supervisory Authorities published a final report amending the draft Regulatory Technical Standards for the Delegated Regulation supplementing the SFDR. The report proposes additional social indicators for disclosing the principal adverse impacts of investment decisions on the environment and society, new product disclosure requirements regarding GHG emissions reduction and improvements to disclosures on the “do no significant harm” principle. These measures are designed to bring more clarity to the SFDR and its implementation standards and enhance its consistency with the European Union Taxonomy Regulation with the aim of improving its robustness and effectiveness in addressing greenwashing. (For further discussion of policy responses to greenwashing in other countries, see section C.) The complexity of defining and combating greenwashing underscores the critical need for clear, verifiable sustainability disclosure rules and effective enforcement to ensure market integrity. In addition, it is essential to establish well-defined rules and product standards that clearly outline the criteria required for a product to be labelled as sustainable. Moreover, reliance on self- assessment should be replaced by external auditing and third-party ratings to ensure market transparency and credibility. Exposure to climate- positive assets only 20 per cent, casting doubt on green credentials World Investment Report 2024 Investment facilitation and digital government 88 B. Sovereign and public institutional investors Institutional investors made progress on sustainability performance and compliance with international sustainability reporting standards in 2023. Since UNCTAD began monitoring in 2019, the number of these funds that report has grown from one in four to almost three in five. Nevertheless, this means that a significant number of these funds still do not disclose any information on their sustainability performance. SWFs and PPFs, with their long-term investment horizons, continued to integrate sustainability into their investment strategies and improve their climate risk management. Yet, a majority of funds still have not committed to net zero in their investment strategies. Both SWFs and PPFs must comply with a range of reporting standards and obligations and have tried to keep pace with the rapidly evolving international landscape for sustainability reporting, especially on climate action. With assets of more than $30 trillion at the end of 2023 – a significant portion originating from developing economies – SWFs and PPFs have received growing attention as potential sources of investment, especially in sectors relevant to the Sustainable Development Goals and in developing countries. As the world’s largest institutional asset owners, some SWFs and PPFs have substantial market influence through their allocation decisions and strategic influence over the investments they hold through active ownership. PPFs and SWFs also differ from other investors in terms of their liabilities, which are generally long term, and their mandates, which are often aligned with public policy objectives, such as achieving net zero. However, these funds are not always required to disclose and report on their governance or sustainability performance. Robust regulatory and policy frameworks are needed to ensure that institutional investment can contribute to the sustainable development agenda, especially in developing countries. For many funds, fiduciary obligations still limit their exposure to sustainable sectors and to developing countries, which have a higher risk premium. Addressing this challenge may require education and training for funds about markets and opportunities in developing countries. UNCTAD analysis of the top 100 institutional asset owners identified 70 PPFs and 30 SWFs, representing more than $24 trillion in assets under management in 2023, or 80 per cent of global PPF and SWF assets. More than two thirds of the top 100 are from developed economies; SWFs are predominantly based in developing countries (figure III.9). In 2023, some 58 of them reported on their sustainability performance, either in a dedicated sustainability report or in annual financial reporting. Among these funds, PPFs are, in general, relatively better at disclosing sustainability-related information Chapter III Sustainable finance trends 89 than SWFs (60 per cent of PPFs disclose, against just over 50 per cent of SWFs). Disclosure is strongly linked to the regulatory environment in a fund’s jurisdiction. Europe stands out, where 90 per cent of the funds report on sustainability performance, a figure related to the more comprehensive reporting requirements of the European Union. Among the funds that report, Canadian pension funds make up the majority of those in North America, again reflecting the relatively advanced regulatory environment in that country. Conversely, 2 Economist Intelligence Unit (2023), Anti-ESG sentiment in the US weakens ESG markets, 29 June, https:// www.eiu.com/n/anti-esg-sentiment-in-the-us-weakens-esg-markets. 3 UNCTAD Sustainable Finance Regulation Platform: http://gsfo.org. some funds in the United States recently experienced pushback against their sustainable investment strategies and sustainability disclosure at the State level as well as from public campaigning.2 Among the top 100, developing-country funds tend to report on sustainability performance less than developed-country funds. A majority of funds in the emerging Asia-Pacific markets do report, but even in countries that have relatively advanced policy environments, such as China and Singapore (see section C),3 several Figure III.9 The top 100 sovereign wealth funds and public pension funds manage 24trillioninassetsFundsbytypeandbyregionandeconomicgrouping(Number)Source:UNCTAD,basedonGlobalSWF(2023).Abbreviations:PPF=publicpensionfund,SWF=sovereignwealthfund.24 trillion Middle East 11 Emerging Asia-Pacifc 9 Developed Asia-Pacifc 4 North America 2 Europe 3 Africa 1 Middle East 2 Emerging Asia-Pacifc 7 Developed Asia-Pacifc 12 North America 33 Europe 15 Africa 1 Developed- economy funds 69 Developing- economy funds 31 PPFs 70 SWFs 30 World Investment Report 2024 Investment facilitation and digital government 90 funds in the top 100 do not report. This reflects some implementation challenges and weaker disclosure obligations in these jurisdictions. In the Middle East, a region with many SWFs, fewer than one in three SWFs – and no PPF – reports sustainability-related information, indicating that policy measures to strengthen sustainability reporting would be helpful. Despite advances, the dichotomy in disclosure persists. Forty-two funds still do not report on their sustainability performance. This group includes almost half of the SWFs in the top 100, with a noticeable concentration in the Middle East and emerging Asia. In the case of PPFs, the tendency not to report is skewed towards North America. This is partly the result of the weight of these regions in the top 100 but also likely related to regulatory requirements that are weaker than in Europe. At the same time, the funds that do report exhibit some of the most advanced policies on sustainability integration. They are making sustained efforts to address sustainability risks, both for the material threat to their business models and out of an ethical stance towards future generations. This group of asset owners comprises many first movers, several of which have been addressing sustainability issues for many years already and now employ, for example, complex climate modelling analysis and valuation models and rigorous screening of investments. The following analysis is based on the public disclosures of the 58 reporting funds in the top 100. 1. Sustainability integration strategies and practices Most reporting funds articulate a clear vision for sustainability integration and have implemented policies and guidelines to manage sustainability risk, such as specific strategies on climate change mitigation. Many funds have also created dedicated sustainable investment teams. Yet, despite the existence of such climate strategies, only one in three of these funds reported a target for fossil fuel divestment in 2023, a share unchanged from the preceding year. a. Investment strategies Sustainability risk has been driving PPF and SWF investment strategies and decision- making for several years. In 2023, 9 out of every 10 funds reported the general integration of sustainability considerations in their investment strategies (figure III.10). Four out of every five funds reported the integration of social and governance dimensions in their investment strategies by taking into account issues such as labour rights, executive pay, tax contributions and board diversity. A similar number of funds also reported impact strategies, especially on the environmental side; these can involve sectoral targeting, such as renewables, and capital market instruments, such as green or sustainability bonds. Less than half mentioned the integration of the Sustainable Development Goals in their investment decisions. Another way funds integrate a sustainability perspective in their investment strategies is through active ownership. In 2023, almost 80 per cent report engagement with their investees (figure III.11). This enables funds to influence the behaviour of their portfolio holdings through discussion or voting for policy changes. While more than two thirds of funds reported providing guidance on ESG criteria and Goals criteria to their asset managers and investees, less than a quarter offered their asset managers training on these topics. 58 of top 100 PPFs and SWFs reported on sustainability performance in 2023 Chapter III Sustainable finance trends 91 Figure III.10 Sustainability shapes investment strategies used by funds in 2023 (Percentage of reporting funds) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Note: Funds can report more than one strategy. Abbreviation: ESG = environmental, social and governance. a Includes issues related to child labour, diversity and others. b Includes issues related to to executive pay, board diversity, tax and others. c Includes ESG-oriented sectors (e.g. renewable energy, green housing) or capital market instruments (e.g. green bonds, ESG funds) or markets (emerging and developing economies) in ESG investment. General integration of sustainability considerations Integration of social dimensiona Integration of governance dimensionb Impact investmentc Negative screening or exclusion Positive or best-in-class screening Integration of Sustainable Development Goals considerations 91 84 80 79 61 59 45 Figure III.11 Institutional investors are active owners of their assets (Percentage of reporting funds) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Abbreviation: ESG = environmental, social and governance; Active engagement activities Guidance on ESG (and Sustainable Development Goals) provided to asset managers or investees Voting policy that takes ESG factors into account Training provided for asset managers or investees 79 68 63 23 World Investment Report 2024 Investment facilitation and digital government 92 b. Climate-related actions Reporting funds demonstrate significant engagement on climate change mitigation, with 9 out of 10 funds having developed specific strategies addressing climate issues. This is partly the result of regulations and fund commitments in this area and partly because of the nature of climate- related reporting metrics available to funds. Nonetheless, while this commitment is significant, the actions taken vary in depth and potential effectiveness and point to areas for further development. Funds are more likely to set targets for investment in renewable energy than to define a target for divestment from fossil fuels, with just under a third of funds doing both (figure III.12). Among those that do have targets for both, funds in Europe, particularly those in Nordic countries, take the lead with a dual strategy that includes significant investments in renewable energy and assertive fossil fuel divestments. This approach aligns with the comprehensive climate policies in Europe and reflects strategic diversification. This is also true for hydrocarbon funds, such as Norges Bank Investment Management (Norway), which are transitioning towards more sustainable energy solutions. Despite robust investments in renewable energies, PPFs in North America take varied approaches to fossil fuel divestment, influenced by diverse state- level policies and public opinion. PPFs, such as the Healthcare of Ontario Pension Plan (Canada) and the New York State Common Retirement Fund (United States), lean heavily towards renewable energy investments, but these funds are less proactive in divesting from fossil fuels. This difference reflects the balancing act between sustainable commitments and funds’ fiduciary duty to ensure stable returns. Middle Eastern and African funds, such as Mubadala (United Arab Emirates), which receives funding from sources in the hydrocarbons industry, and the Public Investment Corporation (South Africa), which is linked to an energy sector still dependent on coal, temper their approach. The result is a careful balance between exploring renewable energy investments and maintaining stakes in fossil fuels. This nuanced approach reflects the complex interplay between these Figure III.12 Only 30 per cent of funds have targets for renewables investment and fossil fuel divestment Funds by type of target (Number) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Target for investment in renewable energy 22 Target for divestment from fossil fuels 2 Targets for both 17 No targets for either 17 Chapter III Sustainable finance trends 93 regions’ economic priorities, including employment in fossil fuel industries, and their sustainable development objectives. Among funds that have committed to achieving net zero or carbon neutrality, most have set the target year of 2050. Some have set more ambitious targets, while others, particularly those associated with hydrocarbon sectors, have set later targets, such as 2060. Three quarters of reporting funds have adopted sophisticated, systematic climate risk assessment strategies. This signifies a commitment by a majority of reporting funds to integrate climate risk into their risk management frameworks, aiming to mitigate vulnerabilities and exposure to transitional and physical risks, and to explore new opportunities (table III.1). North American funds, such as the California State Teachers’ Retirement System, are pioneers in climate scenario analysis, exploring how various global warming scenarios could influence its portfolio. SWFs in oil-rich regions often integrate broader risk management approaches, possibly because of their exposure to the fluctuating dynamics of the energy sector amid global decarbonization efforts. Sectoral analysis is gaining traction among European funds, which scrutinize specific industries for climate-related vulnerabilities, allowing for more targeted risk mitigation efforts. About 20 per cent of funds also conduct climate stress testing of their investment portfolio. Table III.1 Most funds systematically assess sustainability and climate risk Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Note: Number of reporting funds = 41. Category Number of funds Integrated risk management 25 Climate scenario analysis 20 Sectorial analysis 7 Stress testing 7 Portfolio testing 6 2. Sustainability disclosure a. Reporting frameworks and standards used by funds In 2023, PPFs and SWFs maintained their commitment to the standardization of sustainability reporting. The Task Force on Climate-related Financial Disclosures (TCFD) and the Principles for Responsible Investment are the two main frameworks that funds use for their sustainability reporting (figure III.13). Following closely are the new International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards set by the International Sustainability Standards Board (ISSB), the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). The growing adoption of the new ISSB standard, which incorporates the elements of the TCFD standard, represents a significant development in SWF and PPF sustainability reporting, showing the World Investment Report 2024 Investment facilitation and digital government 94 potential rise of the standard as a global baseline for sustainability disclosure. Nonetheless, the variety of frameworks and standards in use shows that further convergence will be beneficial for enhancing comparability and consistency in disclosure among SWFs and PPFs. b. The main reporting metrics used for sustainability disclosure While almost 95 per cent of reporting funds have put in place policies on sustainability, fewer funds – 64 per cent – clearly disclose the metrics or methodologies they use to measure sustainability performance and impact. Reporting funds mainly use 16 indicators to measure their sustainability performance, categorized into five reporting areas (figure III.14). Climate and GHG emissions are the main area of disclosure and measurement: among the 37 funds reporting on indicators, more than 60 per cent have set specific ones for GHG accounting. The indicators are categorized into three types: absolute emissions, emissions intensity and total carbon footprint. These calculations are typically applied to portfolios: funds generally monitor scope 1 and scope 2 GHG emissions (in tons of carbon dioxide equivalent), with a small minority of funds going further and reporting on scope 3 emissions. For those funds that use emissions intensity metrics, the largest number use the carbon footprint indicator, describing the total carbon emissions for a portfolio. Nearly half use the TFCD-recommended weighted average carbon intensity, which indicates the portfolio’s exposure to carbon- intensive companies, expressed in tons of carbon dioxide equivalent per million dollars of revenue. It assesses a portfolio’s carbon efficiency by considering each investment asset’s revenue-based emissions intensity and its weight in the portfolio. Some funds consider operational emission reduction actions of invested companies, including energy consumption, renewable energy usage and operational carbon footprint calculation. However, few funds incorporate science-based climate targets into their metrics system. Regarding environmental protection and resource consumption, specific indicators include Figure III.13 Most funds use a global sustainability reporting standard or framework (Number of reporting funds) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2022. a CDP was formerly known as the Carbon Disclosure Project. Task Force on Climate-Related Financial Disclosures Principles for Responsible Investment International Sustainability Standards Board Global Reporting Initiative Sustainability Accounting Standards Board Corporate Sustainability Reporting Directive CDPa European Union Taxonomy 33 22 16 13 12 5 5 4 Chapter III Sustainable finance trends 95 expenditure on environmental protection by portfolio companies, water withdrawal rates and whether portfolio companies have a responsible waste management system. Regarding corporate governance, funds predominantly use ESG and sustainability-related metrics; company diversity and issues such as employee training are also reported. In general, social areas are underreported compared with environmental and climate areas. Social issues are typically considered within the broader context of sustainability, with only one fund specifically addressing the social impact of portfolio companies. To ensure the quality of sustainability reporting, third-party verification or auditing is important, in the same way that financial reporting is audited. Yet only one in four reporting funds use third-party verification. Despite its importance for ensuring credibility and trust (and combating greenwashing), auditing is currently voluntary. Nevertheless, the International Auditing and Assurance Standards Board (IAASB) is developing the International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements, which will be issued before the end of 2024. It is intended to serve as a general standard suitable for any assurance purpose. According to the IAASB, it will apply to sustainability information reported across any sustainability topic and prepared under multiple frameworks, including the recently released IFRS Sustainability Disclosure Standards S1 and S2. Figure III.14 SWFs and PPFs reported sustainability metrics in five areas in 2023 Source: UNCTAD, based on latest fund reporting. Abbreviations: ESG = environmental, social and governance, GHG = greenhouse gas, PPF = public pension fund, SWF = sovereign wealth fund, tCO2e = tons of carbon dioxide equivalent. Reporting indicator Number of funds reporting Examples • Carbon footprint of investments • Scope 1 and 2 GHG emissions of investments • Carbon intensity (no specifc calculation methods) • Scope 3 GHG emissions of investments • Weighted average carbon intensity • Absolute emissions of investments (no scope) • Total portfolio emissions (tCO2e) • Portfolio carbon intensity (tCO2e/$ million of portfolio value) • Portfolio weighted average carbon intensity (tCO2e/$ million of revenue) • Electricity production from renewable energy sources • Fossil fuel revenue • Climate-neutral and circular internal business operations • Number of portfolio companies with science-based net-zero 2050 target • Waste management, environmental performance of properties • Water withdrawal • Sustainability considerations in investments • Investments in Sustainable Development Goals and climate solutions • Exposure to fossil fuels • Climate risk and climate stress test • Emissions reduction of operations • Science-based climate target • Work-related injuries, net new hires and employee engagement • Gender, age, ethnic and cultural background, and work capacity • ESG/sustainability related • Others • Diversity related 13 7 5 4 4 3 5 4 3 8 6 3 7 7 3 36 GHG accounting 17 Climate risk and emissions reduction 17 Corporate governance-related targets 12 Environment-related targets 5 Sustainable investment targets • Environmental protection and resource consumption 5 World Investment Report 2024 Investment facilitation and digital government 96 C. Policies, regulations and standards In 2023, the IFRS Foundation launched the Sustainability Disclosure Standards, which have attracted significant interest globally. The emergence of international standards, including the IFRS and European standards, has created spillover effects that affect developing economies and their small and medium-sized enterprises (SMEs). Progress has been made in enhancing the interoperability of international standards. Stock exchanges also continue to play a vital role in the adoption and implementation of sustainability reporting. Governments from both developed and developing economies have accelerated sustainable finance policymaking, focusing on leveraging capital markets for climate transition. In 2023, 26 of the 35 economies tracked by the UNCTAD Global Sustainable Finance Observatory introduced more than 90 measures dedicated to sustainable finance, marking a significant increase from the 63 measures adopted in 2022. Countries are integrating sustainable finance into national development strategies more and more, prioritizing policy impact and effectiveness. 1. International sustainability reporting standards a. New standards June 2023 saw the launch of the first two of the IFRS Sustainability Disclosure Standards by the ISSB, after a global consultation process. The International Organization for Securities Commissions (IOSCO) issued a statement endorsing the standards and called on its 130 member jurisdictions, which regulate more than 95 per cent of the world’s financial markets, “to consider ways in which they might adopt, apply or otherwise be informed by the ISSB standards within the context of their jurisdictional arrangements, in a way that promotes consistent and comparable climate-related and other sustainability- related disclosures for investors.” This statement has been received as a strong signal from market regulators to encourage the adoption of the ISSB standards. The ISSB, created in 2021 by the IFRS Foundation, develops standards that form a global baseline for disclosure of sustainability-related risks and opportunities, to meet the needs of investors and other capital market participants. It was formed in response to strong demand from capital market participants and international policymakers, including the members of the Group of Seven, the Group of 20 and the Financial Stability Board, to harmonize and simplify the landscape of investor- oriented sustainability disclosure standards. Chapter III Sustainable finance trends 97 The first standard, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, sets out a requirement for an entity to disclose information about all risks and opportunities related to material sustainability that could reasonably be expected to affect the entity’s prospects. It provides conceptual foundations to aid the disclosure of this information, as well as core content requirements applicable to all sustainability-related risks and opportunities. IFRS S2 Climate-related Disclosures provides more detailed requirements for the disclosure of climate-related information. At its formation, the ISSB merged with four formerly independent bodies: the TCFD, the Climate Disclosure Standards Board (CDSB), the SASB and the International Integrated Reporting Council (IIRC). As a result, the ISSB standards draw heavily from the voluntary investor-focused standards and frameworks produced by those four bodies. Companies using ISSB standards should make disclosures about their governance and risk management of sustainability and climate-related risks and opportunities, as well as the strategy, metrics and targets used to manage those risks and opportunities. In line with the concept of providing a globally consistent baseline, national policymakers may add building blocks to the ISSB’s standards in order to meet local reporting objectives, provided that local provisions do not obscure information required by the global baseline. Following the launch of the ISSB standards and their endorsement by IOSCO, the ISSB set three new priorities. First, for future areas of disclosure standardization, the ISSB is exploring biodiversity, ecosystems and ecosystem services, as well as human capital. It has also published educational material on nature and social aspects of climate-related risks and opportunities. Second, in support of adoption of the standards by market participants, the ISSB has established a partnership framework for capacity-building, working with public and private organizations, global and local, to ensure accelerated readiness among jurisdictions to adopt the standards. A dedicated IFRS Sustainability Knowledge Hub was also launched to guide report preparers. Third, in support of adoption of the standards by jurisdictions, the ISSB has been engaging with regulators worldwide and has published a preview of a jurisdictional guide for the adoption or other use of the standards. b. Status of adoption An increasing number of jurisdictions have already adopted the ISSB standards, with many others working on adoption (table III.2). While some intend to implement the standards fully as the globally consistent baseline, others plan to introduce amendments to them, which may result in inconsistencies in the information reported by complying entities. In response to the rise of international and regional standards and their spillover effects through global supply and investment chains, many countries, including developing ones, are taking action to modernize their company reporting systems by aligning them more closely with international best practices. However, several challenges could pose severe barriers to policymaking in this area in developing economies (UNCTAD, 2024c). They include (a) the fragmentation of international standards, (b) the lack of robust national sustainability reporting infrastructure, (c) insufficient knowledge and human capacity, and (d) limited access to sustainability data. Addressing these issues would require enhanced international coordination on sustainable finance regulations, especially in standard-setting, while considering the specific needs and challenges faced by developing economies. Technical support will also be essential. Towards this end, UNCTAD, through its Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting, is supporting countries in reinforcing their regulations and 17 jurisdictions using ISSB standards, with others working towards adoption World Investment Report 2024 Investment facilitation and digital government 98 institutions, and building human capacity to implement international standards, such as those of the ISSB. Since 2021, UNCTAD has been launching regional partnerships to promote high-quality sustainability reporting in developing countries. The Partnerships in Africa (29 countries and 58 institutions) and in Latin America (30 institutions in 15 countries) have become operational over the past two years. At the 2023 World Investment Forum, UNCTAD announced additional regional partnerships for Asia, Eurasia, and the Gulf States and neighbouring countries. These partnerships are vehicles for facilitating the exchange of good practices in the implementation of sustainability reporting standards. c. Policy spillover effects The effects of these international standards can extend beyond the jurisdictions where they are formally adopted, through global supply chains. Large companies and financial institutions increasingly require their suppliers or investee companies to report on sustainability. For example, beyond disclosing scope 3 GHG emissions Table III.2 Jurisdictions move toward adopting ISSB standards Source: UNCTAD. Jurisdiction Status as of April 2024 Implementation date Australia Consulting on standards until 1 March (currently adopting only IFRS S2) Staggered implementation from January 2025 Bangladesh Introduced mandatory requirements for banks and finance companies January 2024 Brazil Adopting in full (IFRS S1 and S2) January 2026 Canada Consulting on draft standards from March to June 2024 January 2025 for listed companies, January 2027 for unlisted companies with assets of more than $1 billion Costa Rica Adopted in full (IFRS S1 and S2) in 2024 Phased mandatory adoption for public companies (January 2025) and companies classed as large taxpayers (January 2026) Japan Issued standards for consultation March 2025 Kenya Developing a road map - Malaysia Consulted on standards Phased mandatory adoption for listed and unlisted companies December 2025–December 2027 Morocco Reviewing disclosure and target-setting requirements Early 2025 (currently only for banks) Nigeria Consulted on adoption road map Phased mandatory adoption for listed companies and SMEs between January 2027 and January 2030 Pakistan Consulting on adopting IFRS S1 and S2 Phased mandatory reporting between January 2025 and January 2027 Philippines Revising sustainability reporting guidelines for listed companies to incorporate IFRS S1 and S2 January 2025 for listed companies, January 2027 for unlisted companies with assets of more than $1 billion Republic of Korea Finalizing standards for June 2024 January 2026 or later Singapore Introduced mandatory climate-related disclosures (currently adopting only IFRS S1 for climate reporting) January 2025 for listed companies, January 2027 for unlisted companies with assets of more than $1 billion Türkiye Adopted in full (IFRS S1 and S2) January 2024 United Kingdom Consulting on standards until July 2024 - Hong Kong, China Developing adoption road map - Chapter III Sustainable finance trends 99 along supply chains, the ISSB S2 standard requires financial institutions to report “financed emissions” – the emissions associated with their investments, including those in SMEs. The SFDR of the European Union includes similar requirements. As sustainable finance gains traction, all companies, including SMEs, are increasingly expected to provide sustainability reports to meet investor demands. In some cases, companies may need to comply with regulations in markets where they have significant operations, even if they are not listed there. For example, under the European Union Corporate Sustainability Reporting Directive (CSRD), non-European Union companies will have to report if they generate more than €150 million in the European Union market. It is estimated that about 3,000 United States companies and more than 10,000 businesses worldwide will be affected by the requirements (Huck, 2023). Similarly, the climate disclosure rules released recently by the United States Securities and Exchange Commission (SEC) include requirements for not only local, but also foreign incorporated entities (SEC, 2024). Sustainability reporting requirements can further arise from legislative developments beyond the immediate standard-setting community. For instance, the European Union Carbon Border Adjustment Mechanism is not specifically a sustainability disclosure regulation, yet its implications for climate-related disclosures will extend well beyond Europe. Starting in October 2023, importers of certain goods into the European Union are required to report quarterly on the direct and indirect emissions embedded in each product. The requirements related to these standards and related regulations will have a cascading effect, affecting exporters and their suppliers, including SMEs from other regions, and posing notable challenges for developing economies. This challenge urgently requires international coordination, including enhanced interoperability and consistency among international and regional standards. d. Interoperability With the shift from voluntary disclosure initiatives towards mandatory reporting requirements, there has been a renewed impetus to examine the consistency and interoperability of the sustainability reporting landscape. As new requirements are introduced, businesses operating across jurisdictions may face inconsistent disclosure obligations, leading to greater workloads and potential inconsistencies in the information reported from one jurisdiction to another. Similarly, investors operating internationally may face an additional challenge when comparing the disclosures of companies they are assessing. Overall, the newly developed requirements can be classified by their focus on single materiality or double materiality. Single materiality (sometimes referred to as “investor materiality” or “financial materiality”) is primarily intended to inform a general investor audience and thus focuses on the impact of sustainability on an entity’s prospects and financial performance. Examples of such requirements include the ISSB standards and the climate rule of the United States Securities and Exchange Commission. Other requirements, such as the European Sustainability Reporting Standards and the proposed requirements in China, take a double materiality (also known as “impact materiality”) approach, covering both the impact of sustainability on the entity and the impact of the entity on sustainability. The GRI standards focus specifically on double materiality. To minimize potential inconsistencies and issues with interoperability, standard- setters have been working to align their standards more closely. Notable examples are the efforts by the European Financial Reporting Advisory Group, which develops the European Sustainability Reporting Standards, in achieving a “high level of alignment” with the GRI standards and the ISSB IFRS S2 standard on climate change. The IFRS Foundation and GRI have also published a summary of interoperability Inconsistent disclosure obligations across jurisdictions creates more work for reporting entities World Investment Report 2024 Investment facilitation and digital government 100 considerations for GHG emissions, to support more efficient reporting for companies that use both the ISSB standards and the GRI standards. This resource was developed under the two organizations’ collaboration agreement, to coordinate their sustainability-related work programs and standard-setting activities. As jurisdictions continue their implementation of sustainability disclosure regimes, international investors and others continue to highlight the importance of consistent requirements. Where existing requirements are in place or well under way, some have proposed that international standards should be given equivalence to local requirements, especially in the case of foreign entities, to avoid potential conflicts within the requirements and allow for more streamlined global sustainability reporting. Such equivalence has been achieved in financial reporting, where for example foreign private issuers listed on a United States exchange are permitted to prepare their financial statements according to IFRS accounting standards as an alternative to the Generally Accepted Accounting Principles standards more commonly used by United States companies. e. Stock exchanges promoting adoption and implementation As the interface between market regulators, issuers (both bond and equity), investors and standard-setters, stock exchanges are playing an important practical role in promoting the implementation and adoption of sustainability reporting standards and new sustainable finance products (figure III.15). In 2023, the number of exchanges with ESG-themed bond segments increased, continuing a sharp rise in these segments since 2017 and for the first time exceeding the number of markets covered by an ESG equity index. For many years, sustainable finance focused primarily on equity markets, but this has changed in recent years as sustainability-themed products also emerged in the bond market, derivatives markets and elsewhere. The past year also saw a continued upward trend in mandatory listing requirements related to sustainability reporting, with 38 markets having such rules, up from close to zero just a decade ago. The standardization and regulation of sustainability reporting is also creating greater demand for market education on this topic, as a core mandate of exchanges is to educate market participants on compliance issues and transparency and reporting. The past year saw a continued sharp upward trend in the number of exchanges providing such training. As of the close of 2023, about 59 per cent (71) of all exchanges offered written guidance to issuers on sustainability reporting, a more than tenfold increase from a decade earlier. This written guidance, often voluntary, plays a critical role in preparing market participants for mandatory rules that typically follow. The trend lines over the past decade show a strong relationship between exchange guidance issuance and mandatory listing rules. In light of these ongoing trends, the objective of Sustainable Development Goal 12.6 concerning sustainability reporting is on track to be attained by 2030. The market is gravitating towards a more concentrated set of standards. Exchanges are actively endorsing global ESG reporting frameworks. The GRI standards remain the most frequently cited, followed by the four component standards of the ISSB (those of CDSB, IIRC, SASB and TCFD). Markets that require sustainability reporting: 38 and growing. SDG 12.6 on track Chapter III Sustainable finance trends 101 Figure III.15 Stock exchanges continue to play an important role in promoting sustainability standards and products (Number of exchanges with standard or product) Source: UNCTAD, Sustainable Stock Exchanges database. Abbreviation: ESG = environmental, social and governance. 2004 2005 2007 2003 2006 2008 2009 2010 2011 2013 2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 10 20 30 40 50 60 70 80 90 100 Sustainability reports Written guidance on ESG reporting Training on ESG topics Markets covered by an ESG index Mandatory ESG listing requirements ESG bond segments World Investment Report 2024 Investment facilitation and digital government 102 2. Policymaking at national and regional levels a. Overview The rapid expansion in the sustainable finance market has brought about the parallel growth of national sustainable finance measures. National and regional governments are increasingly creating policies and regulatory frameworks to leverage capital markets to achieve their net-zero goals. The UNCTAD Global Sustainable Finance Observatory monitors sustainable finance regulations and policy measures in 35 economies (countries and economic groupings). They include the members of the Group of 20, the largest developing economies outside the Group of 20 and selected financial centres. Together these economies represent more than 90 per cent of global GDP and the world’s largest capital markets. In 2023, these economies introduced a total of 94 sustainable finance policies and regulations. This brings the cumulative number of sustainable finance measures since 2014 to 516, with nearly 60 per cent of them introduced in the past five years, partly in response to the rapid expansion of the sustainable finance market and product availability (figure III.16). Meanwhile, at least 69 sustainable finance measures are in development. Figure III.16 Record level of new sustainable finance policy measures and regulations adopted in selected economies in 2023 (Number of measures adopted by year) Source: Global Sustainable Finance Observatory (GSFO.org), based on UNCTAD, PRI and World Bank data. Notes: Encompasses seven key policy areas for sustainable finance: national strategy, national framework and guidelines, taxonomy, product standards, sustainability disclosure, sector-specific regulations and carbon pricing. Other economies are Switzerland; 13 developing economies (Bangladesh, Chile, Colombia, Egypt, Kenya, Malaysia, Nigeria, the Philippines, Singapore, Thailand, the United Arab Emirates and Viet Nam, as well as Hong Kong, China); and ASEAN. Relevant measures of the European Union included in Group of 20 economies. a Number updated to include incentive-related measures. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 14 2 12 7 10 7 18 8 20 5 24 6 14 15 75 9 50 13 64 30 Group of 20 economies Other economies Chapter III Sustainable finance trends 103 The most popular policy area is sustainability disclosure, accounting for 37 per cent of all measures (figure III.17). This highlights the priorities of improving market clarity and credibility and addressing greenwashing concerns. Sector-specific measures, which covered sustainable banking, insurance, asset management and others, constituted 23 per cent of total measures, and national strategies and frameworks another 17 per cent. Although specific measures targeting products such as sustainable bonds and funds, carbon pricing and taxonomy represent a smaller portion of the policy pool, policymaking in these areas has been notably dynamic in recent years, with a significant number of measures currently in development. Thematically, most of the policy measures introduced in the last five years have focused on climate change and the green transition; however, social sustainability and inclusive development have started to attract more attention. Examples include the development in the European Union of a social taxonomy, the inclusion of economic activities targeting social sustainable development in the South Africa taxonomy and policy measures adopted by Bangladesh and China and by the Association of Southeast Asian Nations (ASEAN) to support the development of SMEs. Figure III.17 Sustainability disclosure measures remain the most common policy category Sustainable finance policy measures by category, 2014–2023 (Percentage) Source: Global Sustainable Finance Observatory (GSFO.org). Sustainability disclosure 37 Sector-specific measures 23 Taxonomy 3 Carbon pricing 9 Product-specific measures 11 National strategy or framework 17 World Investment Report 2024 Investment facilitation and digital government 104 b. Regional developments In 2023, the 35 economies or country groupings tracked by the Global Sustainable Finance Observatory adopted substantive measures across six key policy areas: national strategy or framework, taxonomy, sustainability disclosure, sector-specific measures, product-specific measures and carbon pricing. Policymaking was most active in national strategies and frameworks, sustainability disclosure, and sector- or product-specific measures focusing on green bonds, sustainable banking and investment (table III.3). The European Union established a comprehensive sustainable finance regulatory framework with the CSRD, which entered into force in January 2023. Together with the Taxonomy Regulation and the SFDR, these regulations lay the foundation of an integrated policy framework governing sustainable finance in the European Union. To further strengthen the framework, the European Union is conducting a comprehensive review of the SFDR, the taxonomy and related technical standards, aiming to improve their usability and effectiveness and to ensure consistency among different pillars of the framework. It also announced a new package of measures to further strengthen its sustainable finance regime, which includes expanding the taxonomy to cover additional activities contributing to climate as well as non-climate environmental objectives, such as water and marine resources protection, circular economy transition, pollution prevention and control, and biodiversity and ecosystem restoration. The measures also bring more transparency and integrity to the market by introducing rules on the ESG rating and provide guidance to support transition finance. In the United States, at the federal level, measures were adopted to promote climate disclosure and sustainable finance; however, at the State level, the backlash against sustainable investment strategies continues: 17 States have passed legislation prohibiting fund managers from considering ESG factors in their investment decisions or prohibiting States from contracting with asset managers that exclude certain industries, such as fossil fuels, from their portfolios (Malone et al., 2023). A sharpening focus on policy effectiveness has also led to policy consolidation in other developed economies. Australia, Japan, Switzerland and the United Kingdom are reviewing legislation related to sustainable Policy area Economy National strategy or framework Argentina, Brazil, China, France, India, Japan, Mexico, Switzerland, Türkiye, United Arab Emirates, ASEAN Taxonomy Mexico Sustainability disclosure Brazil, China, France, Germany, India, Republic of Korea, United Kingdom, United States, European Union Sector-specific measures Argentina, Australia, Brazil, China, India, Indonesia, Italy, Mexico, Switzerland, European Union Product-specific measures Argentina, Australia, Brazil, China, Republic of Korea, European Union Carbon pricing Australia, Canada, European Union Table III.3 Measures in six policy areas adopted by monitored economies, 2023 Source: UNCTAD GSFO Sustainable Finance Regulations Platform. Note: Sector-specific measures cover sustainable banking, insurance, investment and credit ratings; product- specific measures cover sustainable funds and bonds. Measures in development are not included. Chapter III Sustainable finance trends 105 finance, with a focus on sustainability disclosure and the development of sustainable finance taxonomies. Developing economies are becoming increasingly active in sustainable finance policymaking. They accounted for 60 per cent of new policy measures in 2023 – a record high. This surge demonstrates their systemic efforts to leverage sustainable finance for sustainable development. They are actively developing national strategies and frameworks for sustainable finance. In 2023, seven of them (Argentina, Brazil, China, India, Mexico, Türkiye and the United Arab Emirates), together with ASEAN member States, rolled out national strategies or frameworks on sustainable finance. Most of these national strategies were informed by the overall national development agenda, aligning with national objectives under the 2030 Agenda for Sustainable Development and the Paris Agreement. Such strategies help establish policy objectives, priorities and key areas for actions to provide guidance and stimulate national efforts to support the growth of sustainable finance. This trend underscores a growing commitment among countries to adopt a systematic approach to policymaking related to sustainable finance. Another important development concerns the increase in sector- or product-specific measures, focusing on sustainable banking, sustainable insurance and green bonds. For example, in 2023, Brazil and Chile adopted national frameworks for sustainable bonds; the Philippines released guidelines on the issuance of “blue” or ESG bonds; and Bangladesh, China, India, Singapore and Thailand released policies to support the banking industry in integrating sustainable development considerations into operations, covering sustainable deposits, sustainable loans and green credits (see table III.3). Except for the largest States, developing countries in general continue to face challenges in leveraging sustainable finance for development owing to a lack of human resources and knowledge, weak market infrastructure, and the fragmentation and inconsistency in international standards (UNCTAD, 2024c). The persistently low level of sustainable investment in many developing economies poses another challenge to their adoption of sustainable finance policies. Larger developing economies are active in sustainable finance policymaking, but smaller economies face multiple challenges Some of the findings in this chapter are positive and give hope for a future financial system that is sensitive to sustainability criteria and measures of performance that go beyond financial return. Other findings are less positive, including the continued prevalence of greenwashing, a backlash against sustainable investment in some jurisdictions and foot-dragging by some important categories of investors that are reluctant to report on sustainability risks. Overall, the analysis in this chapter shows that the sustainable finance market continues to expand and offers further potential for financing sustainable growth, including in developing countries. It shows that a majority of the top 100 PPFs and SWFs, with patient capital, understand the threat of sustainability risks to their business model. Finally, it reveals the positive trend in sustainable finance policymaking, as governments have made more efforts to leverage the potential of sustainable finance, including through better harmonization of international standards to achieve comparable, high-quality reporting criteria. Going forward, policymakers, regulators and other stakeholders will have to address three challenges: First is spillover effects resulting from national and regional standard-setting and regulation, which have implications for companies around the world. These effects primarily occur through global supply and * * * World Investment Report 2024 Investment facilitation and digital government 106 investment chains, where large companies and financial institutions increasingly require their suppliers or investee companies to report on their sustainability. Second is integrating sustainable finance frameworks into national sustainable development strategies. Most such strategies have been informed by the overall national development agenda, aligning with national objectives under the 2030 Agenda for Sustainable Development and the Paris Agreement. Such strategies help establish policy objectives, priorities and key areas for actions to provide guidance and stimulate national efforts in supporting the growth of sustainable finance. Third is ensuring that sustainable finance policymaking becomes more impact oriented, focusing on policy effectiveness. Prioritizing the impact and effectiveness of sustainable finance measures is essential, given the concerns about a rising backlash against sustainable investment. Addressing the issue will require improving the credibility of sustainable finance and combatting the persistent challenge of greenwashing, in particular through enhanced disclosure aligned with leading international standards, and the clear definition of sustainability concerning economic activities and sustainable financial products. Meanwhile, delivering visible impact would also be important, particularly for developing economies that have not yet benefited from increased sustainable investment flows to the real economy. The signals sent through capital markets can influence, direct and ultimately shape a future economy that is environmentally sustainable, socially equitable and fairly governed. Addressing policy challenges and implementation issues, including policy harmonization and spillover effects, will be essential for realizing any benefits from sustainable finance for the 2030 Agenda for Sustainable Development. Chapter IV Investment facilitation and digital government More investment agreements encourage digitalization Investment facilitation policy measures are increasingly digital 2015–2016 2021–2023 36% 60% +67% 2012–2015 2016–2019 64 3 89 22 2020–2023 121 34 Non-digital Digital 2016 Developed 2024 43 48 2016 Developing 2024 82 124 Number Quality (1–10) 4.6 6.5 4.8 5.8 2016 Developed 2024 12 28 2016 Developing 2024 13 67 Number Quality (1–10) 6.4 8.2 5.3 6.8 Investment facilitation portals are growing in number and quality Information portals Single windows Digitalization has broad benefits Top three business services provided online Countries with better digital government solutions… Higher FDI inflows Higher business creation rates Higher institutional quality +8% Filing taxes Registering businesses Obtaining licences Chapter IV Investment facilitation and digital government 109 A. Introduction Business and investment facilitation have become central to efforts to develop the private sector and attract foreign direct investment (FDI) in developing countries. Facilitation aims to make it easier for domestic firms and international investors to establish and operate their businesses. Core elements include providing information, making rules and regulations transparent, and streamlining administrative procedures. Because these elements are based on both information and procedures, digitalization is central to their effective implementation. They have thus led to a wave of digital government initiatives, including information portals and online single windows. Investment facilitation encompasses policies, measures and practices aimed at minimizing or eliminating obstacles faced by investors in a country (UNCTAD, 2016). Key elements include enhancing transparency and access to information for investors, streamlining administrative procedures, ensuring the predictability of the policy environment and promoting the accountability and efficiency of government officials. Facilitation can also include initiatives focused on preventing or resolving investment disputes. Distinct from investment promotion, which is focused on marketing a location as an investment destination, investment facilitation involves a government-wide approach, engaging multiple agencies and levels. Business and investment facilitation are closely intertwined. Business facilitation aims to create a favourable environment for all firms – large and small, foreign and domestic – to start, operate and grow their operations. Investment facilitation adds mechanisms and initiatives aimed at easing processes specific to foreign investors, such as foreign investment approvals or the admission of foreign personnel. Facilitation efforts can extend into other policy areas. Trade facilitation, for example, complements business and investment facilitation by reducing complexities in cross-border commerce. Business and investment facilitation can play a pivotal role not just in attracting investment but also in supporting attainment of the Sustainable Development Goals. By creating a more transparent and accessible business environment, they can encourage small firms to move from the informal to the formal sector, a vital step in enhancing domestic revenue mobilization. By removing barriers to investment and providing equal opportunities for all, business and investment facilitation can also play a role in promoting more inclusive economic growth, enhancing the access of women, young people and rural populations to economic activity. The UNCTAD Division on Investment and Enterprise has been instrumental in supporting progress on investment facilitation. Since 1999, its Investment Policy Reviews have provided comprehensive advice to nearly 60 countries and regions on a wide array of investment facilitation policies. The Division offers advisory services on investment facilitation to investment promotion agencies (IPAs) and special economic zones (SEZs). Its digital World Investment Report 2024 Investment facilitation and digital government 110 government platforms, including information portals and single windows for business, investment and trade facilitation, have been deployed in more than 60 countries. UNCTAD guides on digital investment provide investors with essential information to evaluate investment opportunities in specific countries and regions (box IV.1). UNCTAD has been a catalyst for international debate on investment facilitation. In 2016, the Global Action Menu on Investment Facilitation outlined the main elements of investment facilitation (box IV.2). Since its publication, an international agreement on investment facilitation for development has been negotiated, facilitation has become a mainstay in regional and bilateral trade and investment agreements, and national implementation efforts have proliferated. By 2023, more than a quarter of investment policy measures worldwide centred on facilitation mechanisms (chapter II). Together with the Action Menu, UNCTAD launched the Global Enterprise Registration (GER) index, an objective rating of countries’ provision of digital information and services for businesses and investors. It was used as a baseline for the state of play on these instruments during the early stages of discussions on the IFD agreement, which was finalized by Box IV.1 UNCTAD: Tools and technical assistance for digital business and investment facilitation UNCTAD offers a series of tools and participatory methodologies for documenting and simplifying procedures and for implementing online platforms. Applied sequentially, they form an integrated programme for the modernization of public administration. Document and publish procedures: the eRegulations information portal The eRegulations system offers an affordable, turnkey solution for governments aiming to simplify administrative procedures and to make them transparent. Designed from the user’s perspective, it breaks down each procedure step by step, providing essential information for each. This includes contact details (entity, office, responsible person), expected outcomes, required documents, costs, duration, legal justifications and options for lodging complaints. Importantly, creating and maintaining the eRegulations portal requires no programming skills, making it accessible for government staff who lack technical backgrounds. The system’s versatility allows its use for any administrative process, including company registration, tax payments, licensing activities, construction permits and import–export operations. Currently, eRegulations portals are operational in more than 50 countries. Simplify procedures: 10 principles to simplify administrative procedures Once administrative procedures are clearly defined, they become easier to simplify. This can be achieved by comparing existing practices with legal requirements and reducing interactions and document demands to only what is necessary and sufficient. The “10 principles to simplify administrative procedures” from UNCTAD guide Governments in reducing procedural steps and requirements, often by more than 50 per cent, without necessitating changes to existing laws. Digitalize procedures: the eRegistrations system eRegistrations is a no-code development platform that allows the creation of online services without programming skills. It can be easily adapted and configured to any administrative process and may apply to procedures such as company registration, construction permits, export licences or transfers of property titles. eRegistrations is suited both to operations involving only one administration (such as the business registry) and to simultaneous operations at multiple administrations (such as registering a company at the tax office, with the municipal council, with social security, at the labour department and at the business registry). It can thus operate as an online single window. It can be installed at any level of government. Monitoring progress: regional digital investment facilitation monitors UNCTAD has developed online tools to support the monitoring of progress on digital business and investment facilitation within the context of regional economic integration organizations. The tools are based on the GER.co methodology, which assesses the coverage, quality and user-friendliness of information portals and online single windows for establishing a business. Examples include the digital investment facilitation monitor of the Association of Southeast Asian Nations (ASEAN) (https://asean.investmentfacilitation.org) and, most recently, the Southern African Customs Union monitor (https://sacu.investmentfacilitation.org). Source: UNCTAD. See also https://digitalgovernment.world/ and https://businessfacilitation.org. Chapter IV Investment facilitation and digital government 111 some 120 members of the World Trade Organization (WTO) in February 2024. At the regional level, UNCTAD assisted the members of ASEAN in reviewing the implementation of the ASEAN Investment Facilitation Framework (AIFF) in 2022 (box IV.3). It was also part of the task force assisting African countries during the negotiations of the Protocol on Investment to the African Continental Free Trade Area (AfCFTA), which includes a chapter on investment facilitation. At the bilateral level, UNCTAD has been advocating for the introduction of proactive investment promotion and facilitation provisions for sustainable investment in international investment agreements (IIAs), based on the Investment Policy Framework for Sustainable Development (UNCTAD, 2015). UNCTAD recently developed a set of policy options to enable governments to transform their IIAs into tools to channel investment towards sustainable development (UNCTAD, 2023a). It is working with the Group of 20 Trade and Investment Working Group under the Brazilian Presidency on mapping investment facilitation and sustainable development provisions in the IIAs of members of the Group. Notwithstanding the diverse positions in debates on investment facilitation at the international level, the need for robust investment facilitation practices at the national level is universally acknowledged. Policymakers have firmly shifted their focus to the most effective implementation strategies and tools. Because investment facilitation is about enhancing transparency and providing information to investors and about making administrative procedures for businesses easier to complete, digitalization is at the heart of most facilitation initiatives. The use of digital government tools for investment facilitation has several important benefits. Because of the economies of scale and scope in the establishment of digital platforms, they tend to improve not only foreign investment procedures but also general business establishment procedures (e.g. business registration tax, social security and operating licences), thereby reducing administrative hurdles not only for foreign investors but also for domestic Box IV.2 The UNCTAD Global Action Menu for Investment Facilitation UNCTAD published its Global Action Menu for Investment Facilitation in 2016. It was debated among investment stakeholders at the World Investment Forum 2016 and subsequently endorsed by the Trade and Development Board, the governing body of UNCTAD. The Menu lists 10 action lines, each with a series of options for policymakers: 1. Promote accessibility and transparency in investment policies, and regulations and procedures relevant to investors. 2. Enhance predictability and consistency in the application of investment policies. 3. Improve the efficiency of investment administrative procedures. 4. Build constructive stakeholder relationships in investment policy practice. 5. Designate a lead agency, focal point or investment facilitator. 6. Establish monitoring and review mechanisms for investment facilitation. 7. Enhance international cooperation on investment facilitation. 8. Strengthen investment facilitation efforts in developing-country partners. 9. Enhance proactive investment project development in developing-country partners through capacity-building. 10. Complement investment facilitation by enhancing international cooperation for investment promotion for development through provisions in international investment agreements. Source: UNCTAD (2016). World Investment Report 2024 Investment facilitation and digital government 112 firms, including micro, small and medium- sized enterprises (MSMEs). Moreover, the implementation of digital government can positively affect the business climate in ways that go beyond the immediate scope of business and investment facilitation and the reduction of red tape. It has the potential to tackle the root causes of low investment attractiveness in many developing countries by mitigating weaknesses in governance and institutions more broadly. For that reason, the focus of this chapter is on investment facilitation and digital government. The aim is to take stock of progress in the implementation of digital business and investment facilitation worldwide; to look at the challenges, opportunities and policy priorities for its effective implementation; and to examine how it connects with wider digital government strategies to promote good governance and institutional robustness; to create a more transparent, efficient and investor-friendly environment; and to accelerate economic development. Section B provides an overview of progress in digital investment facilitation worldwide, with a focus on information portals and online single windows, including through an update on the UNCTAD GER survey on the spread and quality of digital services for business in all Member States of the United Nations. Section C examines the growing importance of investment facilitation and its digital component in national investment policies and IIAs. Section D evaluates the impact of digital business and investment facilitation on investment attraction, business creation, and institutional governance and transparency. Section E looks at lessons learned about the implementation of digital business and investment facilitation, identifying challenges and opportunities, and exploring wider implications for the development of digital government. Section F summarizes policy implications and recommendations spanning investment policy and digital government development. Box IV.3 ASEAN: regional cooperation on digital investment facilitation In 2021, the ASEAN countries adopted the ASEAN Investment Facilitation Framework (AIFF), a significant step in regional investment cooperation. This framework aims to enhance investment attraction across member States by increasing transparency, streamlining administrative procedures, promoting policy alignment and building the capacity of investment-related agencies. The ASEAN region has long been proactive in adopting strategies and policy measures to support investment. These efforts have intensified in recent years, accelerating during the pandemic, with an increase from 6 new investment facilitation measures in 2019 to 28 in 2020. These included the introduction of online facilities, e-application systems and streamlined administrative processes, reflecting a strong regional commitment to digitalizing and simplifying investment procedures. Notable initiatives include the Philippines and Malaysia implementing fast-track “green” lanes and simplified processes to ease investment. Member countries have also developed investment portals and digital platforms for e-payment and acceptance of electronic documents and certificates, further enhancing the investment landscape. Overall, investment facilitation efforts in ASEAN are characterized by a dynamic policy environment and innovative approaches to attract and streamline investment, emphasizing digitalization and institutional strengthening. The AIFF acts as a strategic blueprint to guide efficient and integrated investment facilitation across the region, including through the creation of a digital investment facilitation monitor. Progress on AIFF implementation was assessed in the ASEAN Investment Report 2022 (produced with the support of UNCTAD). Source: UNCTAD; ASEAN Secretariat and UNCTAD (2022). See also https://asean.investmentfacilitation.org. Chapter IV Investment facilitation and digital government 113 B. Progress on digital investment facilitation worldwide Administrative procedures for businesses and investors are often the first government services to be digitalized. Information portals and online single windows covering mandatory procedures for the establishment of a business have spread rapidly and are now available in most countries. Their quality and level of sophistication varies. Some portals in the least developed countries (LDCs) rival those in developed countries, showing that digital business and investment facilitation can provide leapfrogging opportunities. However, gaps remain, as evidenced by missing coverage, portal closures, problems in the maintenance of information and “single window dressing”. 1 UNCTAD contributed to the development of the self-assessment tool, with inputs on sections dealing with transparency and streamlining of administrative procedures, as well as single windows and technical cooperation. It is challenging to assess the state of progress in the implementation of investment facilitation – in general, not just digital – around the world in a systematic manner. Early World Bank research and the World Bank Doing Business indicators were among the more comprehensive efforts before investment facilitation was clearly defined. Investment Policy Reviews by both UNCTAD and the Organisation for Economic Co-operation and Development include many elements of investment facilitation assessments. The lack of updated systematic information across countries was one of the reasons for the development of a self-assessment tool to support the implementation of the IFD agreement.1 The WTO Secretariat has developed a standardized self- assessment guide to help countries with such assessments (WTO, 2023). The number of investment facilitation measures implemented worldwide is on the rise (chapter II), and with the use of digital technologies and platforms, these measures are evolving. This section mostly discusses progress in the development of information portals for businesses and investors, which are platforms that explain the administrative steps required to establish and operate a business, and online single windows, which are transactional portals that allow users to complete multiple procedures administered by multiple government agencies online. 1. The wider digital government context While systematic research on the application of business and investment facilitation practices is scarce, information is available to assess the state of progress on digital services for business as part of broader development of digital government. The United Nations Department of Economic and Social Affairs (UN DESA) conducts a biennial eGovernment Survey that provides an assessment of the digital government World Investment Report 2024 Investment facilitation and digital government 114 landscape across 193 Member States. The survey uses the eGovernment Development Index (EGDI) to rank countries, shedding light on online services and specific eGovernment components that benefit businesses. In its latest edition, the report examines these online services: business registration, business licence application, business tax filing and payment, land title registration application, environmental permit application, and access to and modification of a business’s own data. The 2022 survey findings unequivocally underscore the pivotal role of business facilitation as one of the foremost priorities in digital government (figure IV.1). Of the 20 administrative procedures that are most commonly available as online government services, half relate to business establishment and operation (others include services to citizens such as provision of birth certificates or residency documentation, and government administrative functions such as public sector vacancy announcements or public procurement). The two most common procedures – ranked first and second by some distance – are business registration and business licensing. Business and investment facilitation are clearly important entry points for the development of digital government. The survey highlights a global trend in the use of online services, especially related to the registration of new businesses. According to the survey, the number of countries offering this online service, either as an information portal or within a single window – a transactional portal where (part of) the service can be conducted online – has grown from 162 in 2020 to 176 in 2022. Similarly, there has been notable growth in other online services, such as applications for business licences (from 151 to 167) and options for payment of value added tax (from 130 to 141). The EGDI survey primarily assesses the presence of some form of eGovernment service (more than its substance or comprehensiveness) and does not focus solely on business and investment facilitation services. EGDI ratings are highly correlated with levels of development. Europe and North America lead in eGovernment development, with an average EGDI value exceeding 0.80 out of 1, followed by Asia (0.65), Latin America (0.64), Oceania Figure IV.1 Business services are usually the starting point for digital government Digital government services available to businesses, 2022 (Number of countries with service) Source: UNCTAD. Elaborated from the questionnaire of the 2022 Online Services Index (most recent survey year), a component of the United Nations Department of Economic and Social Affairs eGovernment Development Index. Note: Includes information portals and online single windows. Business registration Business licenses Utilities payment (electricity) Building permits Land title registration Utilities payment (water) Environmental permits 0 20 40 60 80 100 120 140 160 180 176 167 152 149 145 141 138 136 134 Business tax filing Value added tax filing Chapter IV Investment facilitation and digital government 115 (0.51) and Africa (0.41). Despite significant progress in Africa, the EGDI average for the continent remains low, highlighting the persistence of a digital divide. The new Business Ready (B-READY) index of the World Bank Group, intended to replace its well-known Ease of Doing Business rankings, also places significant weight on the provision of digital government services, including single windows and information portals. The UN DESA and World Bank initiatives reflect a global trend: countries are increasingly leveraging digital technologies to streamline information provision and administrative procedures to enhance their efforts to facilitate investment. 2. The spread and quality of business portals UNCTAD survey data (based on the GER methodology; box IV.4) confirm many of the findings of the EGDI. In contrast to the EGDI, the GER survey focuses specifically on business and investment facilitation portals. It distinguishes between types (information portals and single windows), and it assesses their content and quality. These differences explain several discrepancies between the two surveys. Nevertheless, the data show a clear trend in the development of digital tools to streamline business registration processes and other procedures (figure IV.2). The growth trajectory is evident, with the utilization of information portals for business and investment processes in Box IV.4 The UNCTAD Global Enterprise Registration survey To comprehensively evaluate the landscape of digital business and investment facilitation, UNCTAD introduced the Global Enterprise Registration (GER.co) online rating system and associated index in 2016. In its inaugural version, the platform was developed in collaboration with the Kauffman Foundation’s Global Entrepreneurship Network and the United States Department of State. GER.co assesses information portals, gauging their transparency regarding mandatory procedures for the establishment of a business. These typically include business registration, tax and social security enrolment and operating licence procurement, and – in the case of foreign investors – investment approval. GER.co also evaluates online single windows, measuring their effectiveness in enabling businesses and investors to complete mandatory procedures online. The assessment uses a 10-point scale, calculated on the basis of objective criteria, thus ensuring a standardized and transparent evaluation process. The highest-rated information portals provide comprehensive information about each step of an administrative procedure, what documents are required, how much the procedure costs, how long the process takes, which laws apply and how to appeal a negative decision. The highest-rated online single windows enable firms to complete a single form, submit a unified set of documents and make a single payment covering multiple procedures administered by multiple agencies. In return, investors receive digitally verifiable certificates. GER.co provides an interactive interface, allowing stakeholders in each country to submit revised ratings. This feature ensures that the platform remains current and reflects the evolving digital landscape in different countries. For this World Investment Report, UNCTAD reviewed the GER ratings of United Nations Member States in 2016, 2021 and 2024. The information portals or single windows evaluated may have changed across the three assessments as older sites were replaced or new government agencies created. Given the overlapping mandates of government agencies in investment promotion and business registration, multiple sites may be available for evaluation in a single country. In each such case, for this analysis UNCTAD retained the information portal or single window with the best score. In countries with federal systems or where business registration is administered by a subnational entity, UNCTAD evaluated the situation in the main commercial city. Since GER.co focuses on business registration, evaluations were made separately of the extent to which the sites benefit foreign investors and registrations for special economic zones. Source: UNCTAD. See also https://www.genglobal.org/ger. World Investment Report 2024 Investment facilitation and digital government 116 developing countries increasing from 82 economies in 2016, when the UNCTAD Global Action Menu for Investment Facilitation was launched, to 124 today. The number of developing economies with online single windows has risen from a modest 13 to 67 (figure IV.3). The observed increase in the number of portals is the result of growing policy attention to investment facilitation since 2016 as well as a push following the COVID-19 pandemic, which accelerated the implementation of digital business facilitation measures in many countries. Several developing countries responded by streamlining business establishment procedures, adopting online application systems, reinforcing one-stop centres, expediting operating licence approvals and providing additional support to investors. Digital tools also became important for administering support services for small businesses. The quality of both information portals and single windows has also generally increased, in terms of their comprehensiveness and coverage of mandatory procedures, accessibility and user-friendliness. A slight decline in the average rating of information portals in LDCs can be explained by the addition to the sample of new countries with relatively basic portals. For developing countries as a group, the average rating has gone up significantly despite the increase in the number of portals. Although information portals in developed countries improved over the observation period, their ratings still barely exceed those in developing countries. This may be because developed-country governments are generally considered to have greater regulatory transparency and more sophisticated public services, reducing their incentive to develop comprehensive online portals. There may also be a displacement effect: where comprehensive online single Figure IV.2 Information portals are now present in most countries and their quality is improving Information portals for business registration Source: UNCTAD, GER.co survey. Notes: Includes only Member States of the United Nations. GER.co rates quality on the basis of 10 objective criteria (box IV.4). The last assessment for GER.co was undertaken between February and April 2024. 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 43 41 48 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 56 73 85 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 26 35 39 b. Developing countries excluding least developed (n = 97) c. Least developed countries (n = 45) Number (left axes) Quality (right axes) a. Developed countries (n = 51) Chapter IV Investment facilitation and digital government 117 Figure IV.3 There is still room for growth in online single windows Online single windows for business registration Source: UNCTAD, GER.co survey. Notes: Includes only Member States of the United Nations. GER.co rates quality on the basis of 10 objective criteria (box IV.4). The last assessment for GER.co was undertaken between February and April 2024. 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 12 17 28 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 12 31 51 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 1 14 16 Number (left axes) Quality (right axes) b. Developing countries excluding least developed (n = 97) a. Developed countries (n = 51) c. Least developed countries (n = 45) windows are introduced but separate information portals remain operational, the value of such portals is reduced. For online single windows, which can be more technologically complex and require greater integration and coordination between government agencies, the ratings for developed countries remain higher than those for developing countries. Yet ratings among developing countries vary significantly, with some clear outliers. Several developing countries, among them some LDCs, feature among the countries with the world’s best information portals and single windows, illustrating that there is a leapfrogging opportunity. This effect is especially strong for online single windows, as countries with relatively few legacy systems may have an advantage in building online services. Crucially, many of the developing countries that lead in the adoption of these digital tools have received technical assistance, including from UNCTAD. This underscores the importance of international cooperation in facilitating the digital transformation of business and investment processes, ensuring that developing countries can harness the full potential of these tools to drive economic growth and attract investment. Appropriately, the IFD agreement includes provisions that promote international cooperation and technical assistance to developing countries (box IV.5). Such cooperation can also take place at regional levels, supporting regional integration efforts. Whereas almost all LDCs now have information portals that detail mandatory business registration and investor procedures, only one third have introduced online single windows, as compared with more than half of the other developing countries. LDCs face considerable challenges in consolidating relevant administrative procedures into a unified platform. Key difficulties include costs, gaps in skills and know-how, greater divergence in the way regulations are translated into administrative procedures across agencies and subnational bodies, and frictions in World Investment Report 2024 Investment facilitation and digital government 118 coordination among the agencies involved in facilitating businesses and investment. These difficulties are also evident from other findings of the survey. In 2024, seven economies discontinued online single windows that had been rated in the previous assessments.2 Ten discontinued information portals, and nine of these were developing economies. The cessation of these single windows and information portals could be the result of resource constraints, changes in ownership and responsibility for sites between ministries or agencies, changes in regulations prompting the need for updates or issues with information maintenance. A significant number of portals refer to dated legislation or procedures or offer relatively old forms. Both information portals and online single windows need clear ownership and resources for continuous updates and improvements. Another phenomenon found during the survey is that of “single window dressing”, where significant communication efforts appear to have been made to market a portal to investors or the public, but upon 2 Discontinued online single windows were found in Eswatini, Ghana, Serbia, Somalia, South Sudan, Uganda and Zambia. Discontinued information portals were found in Azerbaijan, the Republic of Congo, Costa Rica, Eritrea, the Islamic Republic of Iran, Mali, Micronesia, the Russian Federation, Tajikistan and Zimbabwe. close inspection key procedures either are not accessible, refer to physical processes that cannot be conducted online or present other technical barriers that diminish the value of the portal. Such limitations are often revealed only when testing the process through the creation of a dummy company. As observed earlier, business registration is usually the first step in and the basis for wider digitalization programmes. The GER survey results indicate that tax services, social security enrolment and operating licence acquisition are the most common additional services included in online single windows for business and investment facilitation. Together, these services constitute the core mandatory procedures for business establishment. Other, complementary services often provided online on the same platform include the reservation of company names (part of business registration procedures), processes to obtain digital identities or signatures, registrations for statistical purposes and connections with chambers of commerce (figure IV.4). Box IV.5 Investment Facilitation for Development agreement: Digitalization aspects The Investment Facilitation for Development (IFD) agreement encourages the use of digitalization expressly through commitments related to the creation of single information portals for transparency; the acceptance of electronic applications, documents and payments for streamlining; and the establishment of local supplier databases to facilitate investment. In addition to such digital government tools, digitalization can also ensure the effective implementation of other IFD commitments. These include avoiding multiple applications, establishing focal points for informational purposes and providing investors with the opportunity to comment on proposed measures. Investment facilitation commitments can be resource intensive. Under the IFD agreement, developing and least developed countries may designate provisions for which implementation is conditional upon the receipt of technical assistance and capacity-building. Donor-country signatories commit to facilitate the provision of technical assistance for the implementation of the IFD agreement. Both donor and recipient countries can direct such support towards digitalization. Source: UNCTAD, based on the text of the IFD agreement. Chapter IV Investment facilitation and digital government 119 3. Foreign investor-specific online procedures 3 Available on the Investment Policy Hub, at https://investmentpolicy.unctad.org/investment-laws. The distinction between business facilitation and investment facilitation through digital government platforms depends on the degree to which countries require foreign investors to complete additional or distinct administrative procedures to establish their operations. Several scenarios can be distinguished (table IV.1). In most countries, foreign investors follow the same procedures as domestic investors to establish a business. This is the case for three quarters of the 141 countries with an investment law recorded in the UNCTAD Investment Laws Navigator.3 The same information portals and single windows created for domestic firms therefore also serve foreign investors. This can be especially beneficial for SME foreign investors and entrepreneurs from neighbouring countries (box IV.6).Some countries (16 per cent of those with an investment law) require foreign companies to seek government approval to invest. This authorization, typically referred to as an investment licence or permit, is usually delivered after an evaluation process that considers the investor’s business plan in light of host-country criteria that can range from economic development objectives to national security considerations. This is the case for several small island developing States (SIDS) (e.g. Cook Islands, Kiribati, Maldives, Niue, Papua New Guinea and Solomon Islands), as well as countries in the Middle East (e.g. Iran, Oman, Qatar, Saudi Arabia and the United Arab Emirates) and in Africa (e.g. Ethiopia, Namibia and Somalia). In these cases, digital government solutions need to provide additional services for foreign investors, either through dedicated portals or through separate procedures on the same platform.In other cases, government approval is required for investment in specific sectors only. Where the list of sectors is limited to activities considered sensitive from a national security perspective, as in most developed countries, such approval processes are referred to as FDI screening (UNCTAD, 2023c). In some countries (e.g. China, India, Nepal and Thailand), the approval requirement can extend to a broad range of sectors and aim to protect domestic industries or address other public interest concerns. In this scenario, foreign investors Figure IV.4 Online single windows offer various services in addition to business registration Additional services provided by online single windows, 2024 (Percentage) Source: UNCTAD, GER.co survey. Notes: Includes only Member States of the United Nations. The last assessment for GER.co was undertaken between February and April 2024. Tax registration Social security Business licenses Digital signature Chamber of commerce registration Statistics office registration 66 42 30 14 4 3 World Investment Report 2024 Investment facilitation and digital government 120 Table IV.1 Digital government solutions for foreign investment facilitation are shaped by legislative scenarios Foreign investor-specific requirements and implications for digital investment facilitation Source: UNCTAD. Scenario Description Common business facilitation practices Example countries No distinction Foreign and domestic investors follow the same business establishment procedures General-purpose business facilitation portals Most countries Foreign investment license/permit All foreign investors are required to follow an approval procedure General-purpose business facilitation portals with dedicated digital procedures Papua New Guinea Solomon Islands Separate foreign investment facilitation portals, digital procedures Ethiopia Saudi Arabia Somalia Separate foreign investment facilitation portals, non-digital procedures Lesotho Maldives Sector-specific FDI approval Most foreign investors follow domestic procedures but approval is required in specific sectors based on national security (screening) or other public interest concerns Separate foreign investment facilitation portals, digital procedures France Germany India Nepal Separate foreign investment facilitation portals, non-digital procedures Belgium Canada Thailand United States Foreign investor registry Foreign investors are included in a dedicated registry, often as a prerequisite to obtain the advantages of the investment law (e.g. incentives) Separate foreign investment facilitation portals, digital procedures Bhutan Dominican Republic Separate foreign investment facilitation portals, non-digital procedures Chile Colombia Peru can use business facilitation portals, but with some restrictions or additional requirements in sectors of concern. A small share of countries (11 per cent of countries with an investment law) require foreign investors to register their companies in a dedicated registry, either as an alternative or in addition to registering them as domestic businesses. Registration is typically done at the IPA or investment authority or at the central bank. The purpose of the registration is often to collect statistics on FDI (e.g. in the Plurinational State of Bolivia, Cabo Verde, Colombia, the Dominican Republic and Georgia), or to enable investors to access the benefits of the investment law, including incentives (e.g. in Chile, Nicaragua, Peru and the Bolivarian Republic of Venezuela). The dedicated registry can either be separate Chapter IV Investment facilitation and digital government 121 from a general business registration portal or be connected to or integrated in it. Some countries (17 per cent) impose investment registration requirements on both foreign and domestic investors. The purpose is often to benefit from the provisions of the investment law – which usually applies to both foreign and domestic investment – including eligibility for incentives (e.g. in Cambodia, Chad, Kenya, Malawi, the Philippines and Uganda). Access to the treatment and protection guarantees of the law can be a crucial consideration for investors in their decision to establish and operate in a country, making this registration equivalent to an investment permit. In Angola, for instance, to benefit from the provisions of the Private Investment Law, both domestic and foreign businesses that invest more than $1 million must obtain an investment licence. The provisions include the ability to access land concessions, secure fiscal incentives, transfer funds abroad and obtain other necessary permits. Complex procedures specific to foreign investors usually prompt the establishment of dedicated information portals or online single windows, distinct from those for domestic investors. These different scenarios are reflected in the accessibility to foreign investors of online single windows (figure IV.5). For such investors, portals in developing countries, and especially in LDCs, have comparatively more dedicated services or additional forms or procedures. Most investment laws are adopted in developing countries, whereas developed countries tend to rely instead on general commercial law for business establishment procedures. Nonetheless, accessibility to foreign investors is not actually better in developed countries. Many developed-country single windows prevent foreign investors from carrying out procedures online through requirements such as electronic identities or certified email addresses that can be obtained only through government offices that require residency or physical presence in the country. These requirements often stem from anti-money- laundering legislation or general efforts to curb illicit financial activities. Such legitimate regulatory obstacles to the complete digitalization of business establishment processes are an important reason for the continued relevance of information portals in addition to online single windows. Box IV.6 Burundi: Fueling business creation and regional integration through digital investment facilitation In November 2022, the Burundi Development Agency introduced a digital platform designed to simplify the process of starting a business in the country (EasyBusiness.bi). Developed using the eRegistrations platform of UNCTAD and supported by the World Bank through the Local Development Project for Employment, the platform offers a comprehensive online service for business registration across the country, eliminating the need for entrepreneurs to travel to the capital. The platform has reduced the registration requirements by 70 per cent, which has had a profound effect on the number of businesses being established. Since its launch, registrations have increased by 59 per cent, including a notable rise in participation from foreign individuals in limited liability companies. More than half of these foreign partners are from neighbouring countries, and more than 70 per cent from the region. The introduction of the platform has not only facilitated local business creation but also attracted international interest, fostering economic growth and development in Burundi. Source: UNCTAD. See also https://easybusiness.bi. World Investment Report 2024 Investment facilitation and digital government 122 4. Portal ownership and the role of IPAs Both information portals and online single windows for business and investment facilitation can be managed by different government entities, depending on their scope. In countries surveyed by the GER, over 40 per cent of both types are administered by line ministries, often for economic affairs or for trade and investment (figure IV.6). Investment authorities and IPAs also frequently manage information portals, including for general-purpose business facilitation (not just foreign investor procedures). Transactional online single windows are more commonly managed by business registries and developed as part of the process of automating such registries. The lower involvement of IPAs in the management of online single windows is understandable, as they are not direct owners of the resulting registries. Nonetheless, many IPAs do play a role in the development of online services for investors in their country. Only about one quarter of respondents in the annual UNCTAD IPA survey reported having no involvement of any kind in the development of an online single window for business and investment facilitation (figure IV.7). The rest reported various levels of engagement, ranging from advocacy to advisory roles to participation in government-wide task forces. The result of this active engagement is that IPAs have a generally positive perception of the share of mandatory administrative processes that can be completed online, a perception that contrasts to some degree Figure IV.5 Single windows in developing countries are often more accessible to foreign investors than those in developed countries Accessibility to foreigners of online single windows, 2024 (Percentage) Source: UNCTAD, GER.co survey. Notes: Rules-based barriers pose requirements that are not immediately accessible or available to foreigners (e.g. certified e-identities or work permits). Technical barriers are challenges in accessing the platform at the time of research (e.g. website inaccessible). 25 14 18 43 39 14 22 20 6 25 19 50 6 Developed countries Developing countries (excluding least developed) Least developed countries Fully accessible Dedicated services that redirect to other sites Different forms or procedures Rules-based barriers Technical barriers Chapter IV Investment facilitation and digital government 123 Figure IV.6 Portals are generally managed by government ministries, IPAs and business registries Ownership of information portals and digital single windows, 2024 (Percentage) Source: UNCTAD, GER.co survey. Abbreviation: IPA = investment promotion agency. Ministry Trade and investment Economic affairs Finance Justice Industry Other line ministry Business registry Digital government body Investment promotion agency Chamber of commerce Other 43 15 7 6 5 2 7 25 14 10 3 4 Ministry Economic affairs Trade and investment Finance Industry Justice Other line ministry Investment promotion agency Digital government body Business registry Chamber of commerce Other 44 12 12 7 4 3 6 32 14 3 2 5 b. Single windows a. Information portals Figure IV.7 Only about one quarter of IPAs have no involvement in developing online single windows Role of IPAs in development of online single windows, 2024 (Percentage of survey respondents) Source: UNCTAD, 2024–2026 World Investment Prospects Survey. Notes: The survey, conducted in April 2024, collected 96 responses from national and subnational IPAs. Percentages may not sum to 100 due to rounding. Abbreviation: IPA = investment promotion agency. 26 19 18 18 14 12 No direct involvement Advocacy role Leading development of online single window Part of task force developing digital service Advisory role Leading development of selected digital service with the results of the GER survey. Some 70 per cent of IPAs report that most mandatory procedures for business establishment – including registration, tax and social security enrolment, and operating licence acquisition – can be conducted online in their country, whereas the GER survey of transactional portals shows lower shares for social World Investment Report 2024 Investment facilitation and digital government 124 security enrolment and operating licence acquisition. Either IPAs have lower visibility of requirements that may be sector specific or not immediately urgent in the establishment phase, or these services are provided mostly through separate online systems not connected to an online single window. There is scope for further engagement by IPAs in the development of digital government (see, for example, the proactive role that the Kenyan IPA Keninvest is taking in this regard (box IV.7)). The digital transformation of IPAs is ongoing (UNCTAD, 2023b). They often provide other types of digital investment promotion and facilitation tools, in combination with or separate from information portals that deal purely with administrative procedures. Tools that connect well with typical investment facilitation practices include investor feedback and grievance communication, online databases to support searches for local suppliers, and incentives calculators. Box IV.7 Kenya: Connecting digital tools for investment promotion and facilitation Despite significant advances in digital government services in Kenya, notably through the eCitizen platform, new businesses and investors still encounter multiple, disjointed registration processes and authorizations, including for licences and permits needed to operate in regulated sectors and counties. Although some applications can be completed online, the lack of integration among systems adds significant barriers for investors and entrepreneurs. There is a pressing need for enhanced facilitation to elevate investment levels sufficiently to address interconnected economic, health, security and climate challenges. The Kenya Investment Authority (Keninvest) offers one-stop, in-person services such as assistance with foreign taxpayer registration, electrical grid connection and work permits. However, its services do not extend to crucial permits and licences at the county, sectoral or environmental levels. In addition, it lacks the capability to comprehensively register investment projects online, collect data or provide effective investor aftercare services, which are essential for monitoring and supporting successful investment outcomes. The Kenya Investment Single Window project, being developed by UNCTAD, aims to tackle these issues. It will introduce an online system to streamline the investment process in the country and enhance the Government’s capacity to attract and monitor investments effectively. The system will connect with existing government databases such as the eCitizen portal, the Kenya Revenue Authority’s iTax system and county government portals. This integration will enhance the functionality of existing platforms, making it easier for businesses to navigate the regulatory environment. Source: UNCTAD. See also https://eregulations.invest.go.ke. Chapter IV Investment facilitation and digital government 125 C. Facilitation in national and international investment policies Investment facilitation plays an increasingly prominent role in both national and international investment policies. Facilitation measures are now the largest category of national investment policy measures, and especially important in developing countries. More recent national policy measures refer explicitly to digital government tools. Most modern IIAs and instruments also include facilitation provisions and act as catalysts for the use of digital government solutions. 1. National policies 4 For more details regarding the definition of investment-related policy measures and their classification into less and more favourable to investors, see chapter II, box II.2. 5 The facilitation measures included in this analysis relate to FDI and primarily encompass policy measures enacted through national legislation. They comprise 333 measures implemented across 99 countries, including 23 developed and 76 developing countries, over the past 12 years. Investment facilitation measures have become a key component of the global investment policy landscape, constituting between a quarter and a third of the investment policy measures more favourable to investors that countries adopted over the last decade, and nearly two fifths of such measures in 2023 (chapter II).4 The total number of investment facilitation measures introduced each year has more than doubled since the early 2000s, growing by 150 per cent in developing countries and 82 per cent in developed countries from 2012–2015 to 2020–2023 (figure IV.8).5Streamlining initiatives emerged as the predominant type of investment facilitation measure over the past decade (53 per cent), followed by facilitation services (31 per cent) and transparency initiatives (16 per cent). This trend was similar across developing and developed regions. During the second half of the 2010s, digital tools emerged in investment policy measures. Digital investment facilitation services, absent from the measures adopted between 2012 and 2015, constituted 15 per cent of all investment facilitation service initiatives in 2020–2023. Between the two periods, the share of digital streamlining measures grew from less than 10 to 25 per cent and the share of digital transparency measures grew from 0 to almost 30 per cent (figure IV.9). Transparency measures related to investment included primarily the consolidation of investment-related provisions (for instance, in Fiji and Uzbekistan), the issuance of guidelines on investment legislation (notably in China and India) and the establishment of online investment portals (as seen in Oman and World Investment Report 2024 Investment facilitation and digital government 126 Uruguay). In addition, the recent expansion of investment screening regimes (chapter II) – by itself not among the measures that are favourable to investors – has prompted several developed countries (including Australia, France, the Kingdom of the Netherlands and the United Kingdom), to clarify their investment review frameworks by publishing guidelines. Streamlining initiatives span a wide array of measures designed to simplify and modernize investment policies and administrative procedures. Non-digital measures include the simplification of business registration (e.g. in Mauritius, Romania and Viet Nam), licensing procedures (e.g. in Jordan, Mozambique, Peru and the Philippines) and screening mechanisms (e.g. in Canada and New Zealand). They also include the creation of physical one-stop shops (e.g. in Algeria, Mongolia and South Africa). Digital initiatives represented a quarter of streamlining efforts. The largest category was the establishment of digital one- stop shops (10 per cent) or online single windows. Other digital streamlining initiatives encompass the digitalization of various investment-related processes (e.g. the introduction of online applications, forms, certificates and payment facilities). As in the case of transparency measures, several new digital initiatives aim to simplify investment screening processes by introducing portals designed for this purpose (e.g. in France and Germany). Facilitation services provide tailored support from IPAs, SEZs or other entities designed to aid investors in establishing or expanding their operations within a country. During the last decade, measures in this category were evenly split between services related to SEZs and those offered by IPAs or governmental agencies. The latter included services such as alternative dispute resolution mechanisms, visa facilitation, linkage programmes and aftercare services. Digital tools are increasingly utilized in delivering investment facilitation services. This trend strengthened after the COVID-19 pandemic, which saw an expansion in the offering of digital investment facilitation and aftercare services by IPAs, with a sharper focus on promoting linkages between foreign companies and the local economy (UNCTAD, 2020b). Oman, for instance, recently launched an online platform to connect local companies with global investors. In Cambodia, the online supplier database aims not only to link foreign and Figure IV.8 Facilitation measures are increasingly prevalent in national investment policies Facilitation measures by economic grouping and period of adoption (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 15 April 2024. Developing countries Developed countries 50 17 95 16 124 31 2012–2015 2016–2019 2020–2023 Chapter IV Investment facilitation and digital government 127 domestic firms, but also to generate a “sustainable investment cycle” by rewarding and motivating sustainable operations. Traditional approaches to resolving investor grievances are increasingly incorporating digital solutions. The Investment Ombudsman model of the Republic of Korea serves as a prime example (box IV.8). Facilitation provisions are increasingly common not only in investment policy measures and initiatives, as discussed earlier, but also in investment laws. Of 141 such laws currently in force, as recorded by UNCTAD in the Investment Laws Navigator, 64 (45 per cent) include clauses on investment facilitation. These clauses have become more common in laws enacted after the early 2000s (figure IV.10). There are some regional differences; 63 per cent of investment laws in Africa incorporate investment facilitation provisions, but only 20 per cent do so in Latin America and the Caribbean. As in the case of policy measures, investment facilitation provisions in investment laws relate to streamlining, services and transparency (figure IV.11). Transparency provisions are present in 19 investment laws currently in force. They typically commit the State to publishing all laws, rules and regulations concerning investment. Only two such laws emphasize the digital accessibility of such information, and one mandates its publication on the official Government website. Another law requires the online publication of supplementary information relevant for investors, such as socioeconomic data on the country. Streamlining provisions largely involve the establishment of one-stop shops for investors (in 33 of 36 investment laws with streamlining provisions). Most of these one-stop shops serve all investors, but some are tailored specifically to foreign or strategic investors. Only five laws establish Figure IV.9 Digital government tools are increasingly common in investment facilitation measures Measures by type and period of adoption (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 15 April 2024. 7 15 4 21 8 33 3 44 17 58 19 24 30 1 42 7 2012–2015 2016–2019 2020–2023 2012–2015 2016–2019 2020–2023 2012–2015 2016–2019 2020–2023 Non-digital Digital b. Streamlining a. Transparency c. Facilitation services World Investment Report 2024 Investment facilitation and digital government 128 Figure IV.10 Recent investment laws frequently include facilitation provisions Laws by period of adoption (Number) Source: UNCTAD, Investment Laws Navigator database, accessed 14 April 2024. Before 1988 1988–1999 2000–2011 2012–2023 6 11 29 22 13 31 29 With faciliation provisions Without facilitation provisions Box IV.8 Republic of Korea: Digital solutions improve investment grievance settlement The Republic of Korea pioneered the institutionalization of an ombudsman mechanism for resolving foreign investment-related grievances. The Office of the Foreign Investment Ombudsman (OFIO), introduced in 1999, acts as a grievance resolution centre and advocacy body for foreign investors. Its digital portal offers a real-time grievance management system, enabling foreign companies to report issues and monitor case progress online. The portal also allows virtual meetings with experts, who then coordinate solutions with relevant ministries or organizations. The digitalization of OFIO services has accelerated the exchange of information with public entities, which is critical for resolving foreign investors’ grievances. From 2018 to 2022, OFIO settled 1,746 grievances, contributing to an increase in decisions to reinvest and a better business environment. This support resulted in $1.73 billion in reinvestment in 2022 alone. These results have led several countries, including Brazil, Kazakhstan and the Russian Federation, to adopt similar investment ombudsman mechanisms. Source: UNCTAD, based on information from the Office of the Foreign Investment Ombudsman and the Korea Trade- Investment Promotion Agency. Chapter IV Investment facilitation and digital government 129 digital one-stop shops. Additional provisions to streamline investor processes include simplifying administrative procedures, promoting digitalization and establishing maximum timelines for government processes related to investment. Facilitation services provisions in investment laws encompass alternative dispute resolution (22 laws), including mediation, conciliation and dedicated mechanisms for resolving investment-related grievances, such as investment ombudsmen. They also include investor support services by IPAs or other agencies (12 laws). These services comprise counselling, administrative assistance for permits and licensing, visa facilitation for investors and skilled workers, and assistance in access to land and utilities. 2. International investment agreements New-generation IIAs increasingly embrace proactive investment facilitation features. Yet, much more is needed to direct facilitation commitments in IIAs towards sustainable investment and to ensure that treaty provisions translate into practical interventions. Recent IIAs increasingly contain provisions aimed at improving the regulatory environment in host countries, encouraging stakeholder engagement, setting up regular cooperation mechanisms between the contracting parties and facilitating investment for sustainable development (figure IV.12). Prominent examples of these provisions appear in treaties and instruments concluded at the plurilateral, regional and bilateral levels. The plurilateral Investment Facilitation for Development (IFD) agreement strongly emphasizes transparency and streamlining of administrative procedures and contains elements to support sustainable development, responsible business conduct and international cooperation. At the regional level, the Protocol on Investment (2023) to the AfCFTA, as well as the Association of Southeast Asian Nations (ASEAN) Investment Facilitation Framework (2021) and the Intra-MERCOSUR Cooperation and Facilitation Investment Protocol (2017), contain proactive commitments to sustainable investment, digitalization and cooperation. At the bilateral level various models promote investment facilitation, including the Cooperation and Facilitation Investment Agreements concluded by Brazil, the Angola–European Union Sustainable Investment Facilitation Agreement (SIFA) (2023) or the framework agreements such as the Australia–Singapore Green Economy Agreement (2022). Digitalization, expressly encouraged in several recent IIAs, can serve as a tool for effectively implementing IIA facilitation commitments. It is the natural implementation mechanism for transparency commitments, the most common facilitation feature in recent IIAs. Figure IV.11 Streamlining and facilitation services are more common than transparency provisions in investment laws Laws with specific investment facilitation measures, 2023 (Number) Source: UNCTAD, Investment Laws Navigator database, accessed 14 April 2024. Streamlining Facilitation services Transparency 19 36 31 World Investment Report 2024 Investment facilitation and digital government 130 Figure IV.12 Recent IIAs include a wide range of facilitation commitments Share of IIAs signed during 2015–2023, by investment facilitation feature (Percentage) Source: UNCTAD. Note: Based on 235 IIAs, 148 BITs and 87 TIPs concluded in the period 2015–2023 for which texts are available. Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with investment provision. Regulatory environment Stakeholder engagement Cooperation mechanisms Sustainable investment Transparency of investment-related measures Entry and stay of personnel Objective application of investment- related measures Regulatory practices and coherence Streamlining of administrative procedures Right to comment on proposed regulatory measures Focal points for investors Institutional framework for cooperation Technical assistance and capacity- building Proactive provisions facilitating sustainable investment 54 37 22 14 7 30 17 46 14 24 Selected features of IIAs Transparency of investment-related measures. Commitment to publish investment-related measures and/or measures that affect the application of the IIA, including online. Right to comment on proposed regulatory measures. Commitment to provide investors the opportunity to comment on proposed measures. Entry and stay of personnel. Commitment to streamline and/or render more transparent procedures for granting entry and stay of investors, including sympathetic consideration commitments. Focal points for investors. Commitment to establish institutions available to investors with information, aftercare, dispute avoidance and/or broader functions. Objective application of investment-related measures. Commitment to objective and predictable application, independence of administering authorities and/or maintenance of appeal and review mechanisms. Institutional framework for cooperation. Establishment of a cooperation mechanism under the IIA, including for contracting parties’ institutions responsible for investment. Streamlining of administrative procedures. Commitment to eliminate redundant bureaucratic steps and clarify the administrative process, including through digitalization and eGovernment tools. Regulatory practices and coherence. Encouragement of good rule-making practices (e.g. regulatory impact assessment, periodic review) and/or inter-agency coordination. Technical assistance and capacity-building. Reference to technical assistance and/or capacity-building activities in the IIA. Proactive provisions facilitating sustainable investment. Commitment to proactive measures aimed at promoting and facilitating investment linked to the Sustainable Development Goals (e.g. environment, health, climate action). Chapter IV Investment facilitation and digital government 131 It can also operationalize IIA commitments to streamline investment administrative procedures and improve stakeholder engagement. Recent treaties increasingly encourage digitalization or include commitments regarding online information provision or single windows (figure IV.13). Over half of all IIAs signed since 2015 contain a commitment to publish investment-related measures. Such transparency provisions are among the earliest investment facilitation commitments to appear in IIAs, and the share of IIAs that contain them has grown steadily. IIAs commonly extend this commitment to proposed measures and at times include a detailed indicative list of measures to publish. These can cover regulations directed specifically at investors, such as incentive schemes, as well as measures or laws that are likely to affect investments indirectly, such as regulations concerning corporate governance, insolvency, property or taxation. Examples of such detailed provisions can be found in the Angola– European Union SIFA, the IFD agreement, the Türkiye–United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA) (2023) and the ASEAN Investment Facilitation Framework, among others. These treaties illustrate the catalytic role that international agreements can play in the adoption of facilitation measures and digital government tools – an effect already observed with the WTO Trade Facilitation Agreement (box IV.9). Digital government tools are the most effective way to operationalize transparency commitments. About half of IIAs with transparency provisions signed in the Figure IV.13 IIAs increasingly encourage digitalization Facilitation provisions in IIAs that refer to digital tools (Percentage) Source: UNCTAD. Note: Based on 131 IIAs, 70 BITs and 61 TIPs concluded in 2015–2023 that contain at least one facilitation provision. Data based in part on International Economic Law Clinic (2024). Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with investment provision. 2015–2016 2017–2018 2019–2020 2021–2023 36 40 47 60 World Investment Report 2024 Investment facilitation and digital government 132 past five years contain a commitment to online publication, and several expressly encourage the contracting parties to create a digital information portal. For example, under the Angola–European Union SIFA, each contracting party commits to make a wide range of information available to investors by electronic means and, where practicable, through a single portal. A key national policy component that recent IIAs have begun to incorporate is the simplification and streamlining of investment-related administrative procedures. These provisions usually aim to eliminate redundant bureaucratic steps and to clarify the administrative process for investment-related application procedures. They often require a reasonable time frame and cost for licence applications, encourage countries to consolidate the application process under a single agency and establish certain procedural commitments for the application process. Recent examples include the Angola–European Union SIFA, the China–Ecuador FTA (2023), the IFD agreement, the Türkiye–United Arab Emirates CEPA and the ASEAN IFF. More recently, treaty partners have also begun to commit to streamlining procedures in the energy sector to support energy transition efforts or to facilitate investment in the energy transition (see the AfCFTA Investment Protocol and the European Union–New Zealand FTA) (UNCTAD, 2023d). Another provision that can benefit from digitalization is the streamlining of procedures for the entry and stay of investors and key personnel (see, for example, the Regional Comprehensive Economic Partnership Agreement (2020) and the Israel–Republic of Korea FTA (2021)). Box IV.9 Information portals for trade Transparency in import, export and transit procedures is essential for businesses to ensure predictability in cross-border trade. Despite progress in trade facilitation, many companies – particularly micro, small, and medium-sized enterprises (MSMEs) – still find it challenging to complete trade formalities and documentation. The challenge often arises from a lack of transparency, cumbersome and redundant procedures, and uncoordinated legal frameworks, causing businesses to spend excessive time and resources to comply with trade and customs procedures. The WTO Trade Facilitation Agreement includes transparency provisions that require members to make certain information available online, such as detailed descriptions of import, export and transit procedures; required forms and documents; and contact information for enquiry points. Although the Agreement does not specify that this information be centralized, it is most effective when presented on a user-centric website that offers comprehensive, step-by-step guides to trade-related procedures. Building on extensive experience in developing digital solutions for business and investment procedures, UNCTAD has created a model Trade Information Portal. This online tool aims to enhance transparency and assist traders by simplifying the completion of international trade procedures. Launched first in Kenya in 2017, the portal has proven effective. Traders have seen reductions in time and costs to access information about clearance procedures. By 2022, the National Trade Facilitation Committee of Kenya had simplified numerous procedures through the portal, eliminating steps and required documents and moving several processes online. The UNCTAD Trade Information Portal model, which is based on the eRegulations technology, emphasizes presenting information from the user’s perspective and providing step-by-step guidance for all import, export and transit procedures. To date, this approach has been implemented in 28 countries, significantly aiding traders by simplifying and demystifying the required legal and procedural steps. Source: UNCTAD. See also https://digitalgovernment.world/trade-information-portals. Chapter IV Investment facilitation and digital government 133 Digital government solutions can help eliminate redundant bureaucratic steps and streamline the administrative process. The AIFF (2021) offers a regional example in which parties endeavour to establish and maintain single online digital platforms for investor applications. Similarly, at the bilateral level, the Türkiye–United Arab Emirates CEPA contains a commitment to work towards the “the highest possible level of digitalization of procedures related to investments”. Parties also refer to measures that have proven to be effective, such as one-stop shops, single portal submissions or commitments to accept the submission of electronic applications, documents and payments (see the AfCFTA Protocol on Investment and the Angola– European Union SIFA, among others). Used strategically, digitalization can not only improve the overall investment climate but also contribute to operationalizing IIA provisions aimed at facilitating sustainable investment. For example, to render tangible recent IIA commitments to facilitate investment in renewable energy, parties may prioritize the digitalization of licencing processes related to construction of energy installations or laying of cables, disbursement of renewable energy incentives or connections to electricity grids (UNCTAD, 2023c). About 30 per cent of IIAs signed since 2015 include a commitment to offer investors and relevant other stakeholders the opportunity to comment on proposed investment-related measures (see for example the Australia– United Kingdom FTA (2021)). Some 17 per cent also require the creation of focal points for investors, with informational or grievance functions. Examples include the Cooperation and Facilitation Investment Agreements of Brazil, the intra-MERCOSUR Protocol on Investment Facilitation and the Regional Comprehensive Economic Partnership Agreement (2020). Some recent IIAs also encourage the establishment of local supplier databases (see the Angola–European Union SIFA and the IFD agreement, which are by default digital) (box IV.2). The use of digital tools can improve the efficiency of all these commitments, as well as their accessibility, including for underrepresented economic actors and civil society. The work of focal points can be optimized by, for example, a first-response automated chat assistant for simple information requests and a mechanism to direct grievances to relevant officers, which allows an overall higher number of inquiries to be processed. Similarly, maintaining an online portal for investor and civil society comments on proposed investment-related measures can allow a broader range of stakeholders to access it and improve the efficiency of collecting, processing and disaggregating comments. World Investment Report 2024 Investment facilitation and digital government 134 D. The impact of investment facilitation and digital government Digital investment facilitation has positive effects on governance and institutions, business creation and investment attraction. It can support the promotion of sustainable investment, although facilitation measures are difficult to target. Much of the sustainable development impact occurs through business facilitation, which contributes to the formalization of local firms, domestic resource mobilization and higher rates of inclusivity and participation in the MSME sector. Systematic research on the impact of investment facilitation on FDI is both scarce and difficult to conduct because of the limited data available on investment facilitation measures, the interlinked nature of investment facilitation measures with other policies and the interdependencies of effects with other factors that affect FDI flows. The lack of conclusive evidence and of a definitive estimate of impact has not stopped policymakers from pursuing investment facilitation efforts in international initiatives and national policy measures. It is generally accepted that investment facilitation is an important component of a conducive business environment, long identified as one of the three key factors influencing FDI, together with economic and policy determinants (UNCTAD, 1998; Alfaro et al., 2008). Facilitation efforts affect several dimensions of the business environment, including the ease of doing business and the quality of investment institutions, which directly influence the establishment and operations of foreign investors. They further affect institutional factors such as levels of corruption, rule of law and quality of governance, which indirectly contribute to improving the attractiveness of a location for foreign investment. The advantage of investment facilitation is that it often does not require changes in policies or legislation. Most investment facilitation practices, from information provision to transparency and streamlining, are about how rules and regulations are communicated and applied and how easy they are to comply with, rather than their substance. Therefore, unlike other FDI determinants, investment facilitation measures often require less policy space (such as for policy determinants) and do not rely on economic conditions (such as for economic determinants). The relevant literature on FDI determinants substantially supports the attractiveness of investment facilitation measures as policy tools for increasing FDI. Empirical studies have reached broad consensus on the fact that countries with better business environments are more likely to attract higher FDI flows. The impact of investment facilitation measures – as measured through their effect on the business environment – is likely to be economically sizeable. An early simulation by UNCTAD – used to underpin its Global Action Menu for Investment Chapter IV Investment facilitation and digital government 135 Facilitation (UNCTAD, 2016) and based on a World Bank study analysing the relationship between FDI and the number of procedures to start a foreign business – suggests that aligning developing countries to the median level of administrative complexity (i.e. reducing procedural complexity in countries above the median) would be associated with an average increase in aggregate FDI stock of 20 per cent. Older studies corroborate the finding (Jayasuriya, 2011; Anderson and Gonzalez, 2013). Investment facilitation measures can also contribute to inclusive and sustainable development. Because of their relatively low cost (compared with, for example, subsidies, incentives or the construction of SEZs), they are expected to disproportionally benefit smaller and resource-poor economies, and in general those that have few other levers to attract FDI. The positive effect of facilitation practices on governance and institutions would benefit countries with weaknesses in these areas relatively more. Furthermore, investment facilitation measures will support FDI in manufacturing and services more than in extractives (FDI that is mostly resource-seeking and less sensitive to other determinants), thereby contributing to economic diversification. Finally, facilitation measures will have a greater impact on FDI by SMEs, which tend to be disproportionately hindered by administrative hurdles. Promoting sustainable development through investment facilitation is not automatic, despite the prominence of sustainable development objectives in international agreements and instruments, including the recent IFD agreement. Targeting investment in sectors that contribute more to sustainable development, or investors with more sustainable operations, can be done through typical investment promotion measures such as incentives, which can be applied selectively and made conditional on specific criteria. It is more difficult to envisage providing information or transparency selectively. The logic and the economies of scale of typical investment facilitation measures would normally dictate that they are applied across the board. The main lever that governments can use to support sustainable development through investment facilitation is to sequence the implementation of sector-specific streamlining measures, prioritizing relevant sectors (e.g. operating licences in the health sector or planning permits in the renewable energy sector). Digital government solutions for business and investment facilitation, for the most part, just reinforce the effects of such efforts. First and foremost, they tend to focus implementation efforts on the aspects of investment facilitation that are likely to have the greatest direct impact on investment attraction and business creation. Common provisions in investment facilitation policies or treaties include elements such as investor focal points, dispute prevention mechanisms and stakeholder engagement. While these are important benefits for investors and they have the potential to improve governance, institutions and the investment climate in the long run, none are as immediately and continuously relevant to businesses and investors as accurate information, transparency of rules and regulations, and streamlined, efficient and effective administrative procedures – all of which feature prominently in every objective assessment of the relative attractiveness of business and investment climates across countries. Improvements in government digitalization more broadly, including in areas beyond business and investment facilitation, can also positively influence the investment climate in a country (Al-Sadiq, 2021). Research has shown a positive correlation between digital government services and FDI inflows, stemming from streamlined procedures, improved information access, heightened government efficiency, reduced corruption and cost-saving mechanisms made possible through the consolidation of services on a single platform (Opertti and Volpe Martincus, 2023). Countries that rank in the top quartile of the EGDI receive more than 10 times the World Investment Report 2024 Investment facilitation and digital government 136 average inward FDI flows per capita as those in the bottom quartile (UNCTAD, 2024a). The same ratio holds for gross fixed capital formation. This is, of course, largely explained by the fact that the EGDI rankings correlate closely with GDP per capita and the development status of economies, with mainly higher-middle-income developing countries in the top quartile, and LDCs typically in the lower quartiles. Similar but more nuanced results derive from correlating investment, business creation and institutional quality with the UNCTAD GER ratings, which are less obviously aligned with development levels and allow for LDCs to leapfrog higher- income countries in the quality of their information portals and online single windows. On average, GER ratings still fully align with institutional quality (as measured by the World Bank’s Governance Index; figure IV.14), but the differences between the top three quartiles become marginal, with significant variance within the top quartiles. Those quartiles combine more advanced developing economies with some LDCs that have created – often with technical support, including from UNCTAD – high-quality online single windows. The same analysis of business creation rates also shows a positive correlation between the presence and quality of information portals and single windows for business and investment facilitation and the establishment of new firms (figure IV.15). Average rates of business creation in the top three quartiles are again very similar, and the rate in the top quartile is slightly below that in the second quartile, as a result of a combination of lower rates in some LDCs and in several higher-income, already more mature, developing economies. Comparing GER ratings with FDI attraction rates makes the influence of several leapfrogging LDCs in the top quartile even more pronounced than for business creation rates (figure IV.16). The low levels of FDI in these LDCs brings down FDI performance in the group of countries with the best digital government tools for business and investment facilitation by a significant margin. Evidently, high-quality Figure IV.14 Digital investment facilitation is associated with higher institutional quality Institutional quality index by GER quartiles, developing countries, 2022 Sources: UNCTAD, GER.co, and World Bank Governance Indices (2022). Notes: Quartiles were constructed from the average score between information portals and single windows from GER.co data for 2024 (or latest available) in developing countries. The institutional quality index represents the average for indicators of government effectiveness, regulatory quality, rule of law, and control of corruption on a scale from -2 to 2. It assigns higher scores to countries with better institutional quality, according to ratings by non-governmental organizations and international organizations. For better representation, a linear transformation was applied to regulatory quality scores. 1.35 1.4 1.45 1.5 1.55 1.6 1.65 1.7 Bottom quartile 4 Quartile 3 Quartile 2 Top quartile 1 Chapter IV Investment facilitation and digital government 137 Figure IV.15 Digital investment facilitation is associated with higher rates of business creation New business index by GER quartiles, developing economies, 2016–2022 Sources: UNCTAD (GER.co) for ratings and World Bank (Entrepreneurship Database, 2016–2022) for business creation. Notes: Quartiles were constructed from the average score between information portals and single windows from GER.co data for 2024 (or the latest available) in developing countries. The new business creation index is measured as the number of newly registered companies with limited liability over the total number of companies with limited liability in the same year (average, 2016–2022). In case of missing data for the total number of companies with limited liability, the observation from the year before plus the number of newly registered companies was used. One outlier (Mauritania) was removed from the first quartile. 0.102 0.104 0.106 0.108 0.11 0.112 0.114 0.116 Quartile 3 Quartile 2 Top quartile 1 Bottom quartile 4 Figure IV.16 Digital investment facilitation does not automatically lead to more FDI Inward FDI as a percentage of GDP by GER quartiles, developing countries, average 2021–2023 Sources: UNCTAD for FDI inflows, UNCTADstat for GDP data, and GER.co for ratings. Notes: FDI is the average of FDI flows between 2021 and 2023. GDP is the average between 2021 and 2022 (latest year available). Abbreviations: FDI = foreign direct investment, GDP = gross domestic product. Bottom quartile 4 Quartile 3 Quartile 2 Top quartile 1 0 0.01 0.02 0.03 0.04 0.05 0.06 World Investment Report 2024 Investment facilitation and digital government 138 Box IV.10 Impact assessments of digital government tools for business facilitation Insights from post-implementation reviews of UNCTAD technical assistance programmes in business facilitation underscore that the ability to register a business online represents a critical step for business creation. It eliminates a significant barrier to formalization and alleviates the need for MSMEs to visit central government offices, thereby improving acccess, enhancing consistency in service delivery and reducing corruption risks. Governments also reported the following benefits: • Higher rates of formalization of local businesses, and creation of more businesses (local and foreign) overall • Reduced time, costs, forms and documents required for creating and operating a business • Positive effect on women, young people and rural populations, who previously faced greater obstacles with traditional paper-based and urban-based business registration procedures • Increased tax, social security and other government revenues, with single windows paying for themselves in two to three years from additional fee generation alone • Greater formal sector employment opportunities • Better data on the business sector, enabling more targeted and inclusive policies, particularly if cross-referenced with tax and social security data • A more client-friendly approach in government administration • Enhanced trade and development, through the use of digital information portals for importers and exporters Impact measurements of selected projects after the implementation of online single windows for business and investment facilitation show positive effects on the participation of women and young people in the economy. Impact on women: • In Benin, one third of business owners registering online are women. • In Bhutan, 52 per cent of those applying to register their companies are women. • In El Salvador, 56 per cent of business owners registering online are women. • In Lesotho, before online registration was possible, women held 26 per cent of business permits. Afterward, that figure rose to 34 per cent. Impact on young people: • In Benin, registration by young people (age 18–30) increased 181 per cent in the first two years of operation. • In Mali, registration by young people increased 263 per cent after implementation. Source: UNCTAD. information portals and online single windows in and by themselves do not lead to higher FDI inflows. Improvements in governance and institutions take time to affect investor perceptions, and other fundamental FDI determinants – ranging from macroeconomic and political stability to market size and income levels, labour costs and the quality of physical infrastructure – are ultimately more important. The comparison of the correlations of GER data with business creation rates, on the one hand, and FDI attraction on the other can be considered a confirmation that the benefits of business and investment facilitation are more significant for domestic firms than for international investors (box IV.10). The latter tend to have more resources for engaging local advisers to support compliance with regulatory requirements and to navigate administrative procedures. Domestic MSMEs and informal businesses stand to gain much more from streamlined procedures for business formalization – hence the insistence by UNCTAD on combining, as much as possible, digital government tools for business facilitation and investment facilitation, and synergizing programmes for private sector development and investment attraction. Chapter IV Investment facilitation and digital government 139 The sustainable development impact of business and investment facilitation measures is also often more tangible through their effect on domestic businesses and MSMEs. The effect on formalization rates is significant, which contributes to domestic resource mobilization. There can also be positive effects on participation rates for women and vulnerable groups in the economy, and for rural populations, owing to easier access to information through remote access to government services. Finally, the analysis for this report empirically evaluated the influence of the quality of online business registration portals on FDI inflows in a cross-country data regression model. Each additional point in the GER score is associated with 8 per cent more FDI. The effect is stronger for developing than for developed countries, presumably because of higher marginal gains in governance and institutional quality. These results are corroborated by other studies, which consistently find a positive correlation between a favourable business environment and FDI inflows. For instance, a unit increase in the (now defunct) Doing Business rankings leads to higher FDI inflows, by $300 million (Jayasuriya, 2011); moving 1 percentage point closer to the frontier regulatory environment is associated with an increase in annual FDI of between 250millionand500 million (Anderson and Gonzalez, 2013). More recent studies suggest that a reduction in procedural complexity in countries leads to higher FDI inflows of about 4 per cent within the first two years following the implementation of digital tools (e.g. World Bank, 2017). These findings highlight the importance of streamlined administrative processes in attracting investment. Empirical analyses specifically focusing on digital government find that accessibility to government information and services online, as measured by the eGovernment Survey Index of UN DESA, is associated with about a 2 per cent increase in FDI per capita inflows, on average (e.g. Al-Sadiq, 2021). The positive relationship between online digital government tools and FDI is attributed to streamlined procedures, enhanced access to information, improved government efficiency, reduced corruption, and cost-saving mechanisms facilitated by service consolidation on unified platforms (Lögün, 2020; Máchová et al., 2018; Al-Sadiq, 2021). Figure IV.17 Higher-quality digital investment facilitation is associated with more investment Impact of gains in GER ratings on inflows, average 2021–2023 (Percentage) Sources: UNCTAD for FDI inflows, UNCTADstat for GDP data and GER.co for ratings. Notes: Depicts the marginal effects (semi-elasticities) of higher quality of information portals and single windows on FDI inflows. Vertical lines represent confidence intervals at the 90 per cent level. Predictions based on an ordinary least squares cross-country model, with robust standard errors. The independent variable is the average rating between information portals and single windows in 2024 (or latest available); controls include population (2021), GDP (2021) and development status. -10 -5 0 5 10 15 20 Developing countries World World Investment Report 2024 Investment facilitation and digital government 140 E. From online business facilitation to digital government The basic architecture of digital government solutions for businesses and investors is fundamentally the same across many types of services. Thus, expanding their scope to cover more services helps capture economies of scale and scope. Effective implementation requires accurate documentation and thorough simplification of procedures, and a focus on putting in place enabling legislation rather than reforming the laws underpinning the procedures. For developing countries, using digital business and investment facilitation to strengthen public administration more broadly is an important opportunity. 1. The basic architecture of digital government services Investment operations encompass a range of administrative requirements, including company registration, obtaining various licences and permits (such as investment, business activity, environmental and building permits), property acquisition registration, compliance with social security, pension schemes and tax obligations at both national and local levels (UNCTAD, 2023e). The administrative processes associated with these obligations all follow a similar pattern. Investors submit the necessary data, documents and payments to one or more administrative bodies. The application file is reviewed by the respective administrations. Upon approval, the data provided is recorded in a registry, and a formal certificate – whether called a licence, permit, registration, declaration or authorization – is issued. The application file consistently comprises three fundamental elements: data (entered on a form), documents (such as proof of registration in other registries, identity cards and authorizations) and payment. The processing involves a varying number of operators within the authorizing entity that assess the file until it is either approved, rejected or returned for correction or requests for additional information. The registry where the information is stored can take various forms, ranging from a physical logbook to a spreadsheet or an online database. Building on this standard administrative pattern, the basic architecture of digital government services mirrors the sequence of steps through a series of online interactions (figure IV.18). An online service is a succession of screens and actions actions through which the applicant can complete a form, upload the necessary documents, make a payment, and submit the application. Subsequently, one or more operators review the application file, deciding to either approve or reject it. Once approved, the applicant’s data are transmitted to an online registry, and a digital registration certificate is issued. Once the application – a platform or interface – has been put in place to manage Chapter IV Investment facilitation and digital government 141 Figure IV.18 Basic architecture of digital government service Source: UNCTAD. Online service (register, modify, cancel, consult) Government portal Registry Access to services Authentication User account Data (form) Control 1 Control n Generate certifcate Documents Payment Create Update Delete Consult interactions with users, the processing components that constitute the actual service have been developed, and a database or registry has been created to manage a particular service such as the registration of a company name, services can be added with essentially the same tools. A single service such as business registration will usually already comprise a “family” of services or multiple versions of itself for different types of legal entities, such as sole traders, limited liability companies, and branches or subsidiaries of foreign firms. But services can equally be extended to other areas, such as construction permits, operating licences or obtaining social security or tax registration numbers. Digital government services are often developed through a series of evolutionary steps. Initially, each government agency tends to develop its own digital services independently, leading to a collection of uncoordinated processes. This fragmentation forces users to interact separately with each agency, inputting the same information multiple times. Such set-ups lead to discrepancies in user data across different registries, as updates in one are not reflected in others. If an agency requires verification of a permit from another, it typically requests a physical copy from the user. 6 See https://e-estonia.com/solutions/x-road-interoperability-services/x-road. To improve efficiency, some systems allow agencies to share applicant data among themselves; an example is X-Road in Estonia.6 While this reduces redundancy – applicants do not need to provide the same information multiple times – it still requires them to initiate applications with each agency separately. This model enhances the user experience and ensures data quality but depends heavily on inter-agency cooperation, which can be a limiting factor. An integrated services approach further consolidates the user experience by enabling applicants to interact simultaneously with multiple agencies through a single service. Applicants fill out one form, upload documents once and make a single payment, even as their applications are processed separately by each relevant agency. In this system, which ensures data consistency, agencies interact seamlessly and offer a unified service to the applicant, but they continue to operate independently. A new approach that holds promise for the future is a fully user-centric model in which the applicant is placed at the centre of public administration (figure IV.19). All personal and official data, such as registrations and permits, are consolidated in an online “safebox” that is accessible to any government agency the user has dealings with. This fundamentally changes how data World Investment Report 2024 Investment facilitation and digital government 142 are managed, by eliminating the need for applicants to submit data or documents multiple times. Instead, applicants simply grant agencies access to their safebox, where all required information is stored and continually updated. Rather than issuing traditional certificates, agencies validate the data directly within the safebox, streamlining processes and ensuring that all information remains accurate and current. Several novel technologies are being developed to bring the user-centric model closer to reality, such as systems that allow users to manage access and usage permissions for their data, and blockchain-enabled verifiable credentials to improve data security. Looking at these advanced models and configurations is especially helpful for countries that are at the early stages of developing digital government, those that have relatively few legacy systems in place with limited sunk costs, and those where basic services in support of business entities of any size can make an immediate and sizeable difference in the quality of public administration and the ease of doing business. 2. Effective implementation Facilitation is fundamentally about simplifying compliance. It ensures that administrative procedures are transparent, clearly understood and designed to require minimal effort from users. The adoption of good business and investment facilitation practices demands a significant shift in mindset within public agencies – from a traditional focus on control and enforcement, which primarily aims to prevent fraud and detect violations, to a supportive role that helps firms meet administrative requirements. The initial step involves first acknowledging that administrative procedures pose challenges for firms – whether foreign or local, large or small – and then conducting an uncompromising analysis of the underlying causes. The root causes of administrative complexity are mostly not in the rules but in the way they are applied. Rules can be interpreted differently by different parts and levels of government. Procedures will vary across different agencies and local authorities. They evolve over time depending on the risk aversity and control mindset of Figure IV.19 Evolution of digital government services Source: UNCTAD. Agency 1 Agency 2 Agency 3 Service 1 Service 2 Service 3 Agency 4 Agency 5 Agency 6 Integrated service (4, 5, 6) Agency 1 Agency 2 Agency 3 Service 1 Service 2 Service 3 Chapter IV Investment facilitation and digital government 143 individual civil servants, or in reaction to occasional instances of malfunction or malfeasance. The design of procedures to implement rules often prioritizes form over substance, causing them, over time, to depart from the original intent of the rule. It is therefore important to differentiate between administrative procedures – which include the interactions, forms, information and payments demanded by administrations to enforce laws – and the actual laws they aim to implement. Typically, administrative procedures are more complex than the laws they are based on, often incorporating unnecessary conditions and delays. Streamlining administrative procedures, in the vast majority of cases, does not necessitate changes to the law. It mostly represents a more efficient and effective application of the law. From a practical perspective, the implementation of digital government services involves three main steps: (1) accurate documentation of the procedure that is to be brought online in its existing form; (2) design of the online service, including, where possible, the streamlining of the procedure; and (3) implementation of the online service. Documentation of the procedure for which the digital government solution is being developed requires the involvement of administrative officers from the entities involved in the relevant registration or authorization processes. It does not require any technical expertise on information technology (IT) or online systems. Instead, it requires detailed knowledge of the step-by-step process that the user of the service needs to follow to obtain the desired certification. The result should be a breakdown of the steps, and for each step a detailed mapping including the entity with which each transaction takes place, the requirements for each transaction (e.g. information to provide, documents to submit, fees to pay), the possible scenarios that follow (e.g. further information or documents needed, referrals to other entities), the results of the transaction (e.g. rejections, certifications), possible complaints or recourse procedures, and the legal basis for each transaction and administrative requirement. The latter element is needed to distinguish between the requirements and controls actually required by the law and those that have been added over time by implementing agencies, as well as to identify discretionary aspects of procedures. The administrative officers responsible for providing the service will be familiar with individual procedures, yet they may be limited in their ability to oversee the complete process from the user’s perspective. Very often, only after a detailed mapping of the process does it become clear that the process has many unnecessary complexities, redundancies and overlaps, such as the need to visit the same entities in different steps or the need to supply the same information or document multiple times. Officers may also not be trained in process documentation techniques; an important part of capacity-building programmes in this area is not about IT, but about process mapping and design. Design of the online service is still not driven primarily by IT, although it is important to involve project managers who are used to translating rules and administrative requirements into “code” – logical instructions that cover every eventuality of the transactions involved (box IV.11). A service is usually not designed to exactly mirror the physical procedure, because the inefficiencies identified during the documentation process can be reduced through a process of streamlining. Simplification means focusing on those requirements and controls that are required by the law, minimizing information and documentation required at each step, and regrouping or resequencing steps. Ultimately, the design of the online service involves creating a database by defining exactly what fields of data are required, designing the user form and document upload page, creating approval roles for administrative officers and integrating World Investment Report 2024 Investment facilitation and digital government 144 online payment (often using a commercial provider of online payment services). Implementation of the online service involves not only the installation of the technical elements of the system – through either physical servers or cloud-based providers – but various other aspects, including the management of the transition process, with each entity responsible for the relevant registrations or authorizations, the training of operators in charge of approvals or controls, and others who will assist the public or staff call centres, the testing of the system using real cases and focus groups, and a communication campaign. Institutional capacity-building, both on the service documentation and design process and, subsequently, on the operation of the system, is crucial to ensure continued service development and the gradual expansion of digital government to cover all services to business. In this process, effective communication on the positive impact of digital investment facilitation is crucial to maximize buy-in from implementing agencies and to overcome resistance. In Benin, the tripling of business creation also tripled fee income, generating more jobs for government workers (box IV.12). In Lesotho, staff using a digital business licensing system reported greater satisfaction as their role shifted from processing forms to advising clients. In Bhutan, government staff involvement in developing new online services expanded their skills and responsibilities, providing additional motivation. Digital tools, by better capturing data on business creation, including user demographics, enable policymakers to understand the impact of investment facilitation, measure effects on communities and ensure inclusivity. Box IV.11 Bhutan: Empowering civil servants to design their own digital services In 2021, the Government of Bhutan introduced a groundbreaking government-to-business digital portal specifically tailored for cottage and small industries, using the customizable digital platform of UNCTAD. This initiative targets firms valued at less than $14,000, which represent 95 per cent of the country’s economy. The process is streamlined and user-friendly: entrepreneurs can complete a simple form on a mobile phones and receive all necessary registration documents instantly and free of charge. The impact was significant: in 2022, about 1 per cent of the population, or 5,500 people, used the service to register a business. This marked a threefold increase in the registration rate, with women making up 52 per cent of the new users. This surge reflected a significant transformation in public administration and set a benchmark for digital government worldwide. The platform empowers civil servants who, after initial training, can independently customize the digital platform to add online services. These services now encompass a wide array that includes bus service permits, drone flying authorizations and industrial park leases. This approach helps civil servants empathize with users, enhancing their understanding of potential bottlenecks and frustrations in the process. The Government plans to expand the platform over the next two years to include all permits, authorizations and procedures. The system could extend to encompass all government departments, allowing civil servants to shift their focus towards more strategic tasks by alleviating administrative burdens. This strategic development has boosted economic diversification and new businesses, tripling formal employment opportunities, demonstrating the impact of digital transformation on economic growth and public administration efficiency. Source: UNCTAD. See also https://unctad.org/news/bhutans-entrepreneurs-can-now-open-business-under-minute. Chapter IV Investment facilitation and digital government 145 Box IV.12 Benin: Using digital government to promote sustainable impact and inclusivity Since 2020, the Investment and Export Promotion Agency of Benin has used the digital government platform of UNCTAD to streamline the registration process for foreign and domestic companies. It allows businesses to handle all registration steps, including for tax and social security, from a mobile phone. Users fill in one form, scan and upload documents, and pay with a credit card or mobile money, reducing the time required from five days to just two hours. The implementation of the digital platform (monentreprise.bj) nearly tripled the number of business registrations. the number of business registrations. Notably, a third of these new business owners are women, half are under age 30 and half are located in rural areas, indicating broad demographic reach. Interviews with users revealed that the system not only facilitates business creation but also helps in business formalization. Formalized businesses report greater ease in hiring qualified staff, accessing credit, obtaining insurance, receiving formal training and exporting to members of the West African Monetary Union. The revenue generated from the increased number of registrations has provided the Agency with additional funds. These funds have been used to expand staff, enhance outreach to entrepreneurs and invest further in improving the system, fostering a sustainable impact and inclusivity in the country’s business environment. Source: UNCTAD. See also https://www.gouv.bj/article/512/lapiex-lance-monentreprise.bj. 3. Connecting with wider digital government The prevailing guidance on digital government implementation favours a centrally driven approach based on a national digital government strategy and supported by a digital government authority or unit. For example, the Recommendation of the Council on Digital Government Strategies of the OECD (2024) recommends the development of a digital government strategy aligned with other sectoral strategies; government-wide coordination mechanisms; development of digital skills, job profiles, technologies, contracts and inter-agency agreements; and review of legal and regulatory frameworks. A World Bank (2016) report, which notes that 30 per cent of digital government projects fail and that only 20 per cent are considered successful, explains that this imbalance is due not only to technical issues such as inadequate infrastructure, interoperability and cybersecurity risks, but also to policies, legal frameworks and institutional factors. The e-Government Survey of UN DESA (2022) measures factors such as the presence of legal and institutional frameworks as the basis for effective implementation. Technical assistance and capacity-building by development agencies generally provide overarching assessments of digital government readiness and associated policy advice. Several practical experiences illustrate how central steering can be important: • Digital government strategies. Successful digital initiatives are often underpinned by a comprehensive strategy. Bhutan and Uruguay exemplify this approach, with their strategic frameworks for digitalization. Bhutan launched its eGovernment Master Plan in 2014, and Uruguay initiated its digital agenda with an eGovernment section in 2007, culminating in 2021 in the Plan de Gobierno Digital 2025. • Digital government entity. The creation of institutions to manage and coordinate digital strategies can provide valuable steering. In Benin, the consolidation of digital strategy entities into the Agency for Information Systems and Digital in 2022 and in Uruguay the establishment of the Agency for Digital Government, Information Society and Knowledge in 2005 are notable examples. World Investment Report 2024 Investment facilitation and digital government 146 • Legal and regulatory framework. The development of effective digital services can be accelerated by enabling legislation in such areas as personal data protection, digital payments, e-signatures and digital identities. The Digital Code (2018) of Benin and the National Digital Agenda of El Salvador are examples of comprehensive legal frameworks that support digital strategies, cybersecurity and regulatory needs in the digital domain. • Stakeholder engagement and communication. Successful digital government initiatives require effective stakeholder engagement, communication strategies and initiatives to build trust to foster adoption. In Rwanda, the introduction of a law that ensures data protection, coupled with educational and awareness initiatives, has been credited by the Minister of Information and Communications Technology and Innovation for a 30 per cent increase in adoption of the e-Government platform. Central steering and support for the roll- out of digital government are important and help push the necessary enabling legislation, budget support and broad- based stakeholder engagement, yet it can also lead to complex, costly and lengthy implementation programmes. The basic architecture of online services and the tenets of effective implementation suggest that there is a complementary approach that can be used in parallel with or even in anticipation of major centralized efforts. This approach is particularly helpful for developing countries that are still in the early stages of government digitalization and that lack the significant resources required for centralized digitalization projects. A bottom-up approach, starting from basic services for business – usually the first government services to be digitalized – and gradually expanding to adjacent policy areas, has several benefits. It can begin in one or very few public sector entities, does not necessarily depend on major legislative interventions, is relatively low cost and adds immediate value to users and revenue- generating potential for government. Such a bottom-up approach can be an integral part of a wider digital government strategy, as a “sandbox” approach in which new digitalization initiatives are rolled out for a clearly delimited administrative process before expanding to broader applications. It allows agencies or subnational entities with higher levels of capacity or a higher state of readiness to race ahead (box IV.13). Box IV.13 Togo: Digital investment facilitation by subnational authorities: special economic zones In Togo, digital transformation has significantly enhanced FDI attraction efforts. Launched in 2022, the first phase of the country’s investment portal (investirautogo.tg) offers a comprehensive online information service. Managed by the Investment Promotion and Free Zone Agency, the portal provides detailed guidance on administrative procedures to start and operate a business. It covers nearly 40 procedures and outlines more than 150 formalities. It also provides contact points for investors who need assistance. It was used by 13,000 investors in 2023. The portal is part of a collaboration between the United Nations Development Programme and UNCTAD, begun at the Government’s request and coordinated with the Togo Digital Agency. The second phase, planned for launch in 2024, is a digital investment window for the Port of Lomé SEZ. It will facilitate the digitalization of processes such as authorization requests, employee exemption from social charges and vehicle registration. Expansion into the SEZ underscores the comprehensive involvement of national institutions in investment facilitation, extending beyond the traditional scope of IPAs. Source: UNCTAD. See also https://investirautogo.tg. Chapter IV Investment facilitation and digital government 147 Implementing agencies can very often achieve much independently of Government-wide efforts or major legislative reform programmes. A balance must be found between the need for overarching strategies and institutions and practical implementation requirements. As noted earlier, digitizing administrative procedures mostly does not require significant changes in laws. This does not mean that no legislative action is needed to support the development of digital government. However, the emphasis should be on enabling legislation rather than on substantive laws underpinning the administrative procedures. And while comprehensive legal frameworks govern personal data protection, digital payments, e-signatures and digital identities, basic reforms of mundane bureaucratic requirements enabling, for example, the acceptance of electronic copies of documents, are often sufficient to allow agencies to proceed with the implementation of digital services. Similarly, while the whole-of-government approach that is usually advocated should be the ultimate goal for the roll-out of digital government, it has clear drawbacks for the pace of development of individual services. Different institutions tend to operate at different speeds and find themselves at different stages of readiness. Centrally steered programmes that aim to bring along all public institutions and agencies can miss out on opportunities to develop individual services more quickly with a limited number of first-mover entities (ITU and UNDP , 2023). The bottom-up approach defines a limited initial project scope and digitalizes one process at a time without necessarily waiting for lengthy, government-wide reviews of strategy, legality or IT that risk being divorced from the reality faced by front-line agencies and service staff. It helps minimize resistance and builds momentum for broader digital transformation at a relatively low monetary and political cost. It is an approach that learns from the failures of approaches in many countries by encouraging agencies with innovative mindsets to take the first steps, with others joining as the advantages of digitalization become clear. There is significant scope to expand the array of services on digital government platforms once the core business and investment facilitation services (registration, tax, social security and operating licences) are covered. Using the online single window platform developed by UNCTAD, El Salvador has added services for the filing of accounts, to support MSMEs not only in the process of becoming formal but also in the effort to stay formal (which requires filing periodic accounts and paying taxes) (box IV.14). Mali is developing a system to speed up approval processes for new pharmaceutical products to streamline the market for essential medicines (box IV.15). And Colombia is piloting an emissions registry to allow firms to calculate and report emissions in compliance with local legislation developed to meet commitments under the Paris Agreement (box IV.16). Adding services in such specific areas or for sector-specific procedures can thus help strengthen the sustainable development impact of digital business and investment facilitation efforts. Digital government solutions obviously also extend to trade, as observed earlier. The ASYCUDA programme of UNCTAD has a long track record of implementing online single windows for clearance of foreign trade procedures (box IV.17). Similar effects of economies of scale and scope can be observed in trade portals, which aim to incorporate as many relevant procedures as possible. However, compared with business and investment facilitation portals, trade portals are more difficult to envisage as a basis for wider digital government expansion because of the narrower scope of services and institutions they involve. World Investment Report 2024 Investment facilitation and digital government 148 Box IV.15 Mali: Expanding the scope of digital services for business: pharmaceutical approval processes In November 2023, Mali launched a pioneering online pharmaceutical registry, developed in collaboration with UNCTAD, the Ministry of Health of Mali and the country’s National Pharmaceutical Association. This initiative was spurred by the urgent need for pandemic preparedness underscored by the COVID-19 crisis and aims to address major health challenges for the country’s predominantly young population. The digital registry is designed to enhance the efficiency of the marketing authorization process and ensure the safety and quality of medicines. It will improve transparency and traceability, optimize resource use, support the growth of the local pharmaceutical industry and combat counterfeiting. According to the United Nations Office on Drugs and Crime (2023), up to half of the pharmaceuticals in Mali are counterfeit or improperly distributed, emphasizing the need for this system. The online registry will enable pharmaceutical importers, producers and distributors, along with the Government, to address supply chain delays and fraud more effectively. This improvement in transparency and accessibility is expected to streamline the distribution of medicines and vaccinations. Currently, the approval process for importing, distributing or producing medicines is hindered by bureaucratic delays, often taking up to 18 months owing to reliance on paper documentation and the requirement for a salaried representative’s physical presence. The new system will reduce the approval time to three months. At present, the system allows online registration of pharmaceutical stakeholders and helps medical authorities monitor the entry, production and distribution of products. It also aids in the identification of obsolete and unauthorized items and provides data on the locations of products and the needs for them across various medical facilities. Although still in its pilot phase, digitalization of this registry holds promise for replication and scaling in other developing countries, potentially transforming health care delivery and management. Source: UNCTAD. See also https://unctad.org/news/magic-malis-digital-pharmaceutical-registry. Box IV.14 El Salvador: Expanding the scope of digital services for business: supporting MSME formalization In 2018, UNCTAD and the Government of El Salvador launched a digital single window for MSMEs (miempresa.gob. sv), allowing them to register online with simplified procedures. An important objective was to reduce informality. Entrepreneurs can register simultaneously with the ministries of finance, labour and commerce, and the municipality. This automates what were previously 12 separate registrations. The system also integrates an online accounting tool that supports the filing of annual accounts and can generate six-month tax and social security filings as well as 11 annual filings. The purpose of these supporting tools is to help businesses become formal and remain formal – which requires periodic filings. Many MSMEs are subsistence enterprises or sole traders, in the informal sector. Registrations at the National Commission for Micro and Small Businesses increased significantly in 2020 and afterward, especially in the most fragile categories. This translated to a steep rise in the numbers of entrepreneurs (+74 per cent) and MSMEs (+63 per cent) registered for social security in 2021. More than half of these companies were women owned. Their access to enterprise loans and safety nets critically contributed to the resilience of the private sector in the pandemic. Source: UNCTAD. See also https://miempresa.gob.sv. Chapter IV Investment facilitation and digital government 149 Box IV.16 Colombia: Expanding the scope of digital services for business: reporting carbon emissions In 2023, the Colombian Ministry of Environment, in collaboration with UNCTAD, initiated the development of a digital platform that will allow businesses to report their carbon emissions annually and obtain necessary certifications, supporting the country’s commitment to the Paris Agreement objectives. The registry is set to launch in the latter half of 2024, after final adjustments to the prototype, which was presented at the World Investment Forum of UNCTAD in October 2023. It integrates a user-friendly emissions calculator and complies with the standards of the Intergovernmental Panel on Climate Change, ensuring that it is both comprehensive and accessible for companies that are required to report their emissions. It is designed to prepare Colombia for upcoming global carbon pricing and tax measures, including the Carbon Border Adjustment Mechanism of the European Union. The platform will be expanded with online services for environmental impact assessment certificates, in an aim to streamline the application and review process, which is often criticized for its inefficiency and lack of transparency. These assessments are crucial for many sectors in Colombia, in particular construction. In addition, a digital registry for green business certificates is being considered. This system would enable companies to evaluate their environmental practices against regional standards and qualify for “green business” status, which provides benefit from various incentives. These digital innovations not only position Colombia as a leader in environmental digitalization but also serve as potential models for other countries with similar environmental and climate legislation. Source: UNCTAD. See also https://unctad.org/news/un-digital-government-awards-celebrate-excellence- online-public-services. Box IV.17 ASYCUDA: Online single windows for trade Since 2012, the ASYCUDA (Automated System for Customs Data) Programme of UNCTAD has partnered with governments and international organizations to design, develop and implement an integrated platform for international trade. It allows all stakeholders to process clearance of trade procedures, including by submitting permit and licence applications online, while also improving information sharing between partner government agencies and traders – aligning with Recommendation 33 of the United Nations Economic Commission for Europe on single windows and trade facilitation. Electronic single windows for trade are one of the most effective measures to enhance trade facilitation in a country, underscored by their inclusion in the WTO Trade Facilitation Agreement. By digitally connecting partner government agencies, an ASYCUDA single window simplifies trade, reduces clearance times and trade costs, ensures transparent and uniform application of duties and taxes, maximizes government revenue, helps combat corruption and ensures compliance with standards for public health and safety. ASYCUDA-based electronic single windows are active or being implemented in 13 countries (Barbados, Burundi, the Comoros, Jamaica, Kazakhstan, Rwanda, Saint Vincent and the Grenadines, Sao Tome and Principe, Timor- Leste, Turkmenistan, Uganda, Vanuatu and Zimbabwe). In 2023 UNCTAD published Roadmap for Building a Trade Single Window, which shares experience, expertise and recommendations in a blueprint for designing and implementing tailored, single windows that comply with national, regional and international requirements. It is being used as a source by the World Customs Organization as it updates its Single Window Compendium. Sources: UNCTAD and UNCTAD (2023b). See also https://asycuda.org/en/# and https://unece.org/sites/default/ files/2023-10/Rec33_ECE-TRADE-352-Rev1E.pdf. World Investment Report 2024 Investment facilitation and digital government 150 F. Conclusions and policy implications Governance and institutional weaknesses have consistently featured in research and investor surveys as key challenges to the attraction of investment in sustainable development. Digital government contributes to good governance and stronger institutions. Online tools for business and investment facilitation have proven to be a good starting point for the broader implementation of digital government. Digital facilitation of business and investment is thus a key step in developing broader digital government services and, indirectly, a key pillar of the promotion of investment in sustainable development. Investment facilitation is top of mind for policymakers worldwide. Investment policy measures of national governments aimed at facilitating the establishment and operations of foreign investors have rapidly increased in number since the launch of the UNCTAD Action Menu in 2016 – they now make up 40 per cent of measures favourable to investors. Recent agreements at the bilateral, regional and international levels more often include provisions on facilitation, and the recently finalized IFD agreement may provide further impetus for action by national policymakers and treaty negotiators. As discussed in this chapter, international agreements can be catalysts not only for investment facilitation but also for digital tools for that purpose. In its support to discussions on international policy instruments, UNCTAD has consistently emphasized the need to focus the implementation of investment facilitation in developing countries on measures with the highest rate of return. While investment facilitation provisions can cover many issues, including dispute prevention, focal points and collaborative initiatives, the most cost-effective and impactful ones revolve around information provision, transparency of rules and regulations, and streamlining of administrative procedures through digital government tools. That is because they are important all the time (not just on an occasional or project basis), they benefit all firms (large and small, foreign and local) and they can cover all necessary processes for business establishment and operation (not just procedures specific to foreign investment). Developing countries can be at an advantage in establishing digital government tools for business and investment facilitation. They have fewer legacy systems to integrate and can adopt the latest solutions. A smaller number of institutions and decision-makers can also support faster implementation. The evidence in this chapter confirms that there is a leapfrogging opportunity; some of the lowest-income countries have created online facilitation platforms that can compete with the best. However, the development of most of these platforms has required technical assistance and support. Importantly, the IFD agreement and other international cooperation agreements on investment aim to accelerate support to developing countries for the implementation of investment facilitation mechanisms. Such Digital investment facilitation measures are valuable all the time, for all firms, in all processes Chapter IV Investment facilitation and digital government 151 support should focus in large part on the development of digital government solutions. Governments should adopt a comprehensive approach to digital investment facilitation, avoiding dedicated processes solely for investment authorization. Investors are not helped by smooth investment approval processes if subsequent procedures to establish their business operations remain inefficient. Governments should progressively incorporate all or most procedures and services required by both foreign and local businesses, such as business registration, tax and social security registration, licensing and other essential services. This approach enables Governments to harness the full potential of digitalization and to capture economies of scale and scope from the implementation of digital platforms. But there is no reason to stop at the core mandatory procedures for business establishment. Countless other administrative procedures affecting business operations may be sector specific or motivated by policy concerns ranging from the environment, to health and safety, to labour and social issues. The digital government tools that are central to effective and efficient implementation of business and investment facilitation initiatives can serve as a foundation for broader digital government adoption, making them a significant step towards modernizing governance and administrative processes. As noted in this chapter, digital investment tools strengthen governance, enhance transparency and lead to more efficient administration. Their application more generally across government can further improve the attractiveness of countries to both foreign and local investors. The return on investment to governments from setting up a digital platform for investment facilitation is maximized when more procedures are covered. Once a digital business registry is established and firms have a verifiable online identity, governments can relatively easily extend online services to licences (sectoral, import-export), permits (construction, environmental), taxes (registration, filing, payment), social security (employer-employee registration, filing and payment), land transactions, health and safety certifications, sector- specific procedures such as pharmaceutical approval processes, and carbon registries. In that way, digital business and investment facilitation becomes a stepping stone to wider digital government. The digital government platform of UNCTAD includes a suite of tools and technical assistance products aimed at supporting developing countries in meeting their investment facilitation commitments. They include information portals, online single windows and regional investment facilitation monitors specifically tailored for business and investment facilitation. Acknowledged by the Donor Committee for Enterprise Development as exemplars of good practice, these tools have garnered widespread attention, being accessed 6.2 million times in 2023. The digital single windows developed by UNCTAD can also be extended to other areas of government. From a technical point of view, their cloud-based approach means there is no need for systems integration: new databases can be designed within the same system and application programming interfaces can connect to existing registries. New online services can be created, with civil servants progressively training their colleagues in other agencies to use the system or accessing training at the Digital Government Academy of UNCTAD and the United Nations Institute for Training and Research. At the request of various Governments, UNCTAD has already started developing digital single windows that go beyond business creation to support business operations, with a specific focus on the Sustainable Development Goals. This effort includes tools to facilitate the licensing of the import, distribution and local production of pharmaceuticals (using Digital business and investment facilitation tools are a stepping stone to wider digital government World Investment Report 2024 Investment facilitation and digital government 152 standards of the World Health Organization), the registration and calculation of carbon emissions to assess nationally determined contributions and to certify carbon credits and debits (following the methodology of the Intergovernmental Panel on Climate Change), tax and social security filings, and the digitalization of extended producer responsibility. This focus on processes relevant for the Sustainable Development Goals shows how digital business and investment facilitation can be deployed specifically to support sustainable development. Cases discussed in this chapter provide ample evidence of the impact of digital business and investment facilitation on sustainable development and inclusiveness, in particular through rates of participation in the economy of women, youth and rural communities. Even in countries with a significant digital divide, solutions have been found to ensure that population groups with limited access to the Internet or lacking digital skills have reaped the benefits of digitalization, e.g. through terminals in business registries and municipalities and through dedicated support. Building on digital business facilitation towards wider implementation of digital government will have an even bigger impact on sustainable development and on investment in the Sustainable Development Goals. There is strong evidence that good governance, transparent rules and regulations, and efficient administrative procedures have a positive impact on FDI. Surveys of investors and IPAs consistently show that governance and institutional weaknesses are at the heart of challenges in attracting investment for sustainable development. By supporting the development of wider digital government applications, technical assistance for business and investment facilitation, including capacity-building initiatives based on international investment policy instruments, has the potential to tackle some of the root causes of the gap in investment for the Sustainable Development Goals. UNCTAD has acted as a catalyst for progress on investment facilitation at the national and international levels. It has actively supported individual countries, regional groups and the international community through policy advice, policy guidance and knowledge resources. An important focus of the organization is now on implementation – through technical assistance to Member States on digital investment facilitation. The digital tools for business and investment facilitation included in the UNCTAD digital government platform are operational in more than 60 countries (and the same tools are used for trade information portals). Looking ahead, UNCTAD will continue to support developing countries and – in collaboration with other international organizations – look for opportunities to maximize the development benefits of digital government solutions by widening their scope of application. * * * Digital business and investment facilitation can support inclusive and sustainable development World Investment Report 2024 153 References Alfaro L, Kalemli-Ozcan S and Volosovych V (2008). Why doesn’t capital flow from rich to poor countries? An empirical investigation. The Review of Economics and Statistics. 90(2):347–368. Anderson J and Gonzalez A (2013). Does Doing Business matter for foreign direct investment? Doing Business Case Study 47/80647. World Bank. ASEAN Secretariat and UNCTAD (2022). 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Restricted document (INF/IFD/RD/137). 156 FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Worlda 1 376 139 1 729 239 984 578 1 621 808 1 355 749 1 331 813 1 010 629 1 444 809 779 507 1 881 922 1 574 724 1 550 584 Developed economies 674 750 1 024 750 337 595 731 843 426 198 464 397 633 813 1 045 960 396 035 1 376 095 1 023 157 1 059 323 Europe 320 294 660 687 158 933 178 748 -105 878 16 493 535 714 648 344 -17 470 705 714 216 770 327 855 European Union 305 556 627 336 154 889 266 502 -84 831 58 645 340 138 644 799 102 670 619 677 169 790 182 746 Austria 5 390 4 905 -9 983 17 092 9 326 4 466 5 612 12 486 7 284 25 243 7 523 9 594 Belgium 27 137 11 861 3 133 9 905 11 551 23 019 43 581 6 111 5 420 30 095 20 311 12 072 Bulgaria 1 143 1 835 3 397 1 794 2 771 3 913 249 449 246 318 561 598 Croatia 1 199 402 146 4 486 3 590 2 749 206 -118 35 926 -254 1 178 Cyprus -413 52 330 -24 451 7 388 5 732 3 447 -6 941 51 415 -32 965 3 278 -905 -1 833 Czechia 11 010 10 108 9 411 9 051 9 248 7 785 8 663 4 128 2 990 7 734 5 675 7 052 Denmark -2 497 27 029 1 372 7 095 7 750 8 760 -3 971 36 425 9 660 26 138 5 868 15 129 Estonia 1 426 3 053 3 541 105 1 009 4 577 -46 1 868 292 -770 842 1 506 Finland -2 172 13 456 -1 579 13 290 5 795 -1 676b 11 455 4 865 5 856 9 156 13 275 1 372b France 34 671 20 426 13 174 34 109 75 979 42 032 95 621 51 459 23 676 55 087 52 776 72 356 Germany 72 022 52 684 69 954 51 218 27 411 36 698 97 117 151 078 38 700 147 604 145 528 101 254 Greece 3 973 5 019 3 213 6 328 8 451 5 430 477 642 549 1 109 3 198 3 952 Hungary 6 460 4 143 6 842 8 041 9 320 6 016 3 364 3 155 4 436 4 141 4 123 3 299 Ireland -12 017 149 433 102 519 -3 933 -25 058 -9 165 5 154 32 083 -11 400 56 146 9 395 -6 595 Italy 37 682 22 720 -18 576 -2 952 32 177 18 219 31 542 24 362 2 929 26 415 16 543 13 014 Latvia 960 926 1 004 3 303 1 404 1 212 207 -104 255 2 324 115 582 Lithuania 972 1 441 416 2 860 2 214 1 868 699 382 -46 1 323 367 758 Luxembourg -83 336 163 718 9 839 25 123 -359 331 -62 808 21 857 176 767 148 012 52 174 -294 199 -23 679 Malta 4 024 3 778 3 921 28 662 19 916 20 900c 7 401 6 960 7 235 24 676 24 625 20 860c Netherlands 102 134 15 940 -81 651 -70 238 -80 438 -168 450 -44 152 31 023 -173 903 92 375 38 227 -142 185 Poland 15 996 13 510 15 195 29 235 31 470 28 685 891 1 854 851 3 168 6 325 10 403 Portugal 7 181 12 251 7 683 9 615 9 778 7 220 1 375 4 010 2 526 1 468 2 686 3 556 Romania 6 219 5 791 3 432 10 574 10 572 7 130 379 363 53 141 1 297 40 Slovakia 1 675 2 511 -2 404 1 821 2 902 180 322 43 348 297 433 89 Slovenia 1 384 1 463 220 1 846 2 039 1 103 281 610 519 1 356 683 540 Spain 58 063 17 842 14 239 38 318 44 885 35 914 37 944 26 196 33 539 17 260 42 900 30 335 Sweden 5 269 8 761 20 880 22 364 44 706 29 418 20 852 16 286 25 576 30 494 61 873 47 498 Other Europe 14 738 33 352 4 044 -87 754 -21 047 -42 152 195 576 3 545 -120 141 86 037 46 980 145 109 Albania 1 290 1 288 1 108 1 234 1 434 1 630 83 128 88 63 181 265 Belarus 1 421 1 293 1 398 1 238 1 603 2 060 50 16 88 -71 173 23 Bosnia and Herzegovina 581 458 480 683 775 946 2 35 73 46 50 48 Iceland -381 -225 -928 518 859 977 76 479 -427 3 -118 -181 Republic of Moldova 313 523 150 404 591 428 38 43 -2 33 50 12 Montenegro 490 416 532 699 877 526 109 75 -5 11 53 63 North Macedonia 725 446 230 556 785 667 12 40 53 98 96 101 Norway 1 044 17 023 -7 990 3 825 9 644 7 960 11 181 14 436 9 930 12 842 13 085 8 153 Russian Federation 13 228 32 076 10 410 38 639 -15 205 8 364 35 820 22 024 6 778 64 072 11 510 29 110 Serbia 4 091 4 270 3 469 4 590 4 598 4 870 363 294 112 264 41 308 Switzerland -100 954 -84 436 -49 570 -76 785 -43 248 13 507 64 955 -46 659 -41 041 -76 161 -74 020 104 954 Ukraine 4 732 6 017 -36 7 320 557 4 247 -127 842 22 -198 344 42 United Kingdom 87 837 53 918 44 397 -71 174 14 912 -89 247 82 961 11 717 -95 877 84 918 95 352 2 007 North America 240 896 280 474 118 890 449 818 378 527 361 271 -99 358 112 548 268 132 383 404 449 398 493 899 Canada 37 662 50 544 25 594 60 382 46 175 50 324 58 049 77 492 43 667 104 878 83 012 89 583 United States 203 234 229 930 93 296 389 436 332 352 310 947 -157 407 35 056 224 465 278 526 366 386 404 316 Other developed economies 113 561 83 589 59 773 103 277 153 549 86 632 197 456 285 068 145 374 286 977 356 989 237 568 Australia 67 569 38 536 14 162 23 855 63 366 29 874 7 825 8 719 5 607 3 100 118 050 9 822 Israel 21 515 17 363 20 969 18 950 23 031 16 422 6 087 8 690 4 579 10 369 10 246 9 970 Japan 9 963 13 755 11 768 34 294 34 194 21 433 144 982 232 627 99 708 208 985 162 126 184 022 Republic of Korea 12 183 9 634 8 765 22 060 25 045 15 178 38 220 35 239 34 832 66 001 65 799 34 541 New Zealand 2 236 4 296 3 997 4 117 7 903 3 568 377 -169 658 -1 451 746 -808 Bermuda 95 5 112 2 10 156c -35 -38 -11 -27 21 21c Developing economiesa 701 389 704 489 646 983 889 965 929 551 867 417 376 816 398 849 383 471 505 827 551 567 491 261 Africa 43 772 46 975 41 048 82 196 54 465 52 633 7 899 5 122 2 465 5 144 9 232 61 North Africa 15 407 13 550 9 797 9 509 15 323 13 461 2 269 1 727 356 994 1 171 1 185 Algeria 1 475 1 382 1 140 870 255 1 216 854 31 15 -52 85 84 Egypt 8 141 9 010 5 852 5 122 11 400 9 841 324 405 327 367 342 390 Libya .. .. .. .. .. .. 276 377 -487 -55c 50c -164c Morocco 3 559 1 720 1 419 2 266 2 260 1 095 782 893 458 644 641 836 South Sudan 60 -232 18c 68c 122c -6c .. .. .. .. .. .. Sudan 1 136 825 717 523 574 548c .. .. .. .. .. .. Tunisia 1 036 845 652 660 714 768 34 22 43 35 53 40 Annex table 1 FDI flows, by region and economy, 2018–2023 (Millions of dollars) 157 Annex table 1 FDI flows, by region and economy, 2018–2023 (Continued) FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Other Africa 28 366 33 425 31 251 72 687 39 142 39 171 5 629 3 395 2 109 4 150 8 061 -1 124 West Africa 8 126 11 976 10 023 13 626 13 065 12 962 1 105 1 269 2 116 2 469 3 249 755 Benin 194 218 174 346 376 434 10 27 22 43 47 49 Burkina Faso 268 163 -102 -80 670 85 68 16 -7 -43 24 5 Cabo Verde 103 123 68 91 93 118 -9 -16 -4 1 -3 -7 Côte d’Ivoire 620 936 713 1 377 1 599 1 753 145 120 1 285 168 215 Gambia 52 71 190 249 236 208 0.5 -2 -3 -3 2 -1c Ghana 2 989 3 880 1 876 2 613 1 511 1 354 81 588 542 199 38 56 Guinea 353 43 174 201 650 893c -0.3 1 2 -3 0.1c 0.1c Guinea-Bissau 21 72 21 19 33 24 -0.4 0.4 0.3 1 1 0.3 Liberia 129 87 738 536 960 745c 84c 102c 80c 91c 91c 87c Mali 467 721 537 640 716 698 0.3 1 1 56 44 23 Mauritania 773 887 931 1 064 1 419 873c .. .. 6c 5c 3c 0.1c Niger 466 717 361 595 966 966 39 32 15 39 9 40 Nigeria 775 2 305 2 385 3 313 895 1 873 566 285 1 473 1 818 2 811 256 Senegal 848 1 065 1 846 2 588 2 929 2 641 53 71 99 52 70 91 Sierra Leone 250 342 173 212 186 263c .. .. .. .. .. .. Togo -183 346 -59 -136 -173 34 70 43 -112 -71 -54 -60 Central Africa 8 822 9 254 8 917 6 607 7 083 5 875 79 422 279 498 490 151 Burundi 7 30 21 22 25 29c .. 1 1 1 2 2c Cameroon 765 1 025 675 964 926 799c 108 126 84 55 27 -109c Central African Republic 18c 26c 2c 5c 24c 39c .. .. .. .. .. .. Chad 461c 567c 558c 705c 614c 913c .. .. .. .. .. .. Congo 4 315c 3 366c 4 016c 532c 532c 626b 14c 23c 27c 25c 25c 26c Democratic Republic of the Congo 1 617 1 488 1 647 1 870 1 846 1 635c 209 134 149 192 436 235c Equatorial Guinea -144 821 -9 562 1 388 142c .. .. .. .. .. .. Gabon 1 379c 1 553c 1 717c 1 529c 1 105c 1 151c -63c -34c .. .. .. .. Rwanda 382 354 260 399 496 523 18 5 .. .. .. .. Sao Tome and Principe 23 24 32 19 127 18 2 1 1 -0.04 0.2 -4 East Africa 7 918 7 681 7 439 10 082 11 543 11 226 248 174 1 508 2 082 1 709 721 Comoros 6 4 4 4 4 5c .. .. .. .. .. .. Djibouti 170 175 158 168 191 137 .. .. .. .. .. .. Eritrea 61c -61c -30c -31c -32c 2c .. .. .. .. .. .. Ethiopia 3 360 2 549 2 381 4 260 3 670 3 263 .. .. .. .. .. .. Kenya 1 139 1 098 1 510 1 406 1 597 1 504c 11 11 1 297 1 840 1 502 588c Madagascar 353 474 358 358 468 415c 118 102 119 114 142 119c Mauritius 461 444 225 253 580 760 98 58 16 86 37 16 Seychelles -66 30 165 225 212 238 20 4 75 42 28 -2 Somalia 408 447 534 601 636 677 .. .. .. .. .. .. Uganda 1 055 1 303 1 191 1 648 2 953 2 886 0.3 0.3 0.3 0.3 0.4 0.4 United Republic of Tanzania 972 1 217 944 1 190 1 265 1 339c .. .. .. .. .. .. Southern Africa 3 499 4 514 4 871 42 373 7 450 9 109 4 196 1 529 -1 793 -899 2 614 -2 751 Angola -6 456 -4 098 -1 866 -4 355 -6 599 -2 086 6 -2 349 91 -1 057 41 33 Botswana 286 94 32 -319 708 198c 82 -20 -68 -33 10 -38c Eswatini 36 130 36 117 15 29 -11 22 -13 60 -17 -22 Lesotho 41 35 28 -12 -8 -26 .. .. .. .. .. .. Malawi 77 55 252 129 243 208c -102 23 -154 28 37 32c Mozambique 2 703 2 212 3 035 5 102 2 458 2 509 -25 -31 153 194 564 174 Namibia 209 -179 -146 851 1 072 2 345 98 9 52 18 12 -310 South Africa 5 450b 5 125b 3 062b 40 215b 9 231b 5 233b 4 076b 3 147b -1 951b 139b 2 162b -2 811b Zambia 408 860 245 394 -65 108 45 696 64 -280 -253 160 Zimbabwe 745 280 194 250 395 588 27 32 33 32 58 31 Asia 501 858 497 788 513 069 666 542 677 829 621 144 359 770 346 416 382 427 457 597 470 637 440 419 East and South-East Asia 400 933 397 183 404 822 542 477 538 249 512 531 300 620 292 723 335 063 380 875 369 413 367 047 East Asia 254 455 232 335 285 512 334 030 315 115 286 214 243 603 203 040 267 099 289 912 286 073 278 533 China 138 306 141 225 149 342 180 957 189 132 163 253 143 037 136 908 153 710 178 819 163 120 147 850 Democratic People’s Republic of Korea 2c 30c 6c 18c 10c 13c .. .. .. .. .. .. Mongolia 2 174 2 443 1 719 2 173 2 504 2 248 37 127 26 113 76 76 Hong Kong, China 104 246 73 714 134 710 140 186 109 685 112 676 82 201 53 202 100 715 96 428 106 226 104 286 Macao, China 2 613 6 683 -6 319 5 280 3 625 2 324c 270 1 041 1 148 3 211 1 062 1 607c Taiwan Province of China 7 114b 8 240b 6 053b 5 416b 10 158b 5 700b 18 058b 11 763b 11 500b 11 341b 15 589b 24 714b South-East Asia 146 479 164 848 119 310 208 447 223 134 226 317 57 017 89 683 67 964 90 962 83 339 88 514 Brunei Darussalam 517 375 577 205 -292 -51 .. .. .. .. .. .. 158 Annex table 1 FDI flows, by region and economy, 2018–2023 (Continued) FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Cambodia 3 213 3 663 3 625 3 483 3 579 3 959 124 102 127 92 151 151 Indonesia 20 563 23 883 18 591 21 131 25 390 21 628 8 053 3 352 4 448 3 845 7 323 7 070 Lao People’s Democratic Republic 1 358 756 968 1 072 636 1 668c .. .. .. .. 0.01 .. Malaysia 7 618 7 813 3 160 12 173 16 940 8 653 5 114 6 231 2 419 4 676 13 322 7 643 Myanmar 2 892 2 509 1 907 2 067 1 239 1 520 .. .. .. .. .. .. Philippines 9 949b 8 671b 6 822b 11 983b 5 939d 6 210d 4 116b 3 351b 3 562b 2 251b 308d 1 251d Singapore 73 115 97 533 74 857 126 674 141 118 159 670 23 926b 67 776b 39 793b 61 368b 52 230b 62 997b Thailand 11 705 3 765 -6 284 14 417 11 082 4 548 15 085 8 410 17 260 18 398 7 365 10 369 Timor-Leste 48 -239 -713 -419 -395 13 .. -3c -26c -26c -34c -17c Viet Nam 15 500 16 120 15 800b 15 660b 17 900b 18 500b 598 465 380b 358b 2 674b -950b South Asia 52 262 59 090 71 050 52 683 57 519 35 974 11 630 13 275 11 206 17 716 15 942 13 524 Afghanistan 119b 23b 13b 21b .. .. 39b 26b 37b 31b .. .. Bangladesh 3 613 2 874 2 564 2 896 3 480 3 004 23 28 12 92 53 30 Bhutan 6 3 1 1 15 18 .. .. .. .. .. .. India 42 156 50 558 64 072 44 763 49 380 28 163 11 447 13 144 11 109 17 253 14 618 13 341 Iran (Islamic Republic of) 2 373 1 508 1 342 1 425 1 500c 1 422c 75 85c 78c 82c 100c 87c Maldives 576b 961b 441b 643b 732b 762b .. .. .. .. .. .. Nepal 67 185 126 196 65 74 .. .. .. .. .. .. Pakistan 1 737 2 234 2 057 2 147 1 462 1 818 -21 -85 -45 242 1 157 32 Sri Lanka 1 614b 743b 434b 592b 884b 712b 68b 77b 15b 17b 15b 34b West Asia 42 030 33 293 30 659 64 156 71 857 65 220 48 431 42 944 38 280 57 503 87 255 58 883 Armenia 267 100 59 366 998 443 7 -133 -27 25 50 54 Azerbaijan 1 403 1 504 507 -1 708 -4 474 253 1 761 2 432 825 77 172 1 875 Bahrain 1 654 1 548 1 021 1 779 2 760 6 840 111 -197 -205 64 1 948 1 113 Georgia 1 352 1 354 595 1 253 2 098 1 595 340 282 23 322 332 53 Iraq -4 885 -3 508 -2 859 -2 637 -2 088 -5 273c 188 194 147 135 238 279c Jordan 955 730 760 622 1 251 843 -8 43 26 16 -16 64 Kuwait 204 351 240 567 758 2 113 3 715 -2 696 7 932 4 666 24 613 11 189 Lebanon 2 658 1 905 1 607 600 527 655 631 345 29 -1 339 66 73 Oman 5 602 1 938 1 914 8 793 5 480 4 745c 130 -588 -840 1 178 944 165c Qatar -2 186 -2 813 -2 434 -1 093 76 -474 3 523 4 450 2 730 160 2 384 -191 Saudi Arabia 12 141b 3 079b 1 621b 23 112b 28 055b 12 319b 19 252 14 553 5 411 24 674 26 962 16 071 Syrian Arab Republic .. .. .. .. .. .. .. .. .. .. .. .. Türkiye 12 511 9 469 7 663 11 481 13 447 10 439 3 666 2 973 3 233 5 037 4 716 5 774 United Arab Emirates 10 385 17 875 19 884 20 667 22 737 30 688 15 079 21 226 18 937 22 546 24 833 22 328 Yemen -282c -371c .. .. .. .. 4c 3c .. .. .. .. State of Palestine 252 132 80 353 233 35c 31 56 59 -58 13 36c Central Asia 6 633 8 223 6 539 7 226 10 205 7 420 -911 -2 526 -2 122 1 504 -1 974 966 Kazakhstan 3 898 3 284 3 670 3 353 6 541 3 223 -1 095 -2 620 -2 206 1 452 -1 535 913 Kyrgyzstan 144 404 -402 226 55 490 100 67 2 2 -455 2 Tajikistan 360b 364b 107b 84b 174b 141b 82b 23b 70b 48b 12b 40b Turkmenistan 1 607c 1 854c 1 436c 1 287c 936c 1 378c .. .. .. .. .. .. Uzbekistan 625b 2 316b 1 728b 2 275b 2 498b 2 187b 2b 3b 11b 3b 4b 12b Latin America and the Caribbeana 154 458 158 201 91 844 139 948 195 859 193 179 9 584 48 449 -504 41 313 69 131 50 077 South America 106 680 110 224 55 592 94 677 145 965 142 769 232 36 372 -2 703 41 362 52 109 40 789 Argentina 11 717 6 649 4 884 6 903 15 408 22 911 1 726 1 523 1 177 1 537 2 076 2 403 Bolivia (Plurinational State of) 302 -217 -1 129 584 6 294 -84 48 -111 91 -81 257 Brazil 59 824 65 386 28 322 50 651 73 352 65 897 -16 336 19 031 -13 415 20 450 32 100 29 920 Chile 13 031 14 403 11 292 12 627 16 882 21 027 6 934 11 169 6 242 12 024 11 852 5 567 Colombia 11 299b 13 989b 7 459b 9 561b 17 183b 17 446b 5 126b 3 153b 1 733b 3 181b 3 383b 1 211b Ecuador 1 389 979 1 095 648 879 372 .. .. .. .. .. .. Guyana 1 231 1 695 2 086 4 468 4 393 7 198 .. 17 14 15 5 7 Paraguay 175 334 149 185 725 241 .. .. .. .. .. .. Peru 6 761 6 362 -825 6 272 12 026 3 331 98 1 087 392 1 098 237 889 Suriname 119 -8 0.3 -124 3 -65 .. .. .. .. .. .. Uruguay -11 2 018 756 1 937 3 456 3 429 718 627 -263 430 500 -812 Venezuela (Bolivarian Republic of) 844 -1 367 1 504 964 1 651 688c 2 051 -159 1 488 2 319 2 089 1 434c Central America 45 062 44 032 32 346 42 638 46 350 46 662 9 065 11 709 2 193 -1 025 15 626 7 926 Belize 118 94 76 125 141 50 1 2 4 2 1 2 Costa Rica 2 487 2 812 1 763 3 231 3 164 3 921 53 117 118 85 104 88 El Salvador 826 636 24 386 171 760 -0.04 0.4 22 12 29 29 Guatemala 981 976 935 3 462 1 442 1 552 201 180 149 476 723 665 Honduras 961 498 419 739 920 1 076 66 3 46 226 183 208 159 Annex table 1 FDI flows, by region and economy, 2018–2023 (Concluded) FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Mexico 34 101 34 617 28 211 31 829 36 312 36 058 8 489 10 755 1 720 -2 125 14 532 6 429 Nicaragua 838 503 747 1 220 1 294 1 230 75 59 40 15 19 31 Panama 4 751 3 895 172 1 646 2 906 2 015 180 592 94 285 34 474 Caribbeana 2 715 3 945 3 906 2 634 3 544 3 748 287 368 6 977 1 397 1 363 Antigua and Barbuda 193b 118b 62b 296b 326b 327b -2b -15b 1b -36b 14b 15b Barbados 242 215 262 239c 200c 225 9 28 8 18c 15c 8c Dominica 97b 76b 5b 28b 12b 14b 0.1b 0.1b -0.4b 2b -1b -1b Dominican Republic 2 535 3 021 2 560 3 197 4 099 4 390 209 -192 -99 153 -49 360 Grenada 226b 263b 160b 189b 172b 181b 36b 49b -45b -19b 19b 21b Haiti 105 75 25 51 39 32c .. .. .. .. .. .. Jamaica 775 665 265 321 319 431c 13 446 7 56 60 -6c Saint Kitts and Nevis 46b 44b -0.5b 25b 47b 36b 56b 23b 8b -3b -3b -3b Saint Lucia 58b 94b 97b 141b 78b 186b -19b 64b -35b -34b -29b 3b Saint Vincent and the Grenadines 28b 58b 57b 169b 68b 79b 15b 10b 3b -1b -3b -3b Trinidad and Tobago -700 184 1 056 -935 -913 -1 105c 65 114 98 768 1 385 1 008c Anguilla 216b 163b 69b 87b 102b 147b 43b 14b 2b -74b 3b 5b Aruba 110 -136 137 143 261 -178c 5 -1 1 4 97 91c Bahamas (the) 947 611 897 1 052 1 255 1 459 117 148 157 66 226 419 British Virgin Islands 34 390c 39 103c 39 620c 39 361c 38 119c 39 889c 41 587c 44 154c 42 280c 43 217c 42 809c 44 158c Cayman Islands 20 681c 28 165c 23 621c 25 893c 24 590c 28 134c 8 261c 31 630c 10 835c 21 232c 17 990c 20 422c Curaçao .. 203 156 146 164 155c .. -11 7 3 11 10c Montserrat 3b 1b 3b 2b 5b 7b .. .. .. .. .. .. Sint Maarten -48 74 22 27 17 37c 4 1 1 6 2 2c Oceania 1 301 1 525 1 021 1 279 1 398 461 -437 -1 138 -917 1 772 2 568 703 Cook Islands (the) 12b 9b 5b -2b 4b 6c 0.3b 0.3b 0.3b 0.3b 0.3b 0.3c Fiji 471 321 241 407 104 91 -4 -36 14 32 16 29 Kiribati -1 -1 3 1 3 2c 0.1 0.1 0.1 0.1 0.1 0.1c Marshall Islands (the) 10 4 3 0.5 3 2 .. .. .. .. .. .. Palau 51 45 43 31 72 48c .. .. .. .. .. .. Papua New Guinea 306b 335b 112b -11b 458b -425c -578b -1 211b -990b 1 691b 2 484b 596c Samoa 17 -4 4 9 5 -3 0.04 4 2 1 -0.1 .. Solomon Islands 25 33 9 28 44 25c 9 4 3 5 2 8c Tonga 23 -6 4 4 7 24c 1 1 1 -0.1 0.4 0.3c Tuvalu 0.3c 0.3c 0.1c 0.2c 0.2c 0.2c .. .. .. .. .. .. Vanuatu 37 53 41 43 11 9c 1 1 1 0.2 1 4c French Polynesia 6 13 -16 -26 -9c -6c 38 21 -3 13 6c 15c New Caledonia 345 723 572 794 696c 687c 96 76 55 30 57c 51c Memorandum Least developed countries (LDCs)e 21 656 22 494 23 996 28 694 26 668 31 299 793 -966 681 -393 1 377 1 160 Landlocked developing countries (LLDCs)f 21 681 21 975 15 344 19 899 23 599 24 255 1 062 742 -1 408 2 049 -1 750 3 488 Small island developing States (SIDS)g 6 228 7 143 5 990 6 061 7 263 8 337 619 696 186 1 111 1 684 1 849 Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). a Excluding the financial centres in the Caribbean and special-purpose entities in reported countries. b Asset/liability basis. c Estimates. d Directional basis calculated from asset/liability basis. e Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Yemen and Zambia. f Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, the Plurinational State of Bolivia, Botswana, Burkina Faso, Burundi, the Central African Republic, Chad, Eswatini, Ethiopia, Kazakhstan, Kyrgyzstan, the Lao People’s Democratic Republic, Lesotho, Malawi, Mali, Mongolia, Nepal, the Niger, North Macedonia, Paraguay, the Republic of Moldova, Rwanda, South Sudan, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and Zimbabwe. g Small island developing States include Antigua and Barbuda, Barbados, the Bahamas, Cabo Verde, the Comoros, Dominica, the Dominican Republic, Fiji, Grenada, Jamaica, Kiribati, Maldives, the Marshall Islands, Mauritius, the Federated States of Micronesia, Nauru, Palau, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Sao Tome and Príncipe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and Vanuatu. 160 Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Millions of dollars) FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Worlda 7 377 201 19 842 937 44 375 102 49 130 846 7 408 709 20 440 527 40 569 644 44 380 560 Developed economies 5 860 038 13 778 925 29 591 913 33 434 653 6 740 421 17 537 053 31 177 995 34 404 485 Europe 2 491 244 8 371 974 16 110 676 17 266 928 3 193 644 10 218 616 17 537 359 18 572 060 European Union 1 882 785 5 902 599 11 672 194 12 453 733 1 967 112 6 952 372 13 530 528 14 499 617 Austria 31 165 160 615 206 490 226 276 24 821 181 638 253 986 273 210 Belgium .. 473 358 531 007 577 961 .. 431 613 685 498 770 505 Bulgaria 2 704 44 970 57 475 61 945 67 2 583 3 590 4 317 Croatia 2 785 32 925 38 365 42 909 952 4 969 8 045 8 143 Cyprus 2 846 260 132 63 537 90 804 557 242 556 28 078 48 338 Czechia 21 644 128 504 206 338 216 595 738 14 923 60 806 69 222 Denmark 73 574 96 136 116 291 125 051c 73 100 163 133 221 838 236 967c Estonia 2 645 15 551 34 289 40 490 259 5 545 12 289 14 204 Finland 24 273 86 698 82 980 149 649b 52 109 137 663 139 076 210 121b France 184 215 630 710 947 200 1 012 705 365 871 1 172 994 1 544 549 1 635 680 Germany 470 938 955 881 1 091 561 1 128 259c 483 946 1 364 565 2 077 987 2 179 240c Greece 14 113 35 026 50 578 61 593 6 094 42 623 16 698 21 324 Hungary 22 870 91 015 107 551 118 983 1 280 23 612 40 043 46 097 Ireland 127 089 285 575 1 369 156 1 410 084 27 925 340 114 1 200 117 1 336 414 Italy 122 533 328 058 458 915 493 530 169 957 491 208 558 626 584 031 Latvia 1 691 10 869 24 067 26 595 19 931 5 730 6 304 Lithuania 2 334 15 455 27 686 31 564 29 2 647 6 757 9 736 Luxembourg .. 172 257 1 155 656 1 183 734 .. 187 027 1 594 807 1 679 068 Malta 2 263 129 770 491 467 725 715 193 60 596 477 251 695 859 Netherlands 243 733 588 077 2 775 591 2 678 218 305 461 968 105 3 395 399 3 386 269 Poland 33 477 187 602 268 019 335 540 268 16 407 29 658 38 212 Portugal 34 224 90 900 177 165 195 340 19 417 52 497 62 900 69 041 Romania 6 953 68 699 115 133 125 555 136 2 327 4 718 4 902 Slovakia 6 970 50 328 57 372 60 532 555 3 457 5 428 5 062 Slovenia 2 389 10 667 21 545 23 702 772 8 147 9 161 9 983 Spain 156 348 628 341 812 740 897 268 129 194 653 236 567 881 630 189 Sweden 93 791 324 478 384 021 413 135 123 618 377 258 519 611 527 177 Other Europe 608 459 2 469 375 4 438 482 4 813 195 1 226 532 3 266 244 4 006 832 4 072 444 Albania 247 3 255 11 104 13 985 .. 154 995 1 389 Belarus 1 306 9 904 15 440 15 822 24 205 1 496 1 470 Bosnia and Herzegovina 450 6 709 9 515 10 667 .. 211 736 814 Iceland 497 11 784 9 070 9 384 663 11 466 4 797 5 023 Republic of Moldova 449 2 897 4 933 5 531 23 90 425 448 Montenegro .. 4 231 5 494 6 066 .. .. 190 271 North Macedonia 540 4 351 7 480 8 421 16 100 166 210 Norway 30 265 167 932 148 338 157 160 34 026 179 568 209 589 202 275 Russian Federation 29 738 464 228 359 982 278 812 19 211 336 355 299 131 258 240 Serbia .. 22 299 53 499 60 459 .. 1 960 4 511 4 999 Switzerland 101 635 648 092 1 038 034 1 136 788 232 202 1 043 199 1 316 327 1 472 959 Ukraine 3 875 52 872 50 987 54 261 170 6 548 -867 -885 United Kingdom 439 458 1 068 187 2 718 892 3 048 932 940 197 1 686 260 2 168 530 2 124 191 North America 3 108 255 4 406 182 11 879 938 14 482 837 3 136 637 5 808 053 10 270 591 12 180 818 Canada 325 020 983 889 1 495 991 1 665 774 442 623 998 466 2 287 758 2 746 892 United States 2 783 235 3 422 293 10 383 947 12 817 063 2 694 014 4 809 587 7 982 833 9 433 926 Other developed economies 260 539 1 000 769 1 601 299 1 684 888 410 140 1 510 383 3 370 045 3 651 606 Australia 121 686 527 728 776 764 807 427 92 508 449 740 655 344 710 639 Israel 20 426 60 086 229 880 244 472 9 091 67 893 99 842 108 680 Japan 50 323 214 880 225 367 246 801c 278 445 831 076 1 948 555 2 132 578c Korea, Republic of 43 738 135 500 272 328 284 146 21 497 144 032 647 568 682 023 New Zealand 24 101 59 738 94 319 99 128 8 491 16 717 18 608 17 536 Bermuda 265c 2 837 2 642c 2 915c 108c 925 129c 151c Developing economiesa 1 517 163 6 064 012 14 783 189 15 696 192 668 288 2 903 474 9 391 648 9 976 074 Africa 153 062 620 046 1 045 624 1 036 252 39 815 137 363 296 153 248 821 North Africa 45 590 201 109 336 039 354 974 3 199 25 770 40 219 42 324 Algeria 3 379c 19 545 35 643 36 860 205c 1 505 2 810 2 894 Egypt 19 955 73 095 148 888 158 689 655 5 448 9 190 9 580 Libya 471c 16 334 18 462c 18 462c 1 903c 16 615 20 450c 20 286c Morocco 8 842c 45 082 63 278 69 297 402c 1 914 7 066 8 076 Sudan 1 398 15 690 30 301c 30 849c .. .. .. .. Tunisia 11 545 31 364 39 467 40 817c 33 287 703 1 488c Other Africa 107 472 418 937 709 585 681 279 36 616 111 594 255 934 206 496 West Africa 33 010 106 590 210 529 210 814 6 381 18 090 31 165 31 268 161 Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Continued) FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Benin 213 604 3 154 3 711 11 21 376 440 Burkina Faso 28 354 2 998 3 193 0.4 8 377 396 Cabo Verde 192c 1 367 2 346 2 572 .. 2 94 106 Côte d’Ivoire 2 483 6 978 13 691 15 974 9 94 1 404 1 674 Gambia 216 323 1 176c 1 384c .. .. .. .. Ghana 1 554c 10 080 46 006 47 360 .. 83 1 830 1 886c Guinea 263c 486 5 252c 6 145c 12c 144 97c 97c Guinea-Bissau 38 63 326 362 .. 5 11 12 Liberia 3 247c 10 206 10 889c 11 633c 2 188 4 714 5 010c 5 097c Mali 132 1 964 6 742 7 697 1 18 317 352 Mauritania 146c 2 372c 5 825c 6 702c 4c 28c 3c 3c Niger 45 2 251 8 628 9 926 1 9 391 446 Nigeria 23 786 66 797 86 239 73 375 4 144 12 576 18 297 17 663 Senegal 295 1 699 13 184 16 358 22 263 991 1 120 Sierra Leone 284c 482 2 688c 2 951c .. .. .. .. Togo 87 565 1 385 1 469 -10 126 1 966 1 975 Central Africa 5 053 39 227 120 236 126 047 1 651 2 217 4 733 4 884 Burundi 47c 13 255c 283c 2c 2 8c 9c Cameroon 917c 3 099c 6 484 7 283c 1 252c 971c 734 625c Central African Republic 104 511 715c 754c 43 .. .. .. Chad 576c 3 594c 8 372c 9 285c .. .. .. .. Congo 1 893c 9 261c 34 026c 34 653c 40c 34c 157c 183c Democratic Republic of the Congo 617 9 368 30 995 32 629c 34 229 3 677 3 913c Equatorial Guinea 1 060c 9 413c 19 069c 19 211c .. .. .. .. Gabon -227c 3 287c 16 591c 17 742c 280c 946c 79c 79c Rwanda 55 422 3 237 3 697 .. 13 74 74 Sao Tome and Principe 11c 260c 493 511c .. 21c 5c 1c East Africa 7 202 37 754 99 466 110 318 387 1 474 3 261 3 993 Comoros 21c 60c 145c 150c .. .. .. .. Djibouti 40 .. .. .. .. .. .. .. Eritrea 337c 666c 1 029c 1 031c .. .. .. .. Ethiopia 941c 4 206 35 281 38 544c .. .. .. .. Kenya 932c 4 967 9 692 11 196c 115c 62 2 668 3 256c Madagascar 141 4 383 4 120 4 535c 9c 193 838 957c Mauritius 683 4 658 5 894c 6 418c 132 864 743c 773c Seychelles 515 2 960 3 117 3 354 130 290 -1 162 -1 167 Somalia 4c 566 4 923 5 600 .. .. .. .. Uganda 807 5 575 16 631 19 517 .. 66 174 175 United Republic of Tanzania 2 781 9 712 18 634c 19 973c .. .. .. .. Southern Africa 62 208 235 365 279 354 234 100 28 198 89 813 216 775 166 352 Angola 7 977 32 458 14 262 12 177 -8 1 870 5 259 5 292 Botswana 1 827 3 351 5 194 5 410c 517 1 007 1 039 916c Eswatini 536 927 966 896 87 91 162 133 Lesotho 330 929 958 851 .. .. .. .. Malawi 358 963 1 484 1 692c -5 45 243 276c Mozambique 1 249 4 331 54 597 57 281 1 3 7 7 Namibia 1 276 3 595 7 747 9 136 45 722 1 034 697 South Africa 43 451 179 565b 172 210b 124 025b 27 328 83 249b 207 954b 157 764b Zambia 3 966c 7 433 15 384 15 492c .. 2 531 311 471c Zimbabwe 1 238 1 815 6 553 7 141 234 297 766 796 Asia 1 023 690 3 878 998 11 052 894 11 674 477 575 247 2 348 138 8 269 297 8 793 808 East and South-East Asia 908 302 2 888 852 9 210 207 9 845 585 557 764 2 059 331 7 365 627 7 823 232 East Asia 650 700 1 738 193 5 704 180 5 976 425 473 708 1 455 117 5 239 530 5 503 294 China 193 348c 586 882c 3 496 380 3 659 633c 27 768c 317 211 2 754 810 2 939 100c Democratic People’s Republic of Korea 77c 236c 949c 963c .. .. .. .. Mongolia 182 8 445 28 521 30 697 .. 2 616 907 1 024 Macao, China 2 801c 13 603 45 737 47 955c .. 550 13 278 14 856c Hong Kong, China 435 417 1 067 520 2 008 153 2 107 038 379 285 943 938 1 975 466 2 028 532 Taiwan Province of China 18 875 61 508b 124 440b 130 140c 66 655 190 803b 495 068b 519 782c South-East Asia 257 603 1 150 659 3 506 027 3 869 160 84 056 604 214 2 126 097 2 319 939 Brunei Darussalam 3 868c 4 140 6 798 6 753 .. .. .. .. Cambodia 1 580 9 026 44 537 48 420 193 331 1 321 1 473 Indonesia 25 060 160 735 264 034 285 690c 6 940 6 672 104 886 111 954c Lao People’s Democratic Republic 588c 1 888c 12 736c 14 404c 26c 68c 95c 95c Malaysia 52 747 101 620 199 206 201 736 15 878 96 964 137 655 144 361 Myanmar 3 752c 14 507 38 427 39 948 .. .. .. .. 162 FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Philippines 13 762c 25 896b 109 622d 118 985d 1 032c 6 710b 63 560d 68 272d Singapore 110 570 633 354b 2 326 998b 2 632 364b 56 755 466 723b 1 638 614b 1 792 289b Thailand 30 944 142 334 292 205 290 870 3 232 24 418 165 398 187 893 Timor-Leste .. 155 993 1 018 .. 94 24 7 Viet Nam 14 730c 57 004c 210 471c 228 971c .. 2 234c 14 545c 13 595c South Asia 30 743 269 143 643 371 675 576 2 761 100 441 231 859 245 241 Afghanistan 17c 963 1 613c 1 613c .. 16 165c 165c Bangladesh 2 162 6 072 20 755 20 549 68 98 400 385 Bhutan 4c 204 419c 438c .. .. .. .. India 16 339 205 580 510 703 536 930 1 733 96 901 222 628 235 956 Iran (Islamic Republic of) 2 597c 28 953 61 636c 63 058c 411c 1 713c 4 239c 4 325c Maldives 128c 1 114c 6 718c 7 479c .. .. .. .. Nepal 72c 239 2 187 2 067 .. .. .. .. Pakistan 6 919 19 828 25 292 28 610 489 1 362 2 894 2 850 Sri Lanka 2 505 6 190 14 047 14 831 60 351 1 534 1 560 West Asia 72 352 619 425 982 875 931 257 14 672 172 001 654 509 707 394 Armenia 513 4 405 7 124 7 499 .. 150 571 618 Azerbaijan 1 791 14 253 32 503 32 745 1 5 790 26 981 28 717 Bahrain 5 906 15 154 36 245 43 084 1 752 7 883 20 955 22 068 Georgia 762 8 518 22 329 24 354 118 848 3 249 3 529 Iraq -48 7 965 .. .. .. 632 3 389 3 598c Jordan 3 135 21 899 38 496 39 534 44 473 681 745 Kuwait 608 11 884 15 091 16 648 1 428 28 189 45 818 50 246 Lebanon 14 233 44 285 70 604 71 260 352 6 831 14 729 14 802 Oman 2 577c 14 987 51 324c 56 069c .. 2 796 6 057c 6 222c Qatar 1 912 30 549 27 610 27 136c 74 12 995 50 054 49 862c Saudi Arabia 17 577b 176 378b 268 947b 215 524b 5 285c 26 528 187 068 203 768 Syrian Arab Republic 1 244 9 939c 10 743c 10 743c .. 5 5c 5c Türkiye 18 812 188 308 202 503 156 537 3 668 22 509 54 082 60 041 United Arab Emirates 1 069c 63 869 194 300 224 987 1 938c 55 560 239 880 262 208 Yemen 843c 4 858c 1 942c 1 942c 13c 571c 672c 672c State of Palestine 1 418c 2 176 3 116 3 195c .. 241 318 292c Central Asia 12 293 101 577 216 441 222 059 49 16 365 17 303 17 941 Kazakhstan 10 078 82 648 154 419 157 198 16 16 212 16 792 17 381 Kyrgyzstan 432 1 698 3 506 3 810 33 2 26 27 Tajikistan 136 1 226 3 329 3 333 .. .. 283 323 Turkmenistan 949c 13 442c 41 537c 42 915c .. .. .. .. Uzbekistan 698c 2 564 13 649 14 804 .. 152 202 210 Latin America and the Caribbeana 338 557 1 550 274 2 653 078 2 953 403 53 170 417 359 820 142 928 378 South America 186 425 1 085 464 1 727 712 1 898 677 43 634 288 295 604 267 677 146 Argentina 67 601 85 591 116 698 128 855 21 141 30 328 45 781 48 299 Bolivia (Plurinational State of) 5 188 6 890 9 839 9 633 29 8 854 1 167 Brazil .. 640 330 878 144 997 570 .. 149 333 299 369 365 813 Chile 45 753 160 904 250 062 267 132 11 154 61 126 134 744 137 182 Colombia 11 157 82 991b 234 231b 254 329b 2 989 23 717b 73 295b 73 295b Ecuador 6 337 11 858 22 292 22 664 .. .. .. .. Guyana 756 1 784 17 074 10 279 1 2 78 47 Paraguay 1 003 3 555 7 666 8 906 .. .. .. .. Peru 11 062 42 976 129 221 132 546 505 4 265 10 124 10 885 Suriname .. .. 1 936 1 853 .. .. 202 213 Uruguay 2 088 12 479 34 653 38 326 138 345 6 898 6 091 Venezuela (Bolivarian Republic of) 35 480 36 107 25 897 26 585c 7 676 19 171 30 735 32 169c Central America 139 768 417 113 843 099 968 310 8 534 126 025 208 553 242 658 Belize 294 1 454 2 679 2 812 42 49 76 78 Costa Rica 2 809 15 936 52 474 55 165c 22 1 135 3 758 3 769c El Salvador 1 973 7 284 10 100 10 841 104 1 1 689 1 720 Guatemala 3 420 4 554 22 409 24 080 93 452 2 936 3 618 Honduras 1 392 6 951 18 557 19 633 .. 867 2 877 3 132 Mexico 121 691 355 512 662 718 778 371 8 273 119 967 190 122 222 742 Nicaragua 1 414 4 681 12 500 13 730 .. 181 818 849 Panama 6 775 20 742 61 662 63 676 .. 3 374 6 277 6 751 Caribbeana 12 365 47 697 82 267 86 417 1 002 3 039 7 322 8 574 Antigua and Barbuda .. .. 2 090b 2 390b .. .. 91b 99b Barbados 308 4 970 8 544c 8 769c 41 4 058 3 858c 3 866c Dominica .. .. 517b 537b .. .. 3b 2b Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Continued) 163 Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Concluded) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). a Excluding the financial centres in the Caribbean and special-purpose entities in reporting countries. b Asset/liability basis. c Estimates. d Directional basis calculated from asset/liability basis. e Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Yemen and Zambia. f Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, the Plurinational State of Bolivia, Botswana, Burkina Faso, Burundi, the Central African Republic, Chad, Eswatini, Ethiopia, Kazakhstan, Kyrgyzstan, the Lao People’s Democratic Republic, Lesotho, Malawi, Mali, Mongolia, Nepal, the Niger, North Macedonia, Paraguay, the Republic of Moldova, Rwanda, South Sudan, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and Zimbabwe. g Small island developing States include Antigua and Barbuda, the Bahamas, Barbados, Cabo Verde, the Comoros, Dominica, the Dominican Republic, Fiji, Grenada, Jamaica, Kiribati, Maldives, the Marshall Islands, Mauritius, the Federated States of Micronesia, Nauru, Palau, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Sao Tome and Príncipe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and Vanuatu. FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Dominican Republic 1 673 18 793 51 982 56 372 .. 743 917 1 277 Grenada .. .. 1 990b 2 153b .. .. 99b 112b Haiti 95 625 2 031 2 063c .. .. .. .. Jamaica 3 317 10 855 18 332 18 763c 709 176 1 136 1 131c Saint Kitts and Nevis .. .. 1 676b 1 709b .. .. 102b 100b Saint Lucia .. .. 1 865b 2 004b .. .. 638b 635b Saint Vincent and the Grenadines .. .. 1 601b 1 683b .. .. 93b 91b Trinidad and Tobago 7 280c 17 424 9 922 9 218c 293c 2 119 5 269 6 167c Anguilla .. .. 1 382b 1 528b .. .. 94b 96b Aruba 1 161 4 567 4 686 4 508c 675 682 760 852c Bahamas (the) 3 865c 13 160 28 512 29 904 547c 2 538 7 572 7 991 British Virgin Islands 30 289c 265 783c 1 028 356c 1 068 246c 69 041c 376 866c 128 306c 172 465c Cayman Islands 27 316c 161 916c 572 927c 601 061c 21 643c 89 316c 362 435c 382 857c Curaçao .. 527 1 081c 1 236c .. 32 1 002c 1 012c Montserrat .. .. 42b 49b .. .. .. .. Sint Maarten .. 256 190c 224c .. 10 107c 111c Oceania 1 854 14 694 31 593 32 060 56 614 6 055 5 067 Cook Islands (the) .. .. 181c 187c .. .. 14c 14c Fiji 356 2 963 5 755 5 855 39 47 125 163 Kiribati .. 5 11 13c .. 2 1 1c Marshall Islands (the) 20 120 170 164 .. .. .. .. Palau 173 232 858 905c .. .. .. .. Papua New Guinea 935 3 748 4 878c 4 454c 1c -5c 4 168c 3 078c Samoa 77 220 318 315 .. 14 51 51 Solomon Islands 106c 552 652 681c .. 27 77 77c Tonga 19c 220c 108c 132c 14c 58c 50c 50c Tuvalu .. 5 9c 9c .. .. .. .. Vanuatu 61c 454 636 647c .. 23 29 28c French Polynesia 146c 442c 1 110c 1 104c .. 144c 354c 368c New Caledonia -41c 5 726c 16 908c 17 595c 2c 304c 1 187c 1 237c Memorandum Least developed countries (LDCs)d 35 969 161 402 429 955 459 109 2 604 11 515 22 890 23 988 Landlocked developing countries (LLDCs)f 33 630 183 972 444 859 468 390 1 025 29 288 53 514 56 413 Small island developing States (SIDS)g 18 806 80 554 155 252 163 726 1 906 11 076 19 815 21 560 World Investment Report 2024 164 WIR past issues WIR 2023: Investing in Sustainable Energy for All WIR 2022: International Tax Reforms and Sustainable Investment WIR 2021: Investing in Sustainable Recovery WIR 2020: International Production Beyond the Pandemic WIR 2019: Special Economic Zones WIR 2018: Investment and New Industrial Policies WIR 2017: Investment and the Digital Economy WIR 2016: Investor Nationality: Policy Challenges WIR 2015: Reforming International Investment Governance WIR 2014: Investing in the SDGs: An Action Plan WIR 2013: Global Value Chains: Investment and Trade for Development WIR 2012: Towards a New Generation of Investment Policies WIR 2011: Non-Equity Modes of International Production and Development WIR 2010: Investing in a Low-Carbon Economy WIR 2009: Transnational Corporations, Agricultural Production and Development WIR 2008: Transnational Corporations and the Infrastructure Challenge WIR 2007: Transnational Corporations, Extractive Industries and Development WIR 2006: FDI from Developing and Transition Economies: Implications for Development WIR 2005: Transnational Corporations and the Internationalization of R&D WIR 2004: The Shift Towards Services WIR 2003: FDI Policies for Development: National and International Perspectives WIR 2002: Transnational Corporations and Export Competitiveness WIR 2001: Promoting Linkages WIR 2000: Cross-border Mergers and Acquisitions and Development WIR 1999: Foreign Direct Investment and the Challenge of Development WIR 1998: Trends and Determinants WIR 1997: Transnational Corporations, Market Structure and Competition Policy WIR 1996: Investment, Trade and International Policy Arrangements WIR 1995: Transnational Corporations and Competitiveness WIR 1994: Transnational Corporations, Employment and the Workplace WIR 1993: Transnational Corporations and Integrated International Production WIR 1992: Transnational Corporations as Engines of Growth WIR 1991: The Triad in Foreign Direct Investment
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U NI T E D NAT I O NS CO NFE R E N C E ON T R A D E A N D D E VE L OP M E N T Investment facilitation and digital government 2024 World investment report 2024 World investment report U NI T E D NAT I O NS CO NFE R E N C E ON T R A D E A N D D E VE L OP M E N T Investment facilitation and digital government Geneva, 2024 Mention of any firm or licensed process does not imply the endorsement of the United Nations. This publication has been edited externally. United Nations publication issued by UN Trade and Development. UNCTAD/WIR/2024 ISBN 978-92-1-003134-9 PDF ISBN 978-92-1-358973-1 EPUB ISBN 978-92-1-358974-8 Print ISSN 1020-2218 Online ISSN 2225-1677 Sales no. E.24.II.D.11 World Investment Report 2024 Investment facilitation and digital government iii Preface Investment is the fuel for sustainable development. Closing the SDG and climate financing gap will require an estimated $500 billion of international public finance and $500 billion of international private finance per year, much of which would be in the form of foreign direct investment. But many developing countries are running on empty. Global and regional crises, trade tensions and tighter financing conditions have had a chilling effect on foreign direct investment, which remained subdued in 2023 for a second year in succession. Global flows of foreign direct investment stagnated at $1.3 trillion. Notably, foreign direct investment in new industrial and infrastructure projects in developing countries declined, while new investment in sectors relevant to the Sustainable Development Goals fell by more than 10 per cent. Stagnant SDG investment and insufficient funding is severely hindering implementation of the 2030 Agenda and the SDGs, particularly in least developed countries. We need urgent action to remove obstacles and provide a transparent, streamlined investment climate for sustainable development. This World Investment Report shows that the lacklustre financial flows to developing countries are not due to a lack of investment policy efforts. Investment facilitation has become a prominent feature of national policies and international agreements. Digital government solutions are proliferating, aiding investors and strengthening governance and institutions. But despite these efforts, finance is not flowing at sufficient scale, due to high interest rates and geopolitical conditions. That means we must redouble our efforts. I urge all decision makers to prioritize the mobilization of sustainable finance at scale. The SDG Stimulus we have proposed is a practical and achievable means of delivering this. Our call for reform and scaling up of multilateral development banks is intended to significantly increase the crowding in of private investment. I also encourage policymakers to prioritize strengthening investment governance in developing countries, to ensure financial flows are directed towards the SDGs. UNCTAD’s recommendations for the use of business facilitation and digital government to ease sustainable investment can play an important part in achieving these goals. António Guterres Secretary-General of the United Nations World Investment Report 2024 Investment facilitation and digital government iv Foreword In a world grappling with global and regional crises, the delicate balance of foreign direct investment (FDI) hangs precariously. This World Investment Report (WIR) serves as a stark reminder that investment, the lifeblood of sustainable development, is not merely a statistic but a lifeline for developing nations. It is the fuel that powers progress towards the Sustainable Development Goals (SDGs) and the 2030 Agenda for Sustainable Development. The challenges we face are multifaceted and interconnected. Geoeconomic fragmentation is reshaping the landscape of global investment. Trade networks are fragmenting, regulatory environments are diverging and international supply chains are being reconfigured. These shifts create both obstacles and isolated opportunities, with some countries benefiting from investments in global value chain-intensive manufacturing while others struggle to participate in the global economy. Overall, however, these trends are leading to a further deterioration of the international investment landscape as seen from the developing world. Last year, FDI fell by more than 10 per cent globally, and by 7 per cent in the developing world. International project finance, crucial for infrastructure development, was particularly hard hit, falling by 26 per cent. Prospects for 2024 remain challenging, with weakening growth prospects and continuing trade and geopolitical tensions. Furthermore, the WIR reveals a crisis in SDG investment, with a more than 10 per cent decrease in 2023. Two sectors, agrifood systems and water and sanitation, registered fewer internationally financed projects in 2023 than in 2015, when the SDGs were adopted. This decline, driven by tighter financing conditions and a slowdown in sustainable finance markets, underscores the need for concerted action to steer investments towards projects that genuinely contribute to a sustainable future. Meanwhile, the mobilization of funds for SDG investment through sustainable finance products in global capital markets is still growing but slowing down. Sustainable bonds showed marginal growth in 2023, and new inflows in sustainable investment funds dropped by 60 per cent. Greenwashing concerns are increasingly affecting investor demand. More broadly, policy action is needed to mitigate the risk of a widening backlash against sustainable investment strategies. The world needs a robust and credible sustainable finance industry, and no effort must be spared to fortify it before it is too late. But the way we do that must be carefully considered. Policymakers should be mindful of the spillover effects of international sustainability reporting standards, particularly on small and medium-sized enterprises (SMEs) in developing countries. These SMEs, the engines of inclusive growth and job creation, are precisely the ones that need sustainable finance flows the most. However they may struggle to meet increased disclosure requirements, potentially affecting their market access and participation in global supply chains. Striking a balance between promoting transparency and avoiding undue burdens on businesses will be crucial for a sustainable and inclusive investment landscape. Against this complex backdrop, the WIR underscores the importance of investment facilitation and digital government as tools to attract and retain investment. By streamlining procedures, enhancing transparency and leveraging digital tools such as online single windows, we can World Investment Report 2024 Investment facilitation and digital government v foster a more conducive investment climate, particularly in developing countries. Furthermore, the report emphasizes that digital business and investment facilitation is not merely a technical solution; it is a stepping stone towards wider digital government implementation, which can address underlying weaknesses in governance and institutions that often hinder investment and impede progress towards sustainable development. Investment facilitation, while essential, is not a panacea for the challenges facing global investment flows. However, it is an undeniable prerequisite for fostering an environment conducive to sustainable investment. The proliferation of digital solutions for investment facilitation, as highlighted in this report, exemplifies the WIR’s commitment to providing tangible and actionable policy recommendations even in the most challenging of times. As we navigate the complexities of the 21st century, the WIR reminds us that investment is not just about capital flows; it is about human potential, environmental stewardship and the enduring pursuit of a more equitable and sustainable world. Let us embrace this vision with renewed determination, recognizing that the choices we make today will shape the world we leave behind for generations to come. Rebeca Grynspan Secretary General of UN Trade and Development World Investment Report 2024 Investment facilitation and digital government vi Acknowledgements The World Investment Report 2024 was prepared by a team at UNCTAD led by Richard Bolwijn. UNCTAD team members included Dafina Atanasova, Vincent Beyer, Stephania Bonilla, Julien Bornon, Bruno Casella, Joseph Clements, Mathilde Closset, Tiffany Grabski, Frank Grozel, Natalia Guerra, Hamed El Kady, Anastasia Leskova, Massimo Meloni, Anthony Miller, Bita Mortazavi, Abraham Negash, Yongfu Ouyang, Marios Pournaris, Ian Richards, Diana Rosert, Amelia U. Santos-Paulino, Changbum Son, Astrit Sulstarova, Yihua Teng, Claudia Trentini and Kee Hwee Wee. Research support and inputs were provided by Ciman Araleh, Gregory Allan Auclair, Weijia Hu, Oktawian Kuc, Corli Le Roux, Noé Michon, Elisa Navarra, Nelson Pérez, Lucas Ricardo, Lauren Satterthwaite, Prachi Sharma, Kjartan Sorensen, Rick van der Maas and Vanina Vegezzi. Comments and contributions were provided by colleagues in UNCTAD: Kiyoshi Adachi, Rodrigo Carcamo, Marco Fugazza, Ebru Gökçe-Dessemond, Poul Hansen, Igor Paunovic, Luisa Rodriguez, Mesut Saygili, Dawei Wang and Anida Yupari, as well as the Office of the Secretary-General. Statistical assistance was provided by Mohamed Chiraz Baly, Kerem Bayrakceken and Bradley Boicourt. IT assistance was provided by Chrysanthi Kourti. The manuscript was copy-edited by Lise Lingo. The design of the charts and infographics, and the typesetting of the report were done by Maria Teresa Arrigoni and Matteo Oldani. Production of the report was supported by Elisabeth Mareschal and Katia Vieu. At various stages of the preparation of the theme chapter, including the peer review, brainstorming meetings and discussions in the margin of the UNCTAD Investment and Enterprise Commission meeting on Investment Facilitation for Sustainable Development, the team benefited from comments and inputs received from external experts: Yasser Abbas, Isiaka Abdulqadir Imam, Axel Berger, Alejandro Encinas Nájera, Najwa Halaseh, Archie Kariuki, Olga Lucia Lozano, Victor Matassi, Ugo Panizza, Deniz Susar, Camilo Trigueros, Chhime Tshering, Ingmar Vali, Christian Volpe Martincus, Dana Akram Abdallah Al Zoubi, and Juwang Zhu. The team is grateful for advice, input and comments received from numerous officials in central banks, national government agencies, international organizations and non-governmental organizations. World Investment Report 2024 Investment facilitation and digital government vii Explanatory notes The terms country and economy as used in this report also refer, as appropriate, to territories or areas. In addition, the designations of country and economy groupings are intended solely for statistical or analytical convenience and do not necessarily express a judgement about the stage of development reached by a particular country or area in the development process. The major country and economic groupings used in this report follow the classification of the United Nations Statistical Office: • Developed economies: the member countries of the OECD (other than Chile, Colombia, Costa Rica, Mexico and Türkiye), European Union member countries that are not OECD members (Bulgaria, Croatia, Cyprus, Malta and Romania) plus Albania, Andorra, Belarus, Bermuda, Bosnia and Herzegovina, Liechtenstein, Monaco, Montenegro, North Macedonia, the Republic of Moldova, the Russian Federation, San Marino, Serbia and Ukraine, plus the territories of Faroe Islands, Gibraltar, Greenland, Guernsey and Jersey. • Developing economies: in general, all economies not specified above. For statistical purposes, the data for China do not include those for Hong Kong Special Administrative Region (Hong Kong SAR), Macao Special Administrative Region (Macao SAR) or Taiwan Province of China. Throughout the report, data on investment trends for the Netherlands refer only to the Netherlands; information for Aruba, Curaçao and Sint Maarten is reported separately. Methodological details on FDI and MNE statistics can be found on the report website (https:// unctad.org/topic/investment/world-investment-report). The following symbols have been used in the tables: • Two dots (..) indicate that data are not available or are not separately reported. Rows in tables have been omitted in those cases where no data are available for any of the elements in the row. • A dash (–) indicates that the item is equal to zero or its value is negligible. • A blank in a table indicates that the item is not applicable, unless otherwise indicated. • A slash (/) between dates representing years, e.g., 2020/21, indicates a financial year. • Use of a dash (–) between dates representing years, e.g., 2020–2021, signifies the full period involved, including the beginning and end years. • Reference to “dollars” ($) means United States dollars, unless otherwise indicated. Annual rates of growth or change, unless otherwise stated, refer to annual compound rates. Details and percentages in tables do not necessarily add to totals because of rounding. World Investment Report 2024 Investment facilitation and digital government viii Abbreviations AfCFTA African Continental Free Trade Area ASEAN Association of Southeast Asian Nations ASYCUDA Automated System for Customs Data AIFF ASEAN Investment Facilitation Framework BIT bilateral investment treaty CDP Carbon Disclosure Project CEPA Comprehensive Economic Partnership Agreement COVID-19 coronavirus disease 2019 ECT Energy Charter Treaty EGDI eGovernment Development Index ESG environmental, social and governance EVs electric vehicles FDI foreign direct investment FTA free trade agreement GDP gross domestic product GER Global Enterprise Registration GHG greenhouse gas GSFO Global Sustainable Finance Observatory GVC global value chain ICC International Chamber of Commerce ICSID International Centre for Settlement of Investment Disputes ICT information and communications technology IFD Investment Facilitation for Development IFRS International Financial Reporting Standards IIA international investment agreement IMF International Monetary Fund IPA investment promotion agency IPFSD Investment Policy Framework for Sustainable Development ISDS investor–State dispute settlement ISSB International Sustainability Standards Board IT Information technology LDC least developed country LLDC landlocked developing country M&As mergers and acquisitions MNE multinational enterprise MSMEs micro-, small and medium-sized enterprises NAFTA North American Free Trade Agreement OECD Organisation for Economic Co-operation and Development OFDI outward FDI OFIO Office of the Foreign Investment Ombudsman OHCHR Office of the United Nations High Commissioner for Human Rights OIC Organisation of Islamic Cooperation PPF public pension fund PPP public–private partnership SDGs Sustainable Development Goals SEZ special economic zone SIDS small island developing States SIFA sustainable investment facilitation framework SMEs small and medium-sized enterprises SPAC special purpose acquisition company SWF sovereign wealth fund TIP treaty with investment provision TNI Transnationality Index UN DESA United Nations Department of Economic and Social Affairs UNCITRAL United Nations Commission on International Trade Law UNCTAD United Nations Conference on Trade and Development UNEP United Nations Environment Programme UNIDROIT International Institute for the Unification of Private Law UNODC United Nations Office on Drugs and Crime USMCA United States–Mexico–Canada Agreement WASH water, sanitation and hygiene WIR World Investment Report WTO World Trade Organization World Investment Report 2024 Investment facilitation and digital government ix Table of contents Executive summary. .......................................................................... xi Chapter I International investment trends. ....................................................... 1 A. Foreign direct investment......................................................... 3 1. Global trends. ................................................................................. 3 2. Trends by geography. ..................................................................... 5 3. Trends by project type and sector. ............................................... 21 B. Investment in the Sustainable Development Goals. ................ 29 C. International production. ......................................................... 34 1. Key indicators of international production. ................................... 34 2. Internationalization trends of the largest MNEs. ........................... 36 3. Shifting investment patterns among the top 100 MNEs. .............. 38 Chapter II Investment policy trends................................................................. 45 A. National investment policies................................................... 47 1. Overall trends. .............................................................................. 47 2. Policy measures more favourable to investors. ............................ 50 3. Policy measures less favourable to investors. .............................. 55 4. Outward foreign direct investment policies.................................. 60 B. International investment policies............................................ 65 1. Trends in international investment agreements............................ 65 2. Trends in investor–State dispute settlement. ................................ 73 Chapter III Sustainable finance trends. ............................................................. 77 A. Sustainability-themed capital market products. ...................... 79 1. Sustainable bond markets........................................................... 79 2. Sustainable funds. ........................................................................ 85 B. Sovereign and public institutional investors. ........................... 88 1. Sustainability integration strategies and practices. ...................... 90 2. Sustainability disclosure. .............................................................. 93 C. Policies, regulations and standards........................................ 96 World Investment Report 2024 Investment facilitation and digital government x ONLINE ONLY: Regional Trends Africa Developing Asia Latin America and the Caribbean Structurally weak, vulnerable and small economies: Least developed countries (LDCs) Landlocked developing countries (LLDCs) Small island developing States (SIDS) 1. International sustainability reporting standards. ........................... 96 2. Policymaking at national and regional levels . ............................ 102 Chapter IV Investment facilitation and digital government........................... 107 A. Introduction. .......................................................................... 109 B. Progress on digital investment facilitation worldwide........... 113 1. The wider digital government context........................................ 113 2. The spread and quality of business portals. ............................... 115 3. Foreign investor-specific online procedures. .............................. 119 4. Portal ownership and the role of IPAs........................................ 122 C. Facilitation in national and international investment policies. 125 1. National policies. ........................................................................ 125 2. International investment agreements......................................... 129 D. The impact of investment facilitation and digital government.134 E. From online business facilitation to digital government........ 140 1. The basic architecture of digital government services............... 140 2. Effective implementation. ........................................................... 142 3. Connecting with wider digital government................................. 145 F. Conclusions and policy implications. ..................................... 150 References..................................................................................... 153 Annex tables. .................................................................................. 156 World Investment Report 2024 Investment facilitation and digital government xi Executive summary International investment trends Global foreign direct investment (FDI) in 2023 decreased marginally, by 2 per cent, to $1.3 trillion. This headline figure was affected by wild swings in financial flows through a small number of European conduit economies; excluding the effect of these conduits, global FDI flows were more than 10 per cent lower than in 2022. The global environment for international investment remains challenging in 2024. Weakening growth prospects, economic fracturing trends, trade and geopolitical tensions, industrial policies and supply chain diversification are reshaping FDI patterns, causing some multinational enterprises (MNEs) to adopt a cautious approach to overseas expansion. However, MNE profit levels remain high, financing conditions are easing and increased greenfield project announcements in 2023 will positively affect FDI. Modest growth for the full year appears possible. International project finance and cross-border mergers and acquisitions (M&As) were especially weak in 2023. M&As, which mostly affect FDI in developed countries, fell by 46 per cent in value. Project finance, important for infrastructure investment, was down 26 per cent. Tighter financing conditions, investor uncertainty, volatility in financial markets and – for M&As – tighter regulatory scrutiny were the principal causes of the decline. Greenfield investment project announcements provided a bright spot. Project numbers increased by 2 per cent, with the growth concentrated in manufacturing, interrupting a decade-long trend of gradual decline in the sector. Furthermore, growth was concentrated in developing countries, where the number of projects was up by 15 per cent. In developed countries new project announcements were down 6 per cent. In developed countries, the 2023 trend was strongly affected by MNE financial transactions, partly caused by moves to implement a minimum tax on the largest MNEs. FDI flows in Europe jumped from negative $106 billion in 2022 to positive $16 billion because of volatility in conduit economies. Inflows to the rest of Europe were down 14 per cent. Inflows in other developed countries also stagnated, with a 5 per cent decline in North America and sizeable falls elsewhere. FDI flows to developing countries fell by 7 per cent to $867 billion, mainly due to an 8 per cent decrease in developing Asia. Flows fell by 3 per cent in Africa and by 1 per cent in Latin America and the Caribbean. The number of international project finance deals fell by a quarter. Greenfield project announcements in developing countries increased by more than 1,000, but these projects were highly concentrated; South-East Asia accounted for almost half, West Asia for a quarter and Africa registered a small increase, while Latin America and the Caribbean attracted fewer projects. • FDI inflows to Africa declined by 3 per cent in 2023 to $53 billion. Greenfield announcements included several megaprojects, including the largest announcement worldwide – a green hydrogen project in Mauritania. International project finance fell by a quarter in number of deals and by half in value, negatively affecting prospects for infrastructure investment. • FDI in developing Asia fell by 8 per cent to $621 billion. China, the second largest FDI recipient in the world, saw a rare decline in inflows. Sizeable declines were recorded in India and in West and Central Asia. Only South-East Asia held steady. Industrial investment in World Investment Report 2024 Investment facilitation and digital government xii Asia remains buoyant, as shown by greenfield announcements, but the global downturn in project finance also affected the region. • Flows to Latin America and the Caribbean were down 1 per cent, at $193 billion. The number of international project finance and greenfield investment announcements fell, but the value of the latter increased because of large projects in commodity sectors and critical minerals, as well as in renewable energy, green hydrogen and green ammonia. • FDI flows to the structurally weak and vulnerable economies increased. FDI inflows to the least developed countries (LDCs) rose to $31 billion, or 2.4 per cent of global FDI flows. Landlocked developing countries and small island developing States also saw increased FDI. In all three groups, FDI remains concentrated among a few countries. International project finance is relatively more important in the poorest countries, which are therefore disproportionally affected by the global downturn in this form of investment. Industry trends showed lower investment in the infrastructure and digital economy sectors, but strong growth in the global value chain-intensive sectors of manufacturing and critical minerals. Weak project finance markets negatively affected infrastructure investment, and digital economy sectors continued their slowdown after the boom ended in 2022. Global value chain-intensive sectors, including the automotive, electronics and machinery industries, grew strongly, showing the effect of supply chain restructuring pressures. In critical minerals extraction and processing, investment project numbers and values nearly doubled. Global economic fracturing trends are affecting the investment strategies of manufacturing MNEs. The investment behaviour of the top 100 non-financial MNEs shows that, since 2019, the geographical distribution of manufacturing projects, especially in strategic sectors, has shifted towards locations closer to major MNE home markets in Europe and the United States. West Asia, North Africa and Central America are emerging as strategic locations for manufacturing MNEs. International investment in sectors relevant for the Sustainable Development Goals in developing countries declined in 2023. Growth in greenfield project announcements, especially in renewable energy, power and transportation, pushed up the numbers. In value terms, Goals investment in developing countries fell because of the downturn in international project finance, used for larger projects in infrastructure sectors. Project numbers in agrifood systems and in water and sanitation were lower than they were in 2015 when the Goals were adopted. Goals investment is also unequally distributed. The shares of global Goals investment projects attracted by Africa and by Latin America and the Caribbean are smaller than their shares in all projects. Only developing Asia attracts above-average Goals investment. Investment policy trends The number of investment policy measures adopted in 2023 was 25 per cent lower than in 2022 but still in line with the five-year average. Most measures, 72 per cent, were favourable to investors. The overall balance between favourable measures (liberalization, promotion, facilitation) and less favourable ones (restrictions on entry and operation) was unchanged. Developing countries mostly aim to promote and facilitate investment, whereas developed countries lean towards more restrictive measures. In developing countries, 86 per cent of measures were favourable to investors. In developed countries, 57 per cent of measures were less favourable to investors. Most of these concerned restrictions to address national security concerns. Investment facilitation and incentives were the main types of measures favourable to investors in both developed and developing countries. Facilitation measures reached almost 40 per cent World Investment Report 2024 Investment facilitation and digital government xiii of favourable measures and 30 per cent of all measures – a record. For incentives, the services sector and renewable energy were the primary focus in 2023. Heightened caution towards foreign investments in critical sectors persisted in 2023. The introduction or expansion of FDI screening mechanisms accounted for nearly half of the measures less favourable to investors. Four additional countries implemented FDI screening in 2023, with several more expected to follow in 2024. Countries that conduct FDI screening now account for over half of global FDI flows and three quarters of FDI stock. FDI restrictions also increasingly affect outward FDI. Outward FDI policies have evolved over the past decade, reflecting the growing importance of both sustainability and geopolitical considerations in shaping investment policies. In 2023, countries and regions concluded 29 new international investment agreements (IIAs). Traditional bilateral investment treaties accounted for fewer than half of the new treaties; most were broad economic agreements with investment provisions. Efforts to reform the IIA regime are continuing. New treaties tend to include features aimed at safeguarding the right to regulate and they increasingly cover a broader range of issues, including investment facilitation. The recent finalization of the Investment Facilitation for Development Agreement by participating members of the World Trade Organization may provide further impetus for this trend. Reform of the stock of old-generation IIAs continues to be slow. About half of the global stock of FDI is still covered by IIAs that have not been reformed, which expose countries to higher risk of investor–State dispute settlement cases. This share is about two thirds for developing countries and closer to three quarters for LDCs. Only 16 per cent of global FDI stock is today covered by a new-generation IIA; reform efforts have so far had a limited effect on mitigating the risk of ISDS, especially in the poorest countries. The total ISDS case count reached 1,332, with 60 new arbitrations initiated in 2023. About 70 per cent of new cases were brought against developing countries, including three LDCs. International investors in the construction, manufacturing and extractive sectors accounted for over half of the claims in 2023. UNCTAD continues to play a leading role in facilitating IIA reform. It launched the Multi-Stakeholder Platform for IIA Reform during the UNCTAD World Investment Forum to chart the way forward towards an investment regime that puts sustainable development at its core. Sustainable finance trends The sustainable finance market continues to grow, but there are clear signs of a slowdown. In 2023, the value of sustainable investment products, encompassing bonds and funds, increased by 20 per cent to more than $7 trillion. However, much of the increase was driven by cumulative issuance and rising valuations, and some segments of the market struggled. Sustainable bonds showed marginal growth. Issuance climbed 3 per cent to $872 billion, bringing the outstanding value of the market to more than $4 trillion. Green bonds were the main driver of growth, while issuance in other segments, especially social bonds, fell. Sustainable funds experienced strong headwinds. Despite continued growth in the number of funds and asset values, net inflows dropped from $161 billion in 2022 to $63 billion in 2023. In the principal markets, funds in Europe lost growth momentum and those in the United States saw significant net outflows, exceeding those of the broader fund market. Greenwashing poses the most significant challenge to the sustainable fund market. The average net exposure of green funds to climate-positive assets (low-carbon assets minus fossil fuels) is World Investment Report 2024 Investment facilitation and digital government xiv only about 20 per cent, and fewer than 5 per cent of these funds are free from oil and gas assets. Further systemic efforts are needed to tackle greenwashing, including well-defined product standards, robust sustainability disclosures, external auditing and third-party ratings. Institutional investors made progress on sustainability reporting, but significant gaps remain. In 2023, 58 of the top 100 sovereign wealth and public pension funds monitored by UNCTAD reported on their sustainability performance, up from 55 in 2022. Only a quarter of reporting funds used third-party verification. Institutional investors are not moving fast enough to reorient portfolios. Most reporting funds have set out strategies to address climate change. However, only one in three have set a target for fossil fuel divestment and investment in renewables. Governments in both developed and developing economies are accelerating sustainable finance policymaking. In 2023, 35 economies tracked by UNCTAD, covering the world’s largest financial markets, introduced 94 new measures and initiatives, up from 63 in 2022. Policy measures mostly concerned disclosure rules, new national strategies, frameworks and guidelines, and (financial) sector- and product-specific requirements. Developing countries are becoming increasingly active in sustainable finance policymaking. They accounted for about 60 per cent of new policy measures in 2023. These measures were mostly concentrated in the largest developing economies or financial centres. Developing countries as a group continue to face challenges in leveraging sustainable finance, as evidenced by the persistently low sustainable investment flows. International standards will have significant spillover effects. The new disclosure standards issued by the International Sustainability Standards Board and the European Union will affect firms based outside the main financial markets for which they were primarily developed. Companies in developing countries that are part of the supply chains of firms in those markets will face greater pressure to meet higher sustainability standards, and compliance may become a prerequisite for market access. A key policy challenge is to avoid widening resistance to sustainable investment strategies in financial markets and – more broadly – to sustainability and disclosure requirements. In the United States, 17 states have passed legislation prohibiting fund managers from considering environmental, social and governance factors in their investment decisions or prohibiting states from contracting with asset managers that exclude certain industries, such as fossil fuels, from their portfolios. For firms worldwide, the complexity and compliance costs associated with sustainability reporting are a growing concern. Investment facilitation and digital government Investment facilitation has emerged as a top priority for investment policymakers worldwide. Since the publication of the UNCTAD Global Action Menu on Investment Facilitation in 2016, an international agreement on investment facilitation for development has been negotiated, facilitation has become a mainstay in regional and bilateral trade and investment agreements, and national implementation efforts have proliferated. Business and investment facilitation have become central to both private sector development and FDI attraction in developing countries. Making it easier to establish and operate a business not only attracts foreign investors but also improves the business environment for local firms, supporting the formalization and growth of micro, small and medium-sized enterprises. World Investment Report 2024 Investment facilitation and digital government xv At the core of facilitation efforts are information provision, transparent rules and regulations, and streamlined administrative procedures. Because these elements revolve around information and procedures, digitalization is central to their effective implementation. Business and investment facilitation have thus led to a wave of digital government initiatives, including information portals and online single windows. Such initiatives now make up a significant share of national investment policy measures monitored by UNCTAD; modern IIAs also increasingly encourage digitalization to implement commitments. The number of digital facilitation tools has grown significantly in recent years, and their quality has improved. UNCTAD data show that the number of national government information portals for business and investor registration in developing countries increased from 82 in 2016 to 124; in developed countries, it increased from 43 to 48. In developing countries, the number of online single windows – which allow for multiple procedures to be carried out online – increased from 13 to 67 in the same period; in developed countries it increased from 12 to 28. The quality of portals has also improved, with some in LDCs rivaling those in developed countries, showing that leapfrogging opportunities exist. Challenges remain in building, maintaining and enhancing digital platforms. Despite progress, issues such as outdated information, portal closures and “single window dressing” persist. Continuous updates, clear ownership and adequate resources are essential for the long-term success of digital facilitation platforms. Technical support for developing countries is important; the highest-rated portals in LDCs often were created through development assistance. Digital government tools can have a positive impact on FDI attraction. On average, for each additional point in the quality of digital business and investment facilitation portals (in the rating methodology of the UNCTAD Global Enterprise Registration initiative), developing countries gain about 8 per cent more FDI. This effect is not automatic; it is part of the impact of broader investment climate improvements. Digital business and investment facilitation also boosts formalization and inclusivity. Countries that implement digital single windows see substantial increases in small business registrations. Many new businesses are established by women, young entrepreneurs and populations outside urban centres, indicating that platforms improve access to services, even in countries with a significant digital divide. Governments should adopt a comprehensive approach to digital investment facilitation, avoiding dedicated processes for investment procedures. Progressively incorporating all mandatory procedures for business establishment, such as business registration, tax and social security, and operating licenses, helps capture economies of scale and scope and ensures that benefits extend to all firms, foreign and domestic, large and small. Digital business and investment facilitation can be a stepping stone for wider implementation of digital government. Because the basic architecture of digital government solutions is fundamentally the same across many types of services, platforms can gradually extend beyond the core mandatory procedures for investor entry and business establishment. Other administrative procedures affecting business operations may be sector specific or cover policy areas ranging from the environment to health and safety, labour and social issues. Business and investment facilitation provides a bottom-up avenue to digital government development. Such an approach, starting from basic services for business – usually the first government services to be digitized – and gradually expanding to adjacent policy areas can begin in one or a very few public sector entities, does not necessarily depend on major legislative interventions, is relatively low cost, and adds immediate value to users and revenue-generating potential for government. World Investment Report 2024 Investment facilitation and digital government xvi Such a bottom-up approach provides a valuable complementary route for developing countries. The prevailing guidance on digital government implementation favours a top-down approach based on a national strategy and supported by a digital government authority. Although central steering is necessary to push enabling legislation, budget support and stakeholder engagement, it can lead to lengthy and complex programmes that are often too costly for developing countries to pursue. Online single windows for businesses and investors can add value quickly and cheaply, and gradually expand coverage of services and institutions. Wider implementation of digital government is a natural complement to investment policy. Online information and streamlined processes alone cannot bring the sea change in investment potential that is needed in many developing countries. Surveys of investors and investment promotion agencies consistently show that weaknesses in governance and institutions are among the most important challenges in attracting foreign investment. Digital government, by increasing transparency, improving efficiency and reducing corruption, helps address those weaknesses and support investment for sustainable development objectives. The digital tools for business and investment facilitation included in the UNCTAD Digital Government Platform are operational in more than 60 countries. Looking ahead, UNCTAD will continue to support developing countries and – in collaboration with other international organizations – look for opportunities to maximize the benefits of digital government for the promotion of investment in sustainable and inclusive development. Chapter I International investment trends 2022 2023 -2% Europe North America Africa Developing Asia Latin America and the Caribbean 16 361 53 621 193 Regions FDI value (Billions of dollars) Growth rates Greenfeld projects FDI International project fnance .. -5% -3% -8 -1% -8% 0 +7% +22% -4% -25% -6% -26% -25% -30% FDI value Growth rates 464 867 31 Developed Developing LDCs Greenfeld projects (mostly industry) FDI International project fnance (mostly infrastructure) Income groups +9% -6% -21% -7% +15% -26% +17% +51% -32% Infrastructure Renewable energy WASH Agrifood systems Health and education +8% -5% -17% +13% +6% Infrastructure GVC-intensive industries Semiconductors Digital economy Extractives 0% +27% -1% -46% -9% Greenfeld projects (Number) Cross-border M&As (Value) Industries (Project numbers) SDG sectors (Developing economies, project numbers) International project fnance (Number) FDI (Value) 2022 2023 -23% 2022 2023 +2% 2022 2023 -46% Chapter I International investment trends 3 A. Foreign direct investment Global foreign direct investment (FDI) flows declined in 2023. Investor uncertainty about the state of the economy and the potential impact of economic fracturing trends affected flows in both developed and developing economies. Tighter financial conditions depressed international project finance deals and cross-border mergers and acquisitions (M&As). Greenfield project announcements increased, potentially signalling better prospects going forward. Combining these trends with stabilizing costs of finance makes expectations for 2024 moderately positive. 1. Global trends FDI flows in 2023 amounted to $1.33 trillion, 2 per cent less than in 2022. The headline number was affected by wild swings in a small number of European conduit economies. Excluding the effect of these conduits, global inflows declined by more than 10 per cent. FDI inflows to developing economies, which have been robust over the past few years, declined by 7 per cent in 2023. Flows to developed economies, net of conduits, fell by 15 per cent. They were affected by corporate financial reconfigurations – driven in part by moves to introduce a global minimum tax for large multinational enterprises (MNEs) – and by a big drop in the value of cross-border M&As. M&As, which especially affect FDI in developed countries, ended 2023 at just over half the value seen in 2022. International project finance was also weak, with both the number and the value of deals down by about a quarter. Tighter financing conditions, investor uncertainty, volatility in financial markets and – for M&As – greater regulatory scrutiny were the principal causes of the decline. Conversely, greenfield project announcements increased marginally, in both number and value terms. The growth was largely due to increased announcements in manufacturing industries, in a break with a decade-long trend of gradual decline in the sector. Manufacturing project announcements by Chinese firms were a big contributing factor. The gains in greenfield investment occurred only in developing countries, where the number of projects announced was up by 15 per cent (table I.1). In developed countries, in contrast, new project announcements were down 6 per cent. Diverging movements in greenfield projects and international project finance deals reflect the different drivers of investment in international production and industry (greenfield), on the one hand, and infrastructure industries (project finance) on the other. They also reflect the sensitivity of different investor pools to current financial conditions. MNEs have realized large profits over the past few years (figure I.1), boosting their capacity to finance asset expansions, which also explains the rising greenfield numbers. Project finance is World Investment Report 2024 Investment facilitation and digital government 4 Figure I.1 The profits of the largest multinational enterprises remain high Profits and profitability level of the largest firms Profts (Billions of dollars) Proftability (Percentage) 1 000 2 000 3 000 4 000 9 6 3 2016 2015 2018 2019 2017 2020 2021 2023 2022 Source: UNCTAD, based on data from Refinitiv. Notes: Covers 4,388 MNEs for which data were available for every year in the range. Profitability calculated as the ratio of net income to total sales. Value (Billions of dollars) Number Economic grouping Type of investment 2022 2023 Growth (%) 2022 2023 Growth (%) Developed economies Greenfield projects 687 631 -8 11 112 10 435 -6 International project finance 728 562 -23 1 720 1 357 -21 Cross-border M&As 599 302 -50 6 710 5 862 -13 Developing economies Greenfield projects 622 749 20 6 949 8 007 15 International project finance 573 396 -31 1 138 839 -26 Cross-border M&As 107 76 -29 1 053 855 -19 Table I.1 Announced greenfield projects, international project finance deals and cross-border M&As Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Abbreviations: M&As = mergers and acquisitions. Chapter I International investment trends 5 more dependent on institutional investors and on debt financing, both of which are more sensitive to capital costs and financial market trends. Higher interest rates may also lead governments to delay large projects as they wait for more favourable terms. The global environment for international business and cross-border investment remains challenging in 2024. Economic growth is expected to slow (table I.2). Global economic fracturing trends, trade and geopolitical tensions, industrial policies affecting strategic and manufacturing sectors, and moves by corporates to diversify supply chains are reshaping international production and FDI patterns. These trends are causing some MNEs to adopt a cautious approach to overseas expansion. Nevertheless, profit levels of the largest MNEs remain high, which will continue to be reflected in reinvested earnings – a significant component of FDI. Furthermore, financing conditions are easing after a period of high interest rates, which could support renewed growth of international project finance. The market for M&As is expected to recover, although cross- border transactions may take longer to react. The growth in greenfield project announcements in 2023 will also affect FDI flows as projects are realized over time. Overall, although early indicators for the first quarter of 2024 are still weak, modest growth for the full year appears possible. Variable 2021 2022 2023 2024a Gross domestic product 6.2 3.0 2.7 2.6 Trade in goods 10.0 3.8 -0.6 2.0 Gross fixed capital formation 7.4 -2.9 1.3 2.8 Foreign direct investment 64.7 -16.4 -1.8 Memorandum: Foreign direct investment value (Trillions of dollars) 1.6 1.4 1.3 Table I.2 Growth rates of global gross domestic product, gross fixed capital formation, trade and foreign direct investment (Percentage) Sources: UNCTAD for foreign direct investment, gross domestic product and trade, and IMF for gross fixed capital formation. a Forecast. 2. Trends by geography a. FDI inflows In developed economies, financial transactions by MNEs led to volatility in FDI. Including the effect of conduit flows, the headline number for FDI inflows shows an increase of 9 per cent (net of conduits, FDI declined by 15 per cent) (figure I.2). Developed countries accounted for 35 per cent of global FDI flows. Their share has been in gradual decline. The first time that they registered less than half of global flows was as recent as 2019. Nevertheless, developed economies still attract the majority of greenfield projects and international project finance deals. World Investment Report 2024 Investment facilitation and digital government 6 Inflows to Europe shifted dramatically, from -$106 billion in 2022 to $16 billion in 2023. Several economies, including Ireland, Luxembourg, the Netherlands, Switzerland and the United Kingdom of Great Britain and Northern Ireland, reported large negative numbers when the 2022 and 2023 inflows are taken into consideration together. Lower negative flows in 2023 had a net positive effect on FDI flows of about $180 billion. Excluding these countries, inflows to the rest of Europe declined by 14 per cent. FDI inflows to North America fell, as did those to most other developed countries. All developed regions experienced a sharp downturn in M&A activity, with the value of cross-border M&As dropping by $300 billion in 2023. The number of greenfield project announcements decreased by 6 per cent in developed economies and the number of project finance deals fell by 21 per cent (table I.3). FDI flows to developing economies decreased by 7 per cent, to $867 billion, or 65 per cent of global flows. Developing Asia, the largest FDI recipient, experienced an 8 per cent decline in inflows, driving the overall result. Inflows to Africa dropped by 3 per cent, while in Latin America and the Caribbean they remained flat. Figure I.2 Foreign direct investment declined in most regions Inflows by economic grouping and region (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 1 332 464 16 361 867 1 356 426 -106 379 930 53 54 World Developed economies Europe North America Developing economies Africa Per cent -2 +9 .. -5 -7 -3 7 193 196 Latin America and the Caribbean -1 7 621 678 Asia -8 2022 Chapter I International investment trends 7 In contrast, inflows to least developed countries (LDCs) increased; their share in global FDI grew from 2 to 2.4 per cent. Greenfield investment in developing countries was a bright spot in 2023, with the number of announcements increasing by 15 per cent and values climbing by 20 per cent. This partially offset declines in international project finance deals, which fell by 26 per cent in number and 31 per cent in value. The overall number of greenfield projects increased by 2 per cent (table I.3). Among developed regions, the number of greenfield projects held only in North America, which was less affected by the downturn in project finance deals as well. In other developed regions, greenfield project numbers were lower. In contrast, almost all developing regions saw growth in greenfield projects. Table I.3 Number of announced greenfield projects and international project finance deals, by economic grouping and region (Number and percentage) Announced greenfield projects International project finance deals Region/economic grouping 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) World 15 514 18 061 18 442 2 2 500 2 858 2 196 -23 Developed economies 10 438 11 112 10 435 -6 1 496 1 720 1 357 -21 Europe 7 545 7 676 7 041 -8 899 1 121 840 -25 European Union 5 913 5 990 5 419 -10 637 833 671 -19 Other Europe 1 632 1 686 1 622 -4 262 288 169 -41 North America 2 084 2 491 2 499 0 372 398 376 -6 Other developed countries 809 945 895 -5 225 201 141 -30 Developing economies 5 076 6 949 8 007 15 1 004 1 138 839 -26 Africa 558 775 830 7 138 178 132 -26 Asia 3 275 4 749 5 798 22 489 624 469 -25 Central Asia 53 49 158 222 24 19 18 -5 East Asia 713 597 703 18 90 95 42 -56 South-East Asia 861 1 103 1 568 42 157 237 135 -43 South Asia 512 1 093 1 167 7 150 223 180 -19 West Asia 1 136 1 907 2 202 15 68 50 94 88 Latin America and the Caribbean 1 241 1 417 1 366 -4 370 334 235 -30 Oceania 2 8 13 63 7 2 3 50 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. World Investment Report 2024 Investment facilitation and digital government 8 The recent pickup in greenfield announcements in developing countries follows a long period of sluggishness and signals a potential recovery (figure I.3). Developing countries accounted for almost half of all announcements at the start of the last decade, but their share had gradually fallen to one third by 2020. However, developing regions have regained momentum over the past few years and the number of projects has grown rapidly following the pandemic, almost doubling from their recent nadir. Developing countries now account for 43 per cent of greenfield project announcements. FDI inflows declined for most reporting economies. About two thirds of developed economies saw declines and about half of developing ones. The United States of America remained the largest FDI recipient, accounting for almost a quarter of the global total (figure I.4). China and Hong Kong, China account for a further 21 per cent. Among the top 20 host economies, the largest absolute drops were registered in France, Australia, China, the United States and India, in that order. Only Singapore registered a significant gain. The United States was the top destination for both greenfield projects and international project finance deals. India and the United Kingdom also appear in the top five destinations for both kinds of FDI. The United Arab Emirates gained two places in the ranking of top destinations for greenfield projects, after entering the top five in 2022. Figure I.3 Greenfield projects in developing economies are regaining lost ground Announcements by economic grouping (Number and percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Developed Developing Share, developing (per cent) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 47 33 43 Chapter I International investment trends 9 Figure I.4 Inflows declined in more than half of the top 20 recipients Foreign direct investment inflows, top 20 host economies (Billions of dollars) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics) and based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. 2023 2022 Top fve recipients by number of projects Greenfeld project announcements United States (1) 311 332 China (2) 163 189 Singapore (3) 160 141 Hong Kong, China (4) 113 110 France (5) 42 76 Brazil (6) 66 73 Australia (7) 30 63 India (8) 28 49 Canada (9) 50 46 Spain (10) 36 45 Sweden (11) 29 45 Mexico (12) 36 36 Japan (13) 21 34 Poland (15) 29 31 Germany (17) 37 27 Indonesia (18) 22 25 United Arab Emirates (21) 31 23 Chile (26) 21 17 Argentina (27) 23 15 Belgium (31) 23 12 (x) = 2022 ranking United States United Arab Emirates United Kingdom India Germany 2 152 1 323 1 184 1 058 1 036 International project fnance deals United States India Italy Spain United Kingdom 334 163 116 107 104 World Investment Report 2024 Investment facilitation and digital government 10 i. Developed economies FDI flows to developed countries increased by 9 per cent in 2023, to $464 billion. However, large fluctuations and negative FDI realizations in several European countries with significant conduit FDI flows over the past two years complicate the picture (figure I.5). Moves to implement a minimum tax on large MNEs in 2024 coincided with a wave of corporate financial restructurings and divestments. Net of the effect of conduit flows, FDI in developed countries was down by about 15 per cent. In the United States, FDI inflows declined by 6 per cent to $311 billion, with a sharp reduction in cross-border M&As, which fell by 40 per cent to $81 billion – half of the average over the past 10 years. Lower deal values in the information and communication technology (ICT) sector explained much of the decline. FDI in Canada increased by 9 per cent to $50 billion, but FDI in other developed countries, including Australia, Japan and the Republic of Korea, dropped sharply. In 2023, the value of M&A sales in developed countries declined by 50 per cent to $302 billion. Most transactions were concentrated in a small group of countries. Almost half of the M&A targets were based in the United States and the United Kingdom. Germany, Canada, Switzerland and France accounted for an additional 30 per cent of deal values. Among the top 10 cross-border M&A transactions, 6 involved acquisitions by investor groups, either with the intent to list companies publicly through special-purpose acquisition company (SPAC) transactions or as part of private equity deals. The financial nature of these deals illustrates the importance that financing conditions have for cross-border M&A trends. Figure I.5 Foreign direct investment inflows turned negative in parts of Europe due to financial restructurings Inflows to developed economies (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 464 59 -42 361 87 426 -85 -21 379 154 Developed economies Other Europe European Union North America Other developed countries Per cent +9 .. .. -5 -44 2022 Chapter I International investment trends 11 The value of greenfield announcements in developed economies fell by 8 per cent. Notably, after a period of very high investment, ICT saw a significant drop in project numbers. Conversely, project numbers in most other sectors increased, particularly in energy and gas supply, which rose by more than half. The largest greenfield projects are illustrative of major trends in international investment. Five projects of the top ten relate to semiconductor and electronics production, reflecting efforts to diversify or de-risk supply chains and to promote domestic production; firms based in Taiwan Province of China were the main investors in three of these projects. Four projects pertained to renewable energy, three of them in battery production. Canada and Japan emerged as top destinations for the largest projects, accounting for 5 of the 10 largest. The downturn in international project finance deals was widespread across most developed economies and industries. However, about 80 per cent of the total drop in deal values was attributed to just three sectors: industrial real estate, power and telecommunication. Renewable energy, typically the largest sector, registered a small gain of 2 per cent, with deal values reaching nearly $250 billion out of a total of $562 billion. The 10 largest international project finance deals in developed economies accounted for more than 20 per cent of the total value of all deals. Most of these were in the energy sector, which is capital-intensive. The top three deals related to renewable energy production, but deals for oil and gas projects were also significant, constituting another 3 of the top 10. Australia emerged as the second largest destination for project finance deals, by value, after the United States. ii. Developing economies FDI inflows to developing economies decreased by 7 per cent in 2023, mainly owing to a rare downturn in Asia. Despite this decline, FDI remained the leading source of external financing for developing economies, accounting for 44 per cent of total financial inflows in 2023, with remittances, development assistance and portfolio investment flows making up the rest. Although the number and value of announced greenfield projects increased, these gains were offset by a sharp drop in project finance deals, with their value falling by almost $200 billion compared with 2022. Cross-border M&A sales typically represent a much smaller share of FDI in developing countries than in developed ones. Still, the value of M&A sales in developing economies in 2023 dropped by $31 billion (to $76 billion), which explains about half of the overall decline in FDI inflows. Despite the drop, several large transactions took place. The largest M&A sale in 2023 was a $23 billion stock swap between a Vietnamese electric vehicle maker and a United States-based SPAC. Singapore also registered several multibillion-dollar M&A sales, including SPAC transactions. Most of the growth in greenfield projects in developing economies was in manufacturing, in terms of both project values and numbers. Over the past two decades, project numbers in the manufacturing sector have gradually declined and the services sector has become more prominent. The increase in 2023 was a welcome break in the trend, given the importance of manufacturing projects for economic growth, industrial development and the participation of developing countries in global value chains (GVCs). In particular, the automotive sector registered strong growth. Notable projects included a $10 billion expansion of Malaysian automaker Proton (foreign owned in part by Geely (China)), a $9 billion joint venture to establish a battery supply chain in Indonesia and a $6.4 billion electric vehicle production facility in Morocco. While most investment was in Asia, the value and number of manufacturing project announcements in Africa and in Latin America and the Caribbean also grew. Regional trends and factsheets on developing regions available online World Investment Report 2024 Investment facilitation and digital government 12 The downturn in international project finance deals was widespread across most regions and industries. Renewable energy projects continued to account for a large share of deals in developing economies, comprising almost 45 per cent of all projects announced. Still, as in developed economies, there was a notable decline in such deals in developing economies, with a 24 per cent drop in the number and a 31 per cent drop in value. The downturn also affected megaprojects. In 2022, five renewable energy projects valued at more than $5 billion were announced; in 2023, there were no deals of this magnitude. (a) Africa FDI inflows to Africa declined by 3 per cent in 2023, to $53 billion (figure I.6). The number and value of project finance deals fell, while outcomes for greenfield announcements were mixed across countries. Cross-border M&A sales, which accounted for about 15 per cent of FDI inflows to Africa in recent years, remained flat at $8.5 billion. European investors remain the largest holders of FDI stock in Africa, holding three of the top four spots (the Netherlands at $109 billion, France at $58 billion, the United States at $46 billion and the United Kingdom at $46 billion). The value of greenfield projects announced in Africa fell to $175 billion, from $196 billion in 2022. However, most countries registered increases in project numbers, with the overall number of project announcements in the region rising by 7 per cent to more than 800. If executed, these projects could generate an additional 200,000 jobs in the region. The largest year-to-year increases in project value were in chemicals (to $13 billion) and electronics (to $7.6 billion), while Figure I.6 Foreign direct investment to most regions in Africa declined Inflows to Africa (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 53 13 13 6 11 7 54 15 13 7 12 9 7 Africa North Africa West Africa Central Africa East Africa Southern Africa Per cent -3 -12 -1 -17 -3 +22 2022 Chapter I International investment trends 13 project values for electricity and gas supply projects dropped by $33 billion compared with 2022. This drop alone explains much of the overall decline in greenfield values. The region attracts a growing share of global megaprojects, with six valued at more than $5 billion. The largest greenfield announcement for any country in 2023 was a green hydrogen project in Mauritania, expected to generate $34 billion in investment (several multiples of the country’s gross domestic product). Several other large hydrogen projects were also announced: The Suez Canal Economic Zone completed agreements for green ammonia and green hydrogen projects in Egypt totalling $10.8 billion. Three energy producers separately announced green hydrogen projects in South Africa totalling $7.1 billion, and there was substantial investment in Morocco as well. Value chains for electric vehicles have also prompted investment in Africa. Among the largest deals, a Chinese manufacturer announced plans to establish a $6.4 billion electric vehicle battery manufacturing facility in Morocco. The estimated value of international project finance deals in Africa declined by 50 per cent in 2023, to $64 billion, following a 20 per cent drop in 2022. Industries related to renewable energy and power generation registered large drops in both values and numbers. However, momentum continued in some parts of the sector. Along with the green energy projects mentioned earlier, an investor group announced a deal for green hydrogen production totalling $4 billion in Egypt, and another group is planning a $2 billion hydrogen project in Morocco. Africa also attracted $10.8 billion in project finance for wind and solar electricity production, with the largest projects located in Egypt, South Africa and Zimbabwe. The African Continental Free Trade Agreement (AfCFTA) Investment Protocol adopted in 2023 is expected to contribute to growing intraregional FDI. The share of intraregional projects, though still relatively low, is higher in services and selected manufacturing industries (with 20 per cent of projects by investors from Africa) than in resource-based processing industries (with only 13 per cent of projects originating from the region). This indicates the pool of investors undertaking projects within the region is large for some sectors. Also, there is an opportunity to expand intraregional investment in processing industries as part of the general drive to increase value addition. (b) Developing Asia FDI flows to developing Asia receded in 2023 but remained elevated, at $621 billion (figure I.7). The region was by far the largest recipient of FDI, accounting for nearly one half of global inflows. East and South- East Asia were the main recipients. Flows declined in East Asia, with a significant drop in China breaking a decade-long growth trend. In South-East Asia, inflows remained stable as a result of robust economic growth and extensive GVC linkages. The decline in flows to West Asia was moderate, whereas South and Central Asia registered sizeable declines, especially in India and Kazakhstan. M&A sales, which usually constitute 10 to 15 per cent of FDI in developing Asia, declined by almost $30 billion in 2023 to $57 billion, representing about half of the total drop in FDI inflows to the region. The overall value and the number of greenfield project announcements in developing Asia increased significantly in 2023, by 44 per cent and 22 per cent, respectively. South-East Asia saw a 42 per cent increase in announcements, particularly in electronics and vehicle production. Projects in these sectors are expected to create nearly 145,000 jobs in the region (out of an estimated 1.4 million jobs expected to be created in developing Asia as a whole). Asia continued to attract megaprojects, with 6 of the 10 largest projects worldwide located in developing Asia, including 4 in South-East Asia. Indonesia was a top destination for announced greenfield projects by value. Notable projects included upstream investments World Investment Report 2024 Investment facilitation and digital government 14 by Chinese glass and solar manufacturer Xinyi Group totalling $11 billion. In addition, a consortium of European and Indonesian companies is developing a $9 billion battery supply chain for electric vehicles. The number of international project finance deals in developing Asia declined by 25 per cent. West Asia was the only exception; total deals there increased to 94 in 2023 from 50 in 2022, with values growing by 32 per cent to $57 billion. Saudi Arabia, Türkiye and the United Arab Emirates all saw higher numbers of deals. Elsewhere in Asia, most countries registered lower numbers. An important trend in the region as a whole was the decline in international project finance in renewable energy (along with most industrial sectors) and the increase in petrochemicals. (c) Latin America and the Caribbean In 2023, FDI in Latin America and the Caribbean remained stable, totalling $193 billion (figure I.8). There was considerable heterogeneity across countries. In South America, FDI in Argentina, Chile and Guyana accelerated. This offset lower values in Brazil and Peru. Brazil remains the largest recipient in South America. In Central America, Mexico accounted for the bulk of foreign investment, with stable FDI inflows. In the Caribbean, the Dominican Republic continued its growth trend, with inflows rising 7 per cent year on year. M&A sales, which typically account for only a small share of FDI in Latin America and the Caribbean, declined by $4 billion in 2023, to $11 billion. The number of announced greenfield projects decreased by 4 per cent in 2023, and the number of project finance deals dropped by 30 per cent. However, the estimated value of announced greenfield projects increased, primarily driven by large projects in Brazil and Chile. Demand for commodities and critical minerals Figure I.7 Foreign direct investment inflows declined across most of Asia Inflows to developing Asia (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 2022 621 286 226 36 65 7 678 315 223 58 72 10 Developing Asia East Asia South-East Asia South Asia West Asia Central Asia Per cent -8 -9 +1 -37 -9 -27 Chapter I International investment trends 15 continues to drive a large share of greenfield investment in the region. The primary sector accounted for 23 per cent of project values over the past two years, compared with less than 10 per cent in other developing regions. Investment in these industries can be sensitive to swings in commodity prices. Investment in renewable energy was prominent, with 4 of the top 10 announced projects (by value) in production of green hydrogen or green ammonia. Overall, greenfield projects are expected to create more than 300,000 jobs in the region. Most large projects are undertaken by investors from outside the region. Only 2 of 19 megaprojects valued at more than $1 billion were undertaken by MNEs based in the region. The global slowdown in international project finance deals affected most subregions and countries in Latin America and the Caribbean. Among major FDI recipients, only Chile posted higher project numbers than in 2022. The downturn affected several industries, with renewable energy among the worst affected: there were 40 per cent fewer deals and a $16 billion drop in the value of announced projects in renewables compared with 2022. (d) Structurally weak, vulnerable and small economies While FDI to middle-income developing countries has been robust, low-income countries and vulnerable groups receive a comparatively small share of global FDI inflows. They face pressing infrastructure needs, so mobilizing external investors could help these countries make faster progress towards achieving the Sustainable Development Goals. In 2023, FDI inflows to LDCs increased to $31 billion, or 2.4 per cent of global FDI flows (figure I.9). Comparing that with the LDC share in the world population of 14 per cent implies large disparities in per capita terms. The same is true of landlocked developing countries (LLDCs), which accounted for 7 per cent of the global population but only 1.8 per cent of FDI. Figure I.8 Foreign direct investment to Latin America and the Caribbean remained stable Inflows to Latin America and the Caribbean (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). 2023 2022 193 143 47 4 196 146 46 4 Latin America and the Caribbean South America Central America Caribbean Per cent -1 -2 +1 +6 World Investment Report 2024 Investment facilitation and digital government 16 Although project finance deals are a small share of all FDI, the typical project financed is large. An analysis comparing the relative contribution of greenfield projects, M&As and project finance deals to total announcement values over the past 10 years shows that LDCs and LLDCs are relatively more dependent on international project finance than are other developing economies, in terms of both numbers and values. For this reason, they are more exposed to the recent downturn in project finance deals. (e) Least developed countries FDI to the 45 LDCs increased 17 per cent in 2023, to $31 billion. Flows remained concentrated, with the top five recipients (Cambodia, Ethiopia, Bangladesh, Uganda and Senegal, in that order) accounting for about 50 per cent of the total. The growth of FDI in LDCs has lagged that of other sources of external finance over the last decade, and the shares of official development assistance and remittances are significantly higher than in developing economies overall (figure I.10). Nonetheless, FDI is an important source of finance for LDCs, as it is often more directly targeted to productive capacity creation, infrastructure assets and economic activities that can support industrial transformation and greater participation in GVCs. The number and value of greenfield project announcements in LDCs increased substantially in 2023 (by 51 per cent and almost 300 per cent, respectively). A large part of the jump in values is explained by the $34 billion green hydrogen project in Mauritania. Excluding this outlier, announced greenfield project values rose by 51 per cent, to $42 billion. As with FDI, just a few countries explain the bulk of greenfield project announcements and expenditures. Guinea, the Democratic Republic of the Congo, Ethiopia, Mozambique and Bangladesh (in that order) were the leading destinations in terms of project values. Combined, these countries accounted for about 60 per cent of the total project values for LDCs in 2023 (excluding the outlier deal in Mauritania). The primary sector has accounted for about one fourth of greenfield project values in LDCs over recent years. For developing countries overall, its share is Figure I.9 Inflows in structurally weak, vulnerable and small economies increased Inflows to least developed countries, landlocked developing countries and small island developing States (Billions of dollars and percentage change) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). Abbreviations: LDCs = least developed countries, LLDCs = landlocked developed countries, SIDS = small island developing States. 2023 2022 31 24 8 27 24 7 LDCs LLDCs SIDS Per cent +17 +3 +15 Chapter I International investment trends 17 only about 10 per cent. This highlights that LDCs are significantly exposed to global commodity cycles, not only for trade but also for investment. International project finance deals in LDCs fell by 24 per cent in value and 32 per cent in number in 2023. The lack of project financing for sectors relevant to the Sustainable Development Goals was particularly acute, with a total of just $14 billion – a significant drop compared with previous years. Over the past decade, the number of project finance deals has gradually increased, while the number of announced greenfield projects has declined (figure I.11). Some 32 per cent of international investment projects in LDCs were initiated using project finance in 2022, compared with less than 15 per cent in other developing countries. As a consequence, although the 2023 downturn in project finance affected all countries, LDCs were among the worst affected. Figure I.10 The composition of financial flows to least developed countries differs from that of flows to other developing economies Shares across categories of external financial flows, 2023 (Percentage) Sources: UNCTAD FDI/MNE database (www.unctad.org/fdistatistics), IMF balance-of-payments statistics, World Bank KNOMAD (Global Knowledge Partnership on Migration and Development) database and OECD. 20 40 60 80 100 44 11 12 34 20 39 41 Foreign direct investment Remittances Developing economies LDCs Foreign portfolio investment Offcial development assistance World Investment Report 2024 Investment facilitation and digital government 18 (f) Landlocked developing countries FDI inflows to the 32 landlocked developing countries (LLDCs) rose by 3 per cent in 2023, to $24 billion. Flows remained concentrated in a few economies, with the top five recipients (Ethiopia, Kazakhstan, Uganda, Mongolia and Uzbekistan, in that order) accounting for about 55 per cent of total FDI to the group. A large share of FDI to LLDCs originates from just a few investor countries. China was the home country of the largest investors by far in 2022, at about $20 billion (with $7 billion of FDI stock in Kazakhstan alone); it was followed by Thailand, Canada and the Netherlands. The increase in announced greenfield project values was most pronounced in manufacturing, where the total jumped by $20 billion, in large part because of a single $7.7 billion project announced for a polyethylene production project in Kazakhstan. Overall, the gains in greenfield announcements for LLDCs outweighed the downturn in international project finance deals. Kazakhstan and Uzbekistan were the top destinations for greenfield projects in 2023, receiving together a large share of the total value (53 per cent) and number (40 per cent). In addition to the polyethylene production project, Kazakhstan entered into a power purchase agreement with TotalEnergies (France) for a $1.4 billion onshore wind farm and battery energy storage system. The Uzbekistan Government awarded contracts for several solar projects, which are expected to generate $4 billion in investment. The global downturn in the number and value of international project finance deals affected LLDCs. Overall, the number of such deals declined by 33 per cent and values were 13 per cent lower than in 2022. There were a few exceptions. Activity picked up in Latin America, mainly in the Plurinational State of Bolivia with a string of deals for lithium extraction and processing that totalled $3.7 billion. In addition, the value of deals in renewables increased by 24 per cent to $15 billion, with projects in Kazakhstan and Uzbekistan accounting for about half of the total. The largest projects in Africa were in copper mining, with a $2 billion expansion in Zambia and a $1.9 billion acquisition in Botswana. Figure I.11 International project finance deals have become relatively more important in least developed countries Types of international investment in least developed countries (Number) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 100 200 300 400 500 600 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 20 40 60 80 100 120 140 a. Greenfeld projects Linear trend b. International project fnance deals Linear trend Chapter I International investment trends 19 (g) Small island developing States FDI inflows to the 29 small island developing States (SIDS) rose by 15 per cent to $8.3 billion in 2023 – about 0.6 per cent of global FDI. Divestments and the resulting negative inflows in several countries affected outcomes in 2022 more than in 2023. Putting these cases aside, actual growth in 2023 was about 10 per cent. The Dominican Republic accounted for more than half of FDI inflows to SIDS in 2023. Greenfield project announcements were up for most SIDS. There were strong gains for the transportation and storage sector, with project values up by $350 million and the number of projects doubling to 10. Hospitality accounted for about 30 per cent of greenfield projects announced over recent years, but values fell by almost 50 per cent to $930 billion in 2023, with a large drop in project numbers as well (down 33 per cent). Volatility in some sectors reflects unusually high investment in 2022 as project backlogs resolved following the pandemic. The number of international project finance deals in SIDS increased by 18 per cent in 2023, and their value also increased strongly. With the small number of deals (49 from 2021 to 2023), a few large deals caused major fluctuations. Three distinct investment streams explained most deals: renewable energy, leisure and hospitality, and oil and gas (along with petrochemicals). Maldives accounts for most projects in the hospitality sector. Other projects were more distributed. b. FDI outflows In 2023, FDI flows from developed economies increased by 4 per cent to $1.1 trillion. As with FDI inflows, corporate restructurings in Europe affected FDI outflows. Several investment-hub countries with significant conduit FDI reported large negative outflows, albeit less negative than in 2022 (i.e. a net positive gain). Excluding the effect of these conduits, global outflows were about 10 per cent lower. The United States and Japan were the home countries of the largest investors. Outward FDI increased by 10 per cent from the United States and by 14 per cent from Japan, going against the overall trend for developed countries. Outward investment from European countries fell by 11 per cent (excluding five conduit countries). Germany, Sweden and Spain are home to large outward investors, and outflows declined from all three (figure I.12). Conversely, FDI outflows from France, another top home country for investors, increased by about one third. Looking at the 20 largest economies by outward FDI flows, those in Asia now account for almost half (9 total), with the relative ranks of India and Taiwan Province of China both rising in 2023. The value of cross-border M&As originating from developed countries dropped by 53 per cent in 2023 due, in part, to tighter financial conditions. The downturn was general across developed economies, including in Europe, Australia, Canada and the United States. Results for greenfield projects were more heterogeneous. MNEs based in North America reduced their number of projects by 18 per cent. Numbers were flat in Europe but increased for other developed economies. FDI outflows from developing economies slowed by 11 per cent in 2023, to $491 billion. The decrease was general across most regions, except South-East Asia. Prospects appear stronger, as greenfield projects announced by MNEs based in developing countries increased by 23 percent in number and by 35 per cent in value. The value of cross-border M&As originating from developing countries – which amount to only about one quarter of those originating in developed countries – was resilient, increasing by 25 per cent. In large part, these results were driven by a rebound in activity by Chinese MNEs. World Investment Report 2024 Investment facilitation and digital government 20 Figure I.12 Nine economies in Asia are among the top 20 home economies of outflows Foreign direct investment outflows, top 20 home economies (Billions of dollars) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). Note: Negative outflows result from divestments and the repayment of intracompany loans. 2023 2022 (x) = 2022 ranking 184 162 Japan (3) 148 163 China (2) 105 -74 Switzerland (157) 104 106 Hong Kong, China (6) 101 146 Germany (4) 90 83 Canada (8) 72 53 France (11) 63 52 Singapore (12) 47 62 Sweden (10) 35 66 Republic of Korea (9) 30 43 Spain (13) 30 32 Brazil (15) 29 12 Russian Federation (29) 25 16 Taiwan Province of China (22) 22 25 United Arab Emirates (17) 21 25 Malta (18) 16 27 Saudi Arabia (16) 15 6 Denmark (36) 13 15 India (23) 404 366 United States (1) Chapter I International investment trends 21 The number of greenfield projects announced by Chinese MNEs almost doubled compared with 2022, explaining half of the total increase for developing countries. In part, this doubling reflects the project backlog following the pandemic, but investment patterns also changed in 2023. Most of the increase in projects announced by Chinese MNEs were in South-East Asia and concentrated in manufacturing industries, particularly computers, electrical equipment, motor vehicles and other transport. The number of greenfield projects by Chinese MNEs in developed economies was stable, at a relatively low level compared with earlier years. Other developing countries also contributed to the rise in greenfield announcements. Greenfield project numbers increased by 21 per cent for MNEs based in Africa and by 18 per cent for those in developing Asia (excluding China). The number of greenfield projects announced by MNEs in Latin America and Caribbean fell 19 per cent. 3. Trends by project type and sector Greenfield project announcements – mostly concentrated in industrial sectors – increased in both value and number in 2023 (figure I.13). The increase in value followed already strong growth in 2022, fuelled by a few very large announcements, including in renewable energy projects. Values in both years ended well above the average for the last decade. Project finance – mostly in infrastructure sectors – declined. Greenfeld projects International project fnance deals Cross-border M&As 2014 2016 2018 2020 2022 0 5 000 10 000 15 000 20 000 6 717 18 442 2 196 2014 2016 2018 2020 2022 0 200 400 600 800 1 000 1 200 1 400 1 600 a. Value (Billions of dollars) b. Number Figure I.13 Announced greenfield projects have regained momentum in recent years Types of investment projects Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Abbreviations: M&As = mergers and acquisitions. World Investment Report 2024 Investment facilitation and digital government 22 Infrastructure projects have a significant debt component and are thus more sensitive to interest rate changes. Total values remained high compared with the average before 2021, when international project finance took off. Fewer deals in services, particularly in the ICT sector, explain a large part of the drop in cross-border M&A values. a. Project types i. Greenfield investment The overall increase in greenfield announcements was powered by a significant rise in the number of manufacturing projects (table I.4). This marked a notable departure from the long-term decline in manufacturing share. Supply chain diversification pressures explained much of the increase, with most GVC-intensive sectors registering growth. Announcements of manufacturing projects by Chinese investors in South-East Asia accounted for one third of the total increase. The announced value of greenfield projects rose by 5 per cent to $1.4 trillion – the highest level ever recorded – again mostly due to the expansion of manufacturing projects among developing economies. The automotive, metals, petroleum, and chemicals sectors all expanded. Only the ICT sector registered lower project numbers and values, after a period of unusually rapid growth between 2020 and 2022. ii. International project finance In 2023, the number of international project finance deals declined by 26 per cent to $958 billion (table I.5). Nevertheless, project finance deals have grown over the past 10 Table I.4 Announced greenfield projects by sector and top industries Sector/industry Value (Billions of dollars) Growth (%) Number Growth (%) 2022 2023 2022 2023 Total 1 309 1 380 5 18 061 18 442 2 Primary 108 66 -39 128 149 16 Manufacturing 485 611 26 6 142 7 521 22 Services 715 703 -2 11 791 10 772 -9 Top 10 industries in value terms Energy and gas supply 381 365 -4 586 879 50 Electronics and electrical equipment 215 183 -15 1 200 1 408 17 Information and communication 129 110 -14 5 131 3 339 -35 Automotive 61 91 50 729 977 34 Construction 69 72 4 218 358 64 Basic metal and metal products 49 70 42 241 336 39 Transportation and storage 57 69 20 997 1 306 31 Extractive industries 107 65 -40 97 117 21 Coke and refined petroleum 18 58 216 41 78 90 Chemicals 27 57 111 488 590 21 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Chapter I International investment trends 23 years and are well above their 2015 nadir of $400 billion. Following a boom in 2022, the number and value of announcements in industrial real estate fell sharply, though they remain at historically high levels. The average cost of debt has substantially increased. The most common reference rates for deals all increased sharply over the course of 2022 and early 2023. International project finance deals in renewable energy – the biggest sector – also declined, with a 12 per cent drop in announced values in 2023. This mostly occurred in developing countries, where declines in oil and gas and in transport infrastructure were also severe. Both the number and the value of public–private partnership announcements fell in 2023, further contributing to the decline. Over the past 10 years, the value of such announcements averaged about $65 billion, whereas in 2023 the total was $6 billion. Similarly, their share in the number of total project finance deals averaged about 5 per cent but fell to less than 1 per cent in 2023. iii. Cross-border mergers and acquisitions Cross-border M&A sales were down by 46 per cent (table I.6). This decline primarily derives from the services sector, where values dropped by more than half and numbers fell by one fifth. A significant part of the decline in services occurred in the ICT sector, which experienced a boom during the pandemic. Both the number and the value of cross-border M&As in manufacturing remained flat. M&A values for the primary sector also normalized after quintupling in 2022. The number of M&A sales decreased across all major industries except for extraction and automobiles. The $23 billion reverse merger of VinFast Auto in Viet Nam with a SPAC based in the United States accounts for a large part of the uptick in the automobile sector. Table I.5 International project finance deals by top industries Industry Value (Billions of dollars) Growth (%) Number Growth (%) 2022 2023 2022 2023 Total 1 301 958 -26 2 858 2 196 -23 Top 10 industries by number Renewable energy 418 368 -12 1 454 1 177 -19 Industrial real estate 266 146 -45 308 231 -25 Power 134 79 -41 193 149 -23 Residential/commercial real estate 67 43 -36 228 129 -43 Telecommunication 119 82 -31 140 111 -21 Oil and gas 93 72 -22 114 103 -10 Transport infrastructure 52 33 -36 111 81 -27 Petrochemicals 69 59 -15 83 77 -7 Mining 42 47 11 88 51 -42 Water and sewerage 18 12 -37 35 27 -23 Source: UNCTAD, based on data from Refinitiv. World Investment Report 2024 Investment facilitation and digital government 24 Several factors explain the drop in M&A activity overall, including tight financial conditions and uncertainty in financial markets. Greater scrutiny from antitrust bodies and foreign investment regulators also affected M&As in the United States, the biggest market. b. Selected industries i. Infrastructure International project finance is the main funding source for infrastructure industries, and the decline in the value and number of project finance deals in 2023 affected this sector in particular (table I.7). The number of announced greenfield infrastructure projects rose, driven by renewables. However, across infrastructure industries, the drop in the value of project finance deals outweighed the gains in greenfield project values. Most infrastructure projects were in renewable energy, constituting more than 45 per cent of announcements and accounting for 65 per cent of estimated project outlays. Both the number of projects and the total project value have grown rapidly in this category, from fewer than 700 announcements in 2015 to more than 2,000 in 2023. There is evidence that investors switch between project finance and greenfield FDI as financial conditions change. When debt finance is costlier and project finance is below trend, greenfield project announcements tend to increase. Table I.6 Net cross-border M&A sales by sector and top industries Sector/industry Value (Billions of dollars) Growth (%) Number Growth (%) 2022 2023 2022 2023 Total 707 378 -46 7 763 6 717 -13 Primary 122 36 -71 389 505 30 Manufacturing 142 141 -1 1 406 1 431 2 Services 442 201 -54 5 968 4 781 -20 Top 10 industries in value terms Information and communication 166 67 -60 1 799 1 432 -20 Extractive industries 121 33 -73 216 400 85 Chemicals 15 32 108 147 132 -10 Pharmaceuticals 36 31 -12 169 129 -24 Automotive 8 31 273 59 62 5 Professional services 23 29 25 730 594 -19 Utilities 18 18 -5 279 229 -18 Trade 27 17 -35 592 523 -12 Food, beverages and tobacco 21 13 -41 157 156 -1 Finance and insurance 88 12 -87 602 539 -10 Source: UNCTAD, based on data from Refinitiv. Chapter I International investment trends 25 ii. Global value chain-intensive industries GVC-intensive industries registered a significant increase in investment projects (table I.8). Greenfield project announcements for the automotive, machinery and textile sectors were all up. Project values for semiconductors declined, but mainly after exceptionally high numbers in 2021 and 2022 as MNEs responded to global semiconductor shortages and concerns about supply chain bottlenecks. In the automotive sector, growth is driven by strong demand for hybrid and fully electric vehicles, and by several new firms entering global markets. The GVCs needed to build electric vehicles (EVs) are also spurring new investment in mining, processing and battery production. A recent UNCTAD analysis examines how economic fracturing is affecting international production in GVCs (UNCTAD, 2024d). Since the 2010s, GVCs have undergone significant restructuring, partially reversing the earlier trend towards offshoring. This shift has been driven by several factors, including technological advancements, policy changes, sustainability concerns and Table I.7 Investment project announcements in infrastructure (Millions of dollars, number and percentage) Industry Announced greenfield projects International project finance deals 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Infrastructure industries Value 265 712 497 837 506 811 2 848 256 722 677 562 380 -22 Number of projects 2 179 2 377 2 775 17 1 724 1 898 1 518 -20 Powera Value 6 538 8 775 13 537 54 199 493 134 319 78 977 -41 Number of projects 50 52 70 35 154 193 149 -23 Renewable energy Value 141 198 372 441 352 883 -5 506 693 417 889 367 815 -12 Number of projects 515 560 859 53 1 355 1 454 1 177 -19 Transportb Value 36 579 53 335 68 421 28 61 549 51 959 33 229 -36 Number of projects 763 988 1 298 31 105 111 81 -27 Telecommunicationc Value 81 397 63 287 71 970 14 80 521 118 511 82 359 -31 Number of projects 851 777 548 -29 110 140 111 -21 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. a Excluding renewable energy. b Transport services for greenfield projects and transport infrastructure for project finance. c Including information services activities. World Investment Report 2024 Investment facilitation and digital government 26 supply chain resilience needs. Robotics and automation are reducing the share of labour in total production costs, enabling the reshoring of production processes. Rising trade and investment interventionism is evident, along with a shift towards regional economic cooperation. Large-scale public interventions, such as the Inflation Reduction Act of the United States and the Recovery and Resilience Facility of the European Commission, are reshaping the FDI landscape with numerous incentives for investment in targeted industries. Finally, sustainability concerns, including carbon border adjustments, are also likely to affect trade flows and investment decisions. iii. Digital industries Following the pandemic, digital industries expanded rapidly. In 2023, the number of greenfield project announcements returned to close to pre-pandemic levels (table I.9). The number of greenfield projects fell by half. Declines were general across all digital industry subgroups. The introduction of advanced large language models over the past two years has led firms in some digital industries to pause investment as they adjust to the new technology. Developing countries that rely on offshore digital services (e.g. call centres or software programming) face the growing risk that automation could harm prospects for new investment projects. Table I.8 Announced greenfield projects in global value chain-intensive industries (Millions of dollars, number and percentage) Industry 2021 2022 2023 Growth, 2022–2023 (%) Global value chain-intensive industries Value 255 426 302 371 314 039 4 Number of projects 3 264 3 505 4 441 27 Electronics and electrical equipment Value 192 678 214 518 182 574 -15 Number of projects 1 116 1 200 1 408 17 Semiconductors Value 125 161 109 478 55 231 -50 Number of projects 114 142 140 -1 Automotive Value 40 846 60 567 90 979 50 Number of projects 725 729 977 34 Machinery and equipment Value 9 490 14 815 23 424 58 Number of projects 656 751 985 31 Textiles, clothing and leather Value 12 411 12 470 17 062 37 Number of projects 767 825 1 071 30 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com). Chapter I International investment trends 27 Digitalization is also a factor in reshaping GVCs. Along with the growth of services, the growth of digital industries is transforming manufacturing. Data-driven tools allow for real-time analysis and optimization of maintenance and logistics. E-commerce platforms blur the line between physical products and services, facilitating the sale of both and often bundling them together. Finally, digital technologies enable the remote provision of service, reducing the need for a physical presence close to manufacturing facilities or final sales points. These factors have increased the share of services activities within manufacturing, and lead to more asset-light international investment. iv. Extractive sectors and critical minerals Greenfield project announcements in mining and critical minerals (including processing) increased significantly in 2023 (table I.10), doubling in both their number and their value. The growth in investment in critical minerals for the energy transition and the decline in new investment in oil and gas extraction show how climate goals are reshaping investment patterns. One third of greenfield projects in critical minerals were invested in by Chinese firms, mostly for the extraction, processing and production of materials for the battery supply chain. Australia, the Republic of Korea, Table I.9 Greenfield project announcements in digital industries (Millions of dollars, number and percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com). Note: For the classification of digital industries see WIR 2017 (UNCTAD, 2017). 2021 2022 2023 Growth, 2022–2023 (%) Digital industries Value 33 035 34 518 20 382 -41 Number of projects 378 344 187 -46 Digital content Value 2 084 515 121 -77 Number of projects 44 37 12 -68 Digital solutions Value 3 090 3 842 2 262 -41 Number of projects 48 61 51 -16 E-commerce Value 25 229 23 935 17 178 -28 Number of projects 232 190 102 -46 Internet platforms Value 2 632 6 226 822 -87 Number of projects 54 56 22 -61 World Investment Report 2024 Investment facilitation and digital government 28 Canada and the United Kingdom were other important investor home countries. The United States, Indonesia and Canada attracted the most projects overall. The highest project values were in Indonesia, Chile and the United States, in that order. Three quarters of projects were in developing countries; about half were in processing or production of materials. Ten projects were announced in LDCs, two of which including a processing or manufacturing component. International project finance in the extractive sector is generally deployed for larger projects. The average estimated value of these projects in 2023 was close to $1 billion, which compared with an average value of about $500 million for greenfield projects. The highest total values of international project finance deals were announced in Chile, Indonesia, Zambia, Botswana and Argentina, in that order. Table I.10 Investment project announcements in extractives and critical minerals (Millions of dollars and percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Announced greenfield projects International project finance deals 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Extractive industries Value 12 655 107 256 64 589 -40 242 825 134 906 118 652 -12 Number of projects 61 97 117 21 246 202 154 -24 Oil and gas Value 6 112 89 567 25 850 -71 198 306 92 756 72 072 -22 Number of projects 23 58 47 -19 124 114 103 -10 Mining Value 6 542 17 689 38 740 119 44 519 42 150 46 580 11 Number of projects 38 39 70 79 122 88 51 -42 Memorandum: Critical minerals (including processing) Value 13 106 30 396 57 964 91 19 553 24 430 23 230 -5 Number of projects 56 61 114 87 28 27 28 4 Chapter I International investment trends 29 B. Investment in the Sustainable Development Goals The drop in international project finance will exacerbate the $4 trillion gap in investment needed to meet the Sustainable Development Goals in developing countries. Several sectors important for such investment saw a decline in project numbers in 2023; two of them, agrifood systems and water and sanitation, attracted fewer projects in 2023 than in 2015 when the Goals were adopted. The past year marked the mid-point of the 2030 Agenda for Sustainable Development. WIR 2023 updated the estimate for the Goals investment gap for developing countries to $4 trillion, from $2.5 trillion in 2015 (UNCTAD, 2023f). Between 2015 and 2023, the overall number of projects in Goals-relevant sectors grew about 4 per cent annually, outpacing overall growth in numbers of deals (at 3 per cent). However, these gains occurred in just a few Goals- relevant sectors, mainly infrastructure and renewable energy (table I.11). Furthermore, investment has been unequal across countries and LDCs still account for only a small share of Goals-relevant investment. Table I.11 Developing countries: investment in sectors relevant to the Sustainable Development Goals (Number and percentage) 2015 2022 2023 Growth, 2015–2023 (%) Growth, 2022–2023 (%) Infrastructurea 730 945 1 022 40 8 Renewable energy 372 687 655 76 -5 Water, sanitation and hygiene (WASH) 32 36 30 -6 -17 Agrifood systemsb 368 305 346 -6 13 Health and education 277 317 337 22 6 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com) and Refinitiv. a Including transport infrastructure, power generation and distribution (except renewables) and telecommunication. b Including agricultural production and processes; fertilizers, pesticides and other chemicals; research and development; and technology. World Investment Report 2024 Investment facilitation and digital government 30 Most Goals-relevant investment is in infrastructure sectors, which were heavily exposed to the global decline in international project finance in 2023. This had a significant negative effect on total Goals investment flows. International project finance deals in Goals-relevant sectors in developing economies fell by 36 per cent in value and 28 per cent in number (table I.12). Declines in renewable energy, power generation and transport infrastructure were the main contributors. Collectively, the value of project finance deals in these sectors fell by almost $100 billion compared with 2022, marking the second consecutive year of declines. Table I.12 Sectors relevant to the Sustainable Development Goals: announced international project finance deals in developing economies (Millions of dollars, number and percentage) Goals-relevant sector Developing economies Least developed countries 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Total Value 442 629 313 161 200 064 -36 55 102 26 742 14 154 -47 Number of projects 641 724 524 -28 55 55 36 -35 Powera Value 145 722 63 548 40 632 -36 42 148 4 764 766 -84 Number of projects 60 67 50 -25 6 8 1 -88 Renewable energy Value 217 440 175 502 121 623 -31 7 800 11 849 10 078 -15 Number of projects 443 500 378 -24 34 31 28 -10 Transport infrastructure Value 29 408 28 514 8 858 -69 3 637 5 103 .. .. Number of projects 58 58 26 -55 7 5 .. .. Telecommunicationb Value 25 013 21 009 14 356 -32 749 320 2 367 639 Number of projects 38 43 35 -19 3 2 4 100 Water, sanitation and hygiene (WASH) Value 11 947 14 475 9 942 -31 179 2 458 522 -79 Number of projects 16 21 19 -10 2 5 1 -80 Food and agriculture Value 9 678 7 452 2 974 -60 .. 2 231 421 .. Number of projects 12 22 11 -50 .. 3 2 .. Health Value 2 253 1 300 1 678 29 .. 16 .. .. Number of projects 6 5 5 0 .. 1 .. .. Education Value 1 167 1 360 .. .. 589 .. .. .. Number of projects 8 8 .. .. 3 .. .. .. Source: UNCTAD, based on data from Refinitiv. a Excluding renewable energy. b Including information services activities. Chapter I International investment trends 31 Greenfield investment provided some counterweight, as the value of cross- border greenfield project announcements for Goals-relevant sectors grew by 14 per cent in 2023 (table I.13). Project numbers increased even more, to 19 per cent. Still, a few sectors explain most of the growth. Transport services accounted for about one half of the increase in project numbers and values. Renewable energy accounted for about one quarter. At the same time, the estimated value of international investment in agrifood, health and education, and WASH (water, sanitation and hygiene) declined compared with 2022. Raising investment in these sectors is key to achieving the Goals, and the needs are substantial. Table I.13 Sectors relevant to the Sustainable Development Goals: announced greenfield projects in developing economies (Millions of dollars, number and percentage) Goals-relevant sector Developing economies Least developed countries 2021 2022 2023 Growth, 2022–2023 (%) 2021 2022 2023 Growth, 2022–2023 (%) Total Value 126 820 261 481 297 746 14 10 147 9 437 49 157 421 Number of projects 1 312 1 566 1 866 19 73 66 91 38 Powera Value 4 173 4 080 7 155 75 2 000 1 865 671 -64 Number of projects 20 17 29 71 1 3 1 -67 Renewable energy Value 56 040 176 342 183 327 4 4 809 4 824 41 614 763 Number of projects 149 187 277 48 13 13 24 85 Transport services Value 14 438 23 347 39 730 70 436 776 4 849 525 Number of projects 275 435 599 38 22 18 31 72 Telecommunicationb Value 29 441 25 672 39 502 54 2 018 917 1 359 48 Number of projects 295 325 283 -13 20 12 13 8 Water, sanitation and hygiene (WASH) Value 4 127 1 619 1 208 -25 136 139 75 -46 Number of projects 19 15 11 -27 1 1 1 0 Food and agriculture Value 11 900 19 829 17 041 -14 426 739 437 -41 Number of projects 275 283 335 18 7 14 14 0 Health Value 5 679 9 668 8 866 -8 187 171 109 -36 Number of projects 194 207 227 10 3 4 3 -25 Education Value 1 021 925 916 -1 136 7 44 535 Number of projects 85 97 105 8 6 1 4 300 Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fdimarkets.com). a Excluding renewable energy. b Including information services activities. World Investment Report 2024 Investment facilitation and digital government 32 LDCs accounted for only a small share of Goals-relevant investment among developing countries. The combined value of Goals-relevant greenfield investment and international project finance deals in developing countries reached $500 billion in 2023. Of this, $63 billion went to LDCs (about 13 per cent). A $34 billion green hydrogen project in Mauritania accounted for more than half the total. The downturn in project finance deals also disproportionately affected LDCs and the number of projects fell by 35 per cent compared to 2022. Still, a few Goals-relevant sectors performed well: renewable energy saw net gains in project values and numbers in LDCs, as did telecommunication, where numbers and values increased for both greenfield investment and project finance deals. The distribution of Goals investment across developing regions is also unequal; only developing Asia attracts above-average greenfield projects and international project finance in Goals-relevant sectors – the share of the region in the global number of Goals projects was higher in 2023 than its share in all projects (figure I.14). Other developing regions not only attract less investment overall, but even lower levels of Goals investment. Africa remains one of the most underserved regions and its share of international investment projects is low. However, it has attracted sizeable investment in power, infrastructure and renewable energy; over the last three years, it accounted for about 30 per cent, on average, of all Goals- relevant investment values in developing countries. In 2023, the region’s share was only slightly lower (27 per cent). Yet there is less progress in other Goals-relevant sectors in Africa. This is particularly true for health (about 5 per cent of total value in developing countries), but also for more capital-intensive sectors such as telecommunication and transport (about 15 per cent for each). Figure I.14 Only developing Asia attracts above-average investment for the Sustainable Development Goals Shares in numbers of investment projects, by region and economic grouping (Percentage) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com) and Refinitiv. Note: Shares are calculated by sector. Share in total projects Share in Goals projects 5.4 25.4 4.8 30.4 2.2 1.6 9.6 7.8 Africa Developing Asia Latin America and the Caribbean Least developed countries Chapter I International investment trends 33 WIR 2023 identified gaps of $500 billion in annual investment for WASH and $300 billion for agrifood systems (UNCTAD, 2023f). As mentioned, the number of deals in these sectors is less than in 2015. The lack of foreign participation in WASH projects is a particular area of concern. It hampers progress towards Goal 6, which targets universal access to safe drinking water, sanitation and hygiene. In 2023, there were only 11 greenfield project announcements related to WASH, amounting to $1.2 billion in developing countries, and only one announcement in LDCs. Project finance and public–private partnerships are more important in WASH, but there were large declines in the value of WASH-related international project finance deals in 2023, including public–private partnerships, with only one deal among LDCs. World Investment Report 2024 Investment facilitation and digital government 34 C. International production International production continues to expand, but investment patterns and GVCs are shifting under the influence of economic fracturing trends. The overall transnationality of the top 100 MNEs still increased marginally in 2023. However, they are beginning to alter their international footprint, bringing strategic activities closer to home and considering options to de-risk supply chains. 1. Key indicators of international production Despite the lacklustre growth of international investment in the last decade, international production through the networks of MNEs remains an important part of the globalized economy (table I.14). The value of FDI flows is about 5 per cent of gross fixed capital formation, production of foreign affiliates as a share of global output is more than 6 per cent, and the sales of foreign affiliates are higher than the value of global exports, confirming the importance of FDI as a modality to reach overseas markets. Furthermore, the global production networks of MNEs are estimated to govern about 80 per cent of global trade. However, significant changes in the global economy are reshaping international production networks and GVCs. A recent UNCTAD report on global economic fracturing and shifting FDI patterns (UNCTAD, 2024d) identifies several key trends. First, it shows three types of divergence. The growth of FDI and GVCs has lost pace with GDP and trade – their growth paths have disconnected. There is a widening gap in investment trends between the manufacturing and services sectors. And investment patterns in China have delinked from the rest of the world. Second, it points out that, in recent years, geopolitical differences and global crises have led to a transition from divergence to fracturing. This leads to more volatile investment patterns and shifting home- and host-country relationships, and it causes geopolitical factors to become increasingly important in investment decisions, at times overriding economic considerations. Third, it shows that the sustainability imperative and the drive to stimulate investment in the Sustainable Development Goals are opening up new opportunities for investment-driven industrial development, particularly in environmental technologies. However, it also shows that these opportunities are available to only a small group of countries with larger markets. In many smaller developing countries, and especially LDCs, marginalization and vulnerability continue to grow. Chapter I International investment trends 35 Table I.14 Selected indicators of foreign direct investment and international production (Billions of dollars at current prices and number) Sources: UNCTAD, FDI/MNE database, IMF (2024), information from The Financial Times, fDi Markets (www. fDimarkets.com) and Refinitiv. Notes: Not included are the value of worldwide sales by foreign affiliates associated with their parent firms through non-equity relationships and the value of sales of parent firms themselves. Worldwide sales, gross product, total assets, exports and employment of foreign affiliates are estimated by extrapolating worldwide data of foreign affiliates of MNEs from countries for which data are avaiable, on the basis of three-year average shares of those countries in worldwide outward FDI stock. Abbreviations: FDI = foreign direct investment, M&As = mergers and acquisitions. a Based on data from 168 countries for income on inward FDI and 142 countries for income on outward FDI in 2023, in both cases representing more than 90 per cent of global inward and outward stocks. b Calculated only for countries with both FDI income and stock data. The stock is measured in book value. Item 1990 2005–2007 (average) 2020 2021 2022 2023 FDI inflows 205 1 415 985 1 622 1 356 1 332 FDI outflows 244 1 464 780 1 882 1 575 1 551 FDI inward stock 2 196 14 573 41 893 47 156 44 375 49 131 FDI outward stock 2 255 15 296 40 718 43 386 40 570 44 381 Income on inward FDIa 82 1 123 2 173 2 883 3 002 2 498 Rate of return on inward FDIb 5.4 9.6 6.8 8.2 8.2 6.0 Income on outward FDIa 128 1 235 1 954 2 857 2 923 2 516 Rate of return on outward FDIb 8.4 10.7 5.8 7.7 7.8 6.4 Announced greenfield projects .. .. 641 830 1 309 1 380 International project finance deals .. .. 585 1 440 1 301 958 Cross-border M&As 98 729 475 737 707 378 Sales of foreign affiliates 4 801 19 758 31 298 33 194 .. .. Value added (product) of foreign affiliates 1 074 4 662 6 547 7 030 .. .. Total assets of foreign affiliates 4 649 47 065 97 467 91 386 .. .. Employment by foreign affiliates (thousands) 20 449 49 780 82 405 74 402 .. .. Memorandum: Gross domestic product 22 612 52 680 84 961 96 488 100 135 104 476 Gross fixed capital formation 5 838 12 482 22 055 25 270 26 142 27 161 Charges for the use of intellectual property, receipts 31 191 507 615 590 460 World Investment Report 2024 Investment facilitation and digital government 36 2. Internationalization trends of the largest MNEs The average transnationality index of the top 100 non-financial MNEs – the weight of their overseas assets, sales, and employees in their global operations – increased marginally in 2023 (table I.15). This increase was driven by MNEs in the automotive industry, where the transition to EVs and new technologies attracted more foreign investment. Falling revenues in other sectors and several MNEs’ divestments in the Russian Federation held back the index. The 12 car producers in the top 100 significantly expanded their international Table I.15 Internationalization levels of top 100 MNEs increased marginally in 2023 Internationalization statistics of 100 largest non-financial MNEs, worldwide and from developing economies Source: UNCTAD. Notes: Data refer to fiscal year results reported between 1 April of the base year and 31 March of the following year. Complete 2023 data for the 100 largest MNEs from developing economies are not yet available. Abbreviations: MNEs = multinational enterprises, TNI = Transnationality Index. a Revised results b Preliminary results. Variable 100 largest MNEs, global 100 largest MNEs, developing economies 2021a 2022a Growth, 2021–2022 (%) 2023b Growth, 2022–2023 (%) 2021a 2022 Growth (%) Assets (Billions of dollars) Foreign 10 449 10 127 -3.1 10 230 1.0 2 953 2 896 -1.9 Domestic 8 902 10 566 18.7 10 665 0.9 7 054 8 694 23.3 Total 19 351 20 693 6.9 20 895 1.0 10 007 11 590 15.8 Foreign as share of total (%) 54 49 49 30 25 Sales (Billions of dollars) Foreign 6 703 7 438 11.0 6 965 -6.4 2 272 2 490 9.6 Domestic 4 949 6 744 36.3 6 596 -2.2 4 094 5 523 34.9 Total 11 651 14 182 21.7 13 562 -4.4 6 366 8 013 25.9 Foreign as share of total (%) 58 52 51 36 31 Employment (Thousands) Foreign 8 998 9 096 1.1 9 553 5.0 4 064 4 150 2.1 Domestic 11 102 11 316 1.9 10 606 -6.3 9 265 9 665 4.3 Total 20 100 20 413 1.6 20 159 -1.2 13 328 13 815 3.7 Foreign as share of total (%) 45 45 47 30 30 Unweighted average TNI 62 61 62 48 46 Median TNI 63 63 66 47 45 Chapter I International investment trends 37 networks, focusing on the United States and China, the two largest EV markets. Since passage of the Inflation Reduction Act of 2022 in the United States, top automotive MNEs have announced greenfield projects in the EV and battery supply chain amounting to nearly $17 billion. In China, the competitiveness of local brands led some, such as Ford (United States) and Honda Motors (Japan), to scale back investment. However, other MNEs such as Stellantis (Italy) and Volkswagen (Germany) started more joint ventures to leverage local technological advancements. For instance, in 2023, Stellantis invested $1.5 billion in Chinese EV start-up Leapmotor, and Volkswagen invested $1 billion in Horizon Robotics, a Beijing-based manufacturer of electronic components, to strengthen its position in the autonomous driving and EV markets. The number of technology MNEs in the top global rankings remained steady at 14 companies, with S&P Global (United States) entering the list as Legend Holdings (China) exited. S&P Global bolstered its capabilities by merging with IHS Markit (United Kingdom) in a $43 billion transaction. Key trends driving investment in the technology industry are the competition to acquire expertise in artificial intelligence and machine learning and to consolidate market presence across neighbouring industries, resulting in more deals. While most of these deals occurred within home economies, larger ones implied an increase in foreign assets. The $75 billion acquisition of video game maker Activision Blizzard by Microsoft (both United States) led to a 22 per cent increase in Microsoft’s foreign assets. Not all technology MNEs have expanded their foreign operations. Apple (United States) scaled down its operations in China, diversifying its supply chain. SAP (Germany) divested its stake in Qualtrics (United States) of approximately $12 billion to focus on its core services. In 2023, the pharmaceutical industry saw a modest expansion of its international footprint, with 10 MNEs driving growth through strategic acquisitions. Similar to developments in the technology sector, many of these transactions occurred within the United States but significantly influenced the international profile of the acquiring companies. For instance, the $43 billion merger of Pfizer (United States) with Seagen (United States) led to a 15 per cent increase in foreign assets. The $7.1 billion acquisition of Telavant (United States) by Roche (Switzerland) reinforced the position of Roche in the United States market. The internationalization rate of the remaining 21 manufacturing MNEs in the top 100 (light and heavy industry) remained stable. British American Tobacco (United Kingdom) reduced its foreign assets by 20 per cent, while Philip Morris International (United States) bolstered its global presence with a $15 billion acquisition of Swedish Match (Sweden). Siemens (Germany) led in digital transformation, acquiring Brightly Software (United States) for nearly $1.9 billion. In the extractive industries, most of the 15 MNEs in the top 100 held back from pursuing large-scale international investment in 2023. Notable exceptions were Rio Tinto and Shell (both United Kingdom), which actively engaged in strategic acquisitions and new ventures. Rio Tinto finalized the acquisition of copper and nickel miner Turquoise Hill (Canada) for nearly $3.3 billion, to enhance its portfolio of critical minerals for the energy transition. Rio Tinto announced initiatives to increase its production of copper and lithium for the same reason. Shell has also expanded operations in view of the energy transition, exemplified by its acquisition of Sprng Energy (India), which develops and operates renewable energy facilities, for about $1.5 billion. The latter part of 2023 and early 2024 saw several more announcements from mining companies about deals intended to boost investment in critical minerals. The telecommunication sector saw significant portfolio shifts in foreign assets. Vodafone (United Kingdom) exited markets in Ghana and Hungary and sold its operations in Italy. Deutsche Telekom Supply chain restructuring is affecting the international footprint of technology MNEs World Investment Report 2024 Investment facilitation and digital government 38 (Germany) and Orange (France) focused on expansion in more profitable regions, including North America, Africa and the Middle East. The utilities sector experienced several reconfigurations that affected its internationalization rate. EDF (France) was fully nationalized, and Enel (Italy) continued strategic divestments, generating $1.3 billion from the sale of its business in Romania. Among construction companies, Vinci (France) moved up the ranking of the top 100 with strategic expansions in airport concessions and energy ventures. A.P . Møller–Maersk (Denmark) exited the ranking after reshuffling operations in East Asia. Finally, the ranking of the top 100 MNEs was also affected by divestments or exits from the Russian Federation. OMV (Austria) dropped out of the ranking after suffering losses due to the expropriation of its stake in the Yuzhno-Russkoye oil and gas field. Between 2022 and 2023, MNEs in the ranking made 36 significant divestments from the Russian Federation, with the largest write-downs and charges concentrated among MNEs in the oil and gas and extractive industries. Emerging-economy MNEs favoured greenfield investment over equity acquisitions. TSMC (Taiwan Province of China), CATL (China) and Zijin Mining Group (China) – in that order by investment size – announced large-scale projects in developed economies. Starting in 2021, TSMC has launched greenfield projects first in the United States, then in Japan and Germany. In 2020 CATL invested over $5 billion in Indonesia and almost $7.5 billion in Hungary, forming multiple joint ventures with top automotive MNEs. Zijin Mining Group has invested more than $5 billion in Serbia and expanded its global footprint by developing mines in Argentina and Kazakhstan. 3. Shifting investment patterns among the top 100 MNEs UNCTAD recently published a diagnostic of 10 major trends in global FDI patterns, examining the effects of long-term structural changes in international production and the more recent pressures caused by economic fracturing (box I.1). This section looks at how the trends observed in that diagnostic are reflected in the investment behaviours of the top 100 MNEs. The main drivers of the structural changes in FDI patterns are technological developments, most visible in high- technology industries; sustainability trends, evident in intense investment activity in environmental technologies and critical minerals; the push for supply chain resilience, which affects most GVC- intensive industries; and geopolitical and trade tensions, felt across all strategic sectors. These sectors include industries such as high-technology, semiconductors, pharmaceuticals, instruments and machinery manufacturing, environmental technologies and other activities deemed essential for the future competitiveness of countries and which therefore play a key role in their industrial and trade policies (IMF, 2023). Over the last 10 years, two thirds of greenfield investment by the top 100 MNEs related to setting up services subsidiaries (figure I.15). Even within manufacturing sectors often considered strategic such as automotive and pharmaceuticals, more than half of the greenfield projects focused on establishing sales and marketing offices, support and technical services centres, or other professional services, thus making these projects less sensitive. The effects of fracturing are mostly seen in the remaining projects, in physical manufacturing activities. The deceleration of global FDI after 2010 is also reflected in the decreasing total number of deals and projects undertaken by top MNEs. The number of greenfield projects announced in the last five years (2019–2023) was about 10 per cent lower than in the preceding five years (2014–2018). While the overall number of projects has declined, notable shifts in their regional distribution have emerged. Critical minerals are driving major cross-border investment deals among top MNEs Chapter I International investment trends 39 Trend 1: Long-term FDI stagnation The long-term trend in cross-border investment shows that a slowdown in global FDI started in about 2010. It no longer keeps pace with global trade and GDP . Trade within global value chains (GVCs) also slowed, confirming the close link between FDI and GVCs. Trend 2: The increasing weight of services The overall stagnation in FDI conceals sectoral differences. Cross-border investment in services flourishes while manufacturing lags. This reflects a global shift towards more services-centric and asset-light investment. Trend 3: The deglobalization of manufacturing (from an FDI perspective) Manufacturing FDI, stagnant for two decades, showed negative growth after the outbreak of the COVID-19 pandemic. Although global manufacturing activity and investment remain robust, their international component is shrinking, suggesting a trend towards deglobalization. Trend 4: The growing ends of the smile curve The transition from manufacturing to services is part of a broader change in the role of FDI in global value creation. Cross-border investment is moving from the centre to the two ends of the “smile” curve, most notably towards services in business and information and communication technology upstream and in marketing downstream. Trend 5: Convergence of sectoral patterns across regions All regions are feeling the effects of the transition towards services-oriented, asset-light FDI. Consequently, traditional differences in sectoral patterns between developed and developing regions are increasingly blurring. Trend 6: The diminishing role of FDI in China The regional rebalancing of global FDI has been significantly influenced by the declining share of China as a recipient country. Despite waning interest from multinational corporations in initiating investment projects in China, the country continues to maintain a dominant position in global manufacturing and trade, signifying a transformation in its global production model. Trend 7: Unstable investment relationships Heightened geopolitical tensions are exacerbating the volatility of investment sources and destinations, and the susceptibility of traditional investment links to disruptions. Instability in investment relationships limits the capacity of developing countries to strategically capitalize on diversification opportunities arising from shifts in investment patterns. Trend 8: Fracturing along geopolitical lines Geopolitical differences are causing a fracturing trend in global FDI, with the reduction in investment between geopolitically distant countries highlighting the significant influence of such differences on investors’ location choices, overshadowing traditional determinants of FDI. Trend 9: The sustainability imperative driving new FDI sectors FDI in environmental technologies stands out as the main pocket of growth outside services. Since 2010, while manufacturing investment stagnated across all industries, the number of greenfield projects along the entire value chain of environmental technologies sectors has increased steadily. Trend 10: The increasing concentration of FDI and marginalization of developing countries Amid historical shifts and economic fracturing, the share of greenfield projects in smaller developing countries and least developed countries is diminishing. This trend exacerbates the marginalization and vulnerability of those countries, as FDI becomes increasingly concentrated in developed and emerging economies. Source: UNCTAD (2024d). Box I.1 Global economic fracturing and shifting FDI patterns: 10 major trends World Investment Report 2024 Investment facilitation and digital government 40 Until 2018, manufacturing projects were predominantly directed towards developing economies, with East Asia and South-East Asia being key destinations. In services, however, more than a third of projects were concentrated in Europe. Within the manufacturing sector, strategic projects – often involving high-value activities – were relatively more concentrated in developed economies and East Asia. Since 2019, the geographical distribution of manufacturing projects has shifted towards locations closer to MNE home markets, especially in strategic sectors (figure I.16). Europe and North America have emerged as primary destinations – unsurprisingly, considering that the majority of MNEs in the ranking are from the United States (19), Europe (53) and Japan (10) – with Central America (including Mexico), North Africa, and West and Central Asia also gaining traction. This trend reflects a strategic pivot towards regionalization and nearshoring, driven by the need to enhance supply chain resilience and reduce geopolitical risks. Figure I.15 Manufacturing activities represent about one third of projects by top 100 multinational enterprises Greenfield projects, by type and industry, 2014–2023 Source: UNCTAD, based on information from the Financial Times, fDi Markets (www.fDimarkets.com). Notes: Refers to the ranking of top 100 multinational enterprises in WIR 2023. Manufacturing includes several activities normally classified as services but physical asset-heavy in nature, in the construction, electricity, extraction and infrastructure segments. Strategic manufacturing includes activities in environmental technologies, explaining their presence in extractive industries and utilities. “Services” includes all remaining services-related business activities and services activities in typical manufacturing industries (e.g. sales offices of car manufacturers). 0% 20% 40% 60% 80% 100% Strategic manufacturing Other manufacturing Services Automotives Sector Number of enterprises Number of projects Pharmaceuticals Heavy industry Extractives Technology Utilities Trade Light industry Transport and logistics Telecommunication Other Total 48 52 12 1 826 9 527 9 1 035 16 1 035 14 2 720 11 835 6 491 9 769 4 798 6 761 4 256 100 10 787 43 57 41 13 46 9 49 42 9 91 7 65 28 19 3 2 1 79 56 42 99 100 27 15 58 18 15 66 Chapter I International investment trends 41 Figure I.16 Manufacturing projects by top 100 multinational enterprises moved closer to headquarters Shares of selected regions/subregions in types of manufacturing projects, difference between 2019–2023 and 2014–2018 (Percentage points) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Notes: Refers to the ranking of top 100 multinational enterprises in WIR 2023. Manufacturing includes several activities normally classified as services but physical asset-heavy in nature, in the construction, electricity, extraction and infrastructure segments. Caribbean economies are included in Central America. Other regions and subregions (developed Asia and Oceania) are not included as there were no significant changes in the share of projects attracted. Strategic manufacturing Non-strategic manufacturing Africa East Asia South-East Asia South Asia West and Central Asia Europe Central America South America North America -8 -6 -4 -2 0 2 4 6 8 10 12 14 0.3 -5 -5 -2 -4 -7 -2 -3 0.2 -0.1 7 13 1 -5 -0.3 4 3 5 World Investment Report 2024 Investment facilitation and digital government 42 In contrast, the number of strategic manufacturing projects in East Asia decreased. Among the top MNEs, the largest manufacturing investors in China include the electronics company Hon Hai Precision Industry (Taiwan Province of China), the chemicals company BASF (Germany) and a range of car manufacturers such as Toyota (Japan), Volkswagen and BMW (both Germany) and Samsung Electronics (Republic of Korea). These companies have historically maintained significant manufacturing operations in China. However, since 2019 they have halved their greenfield investment in the country in favour of partnerships with local manufacturers, especially in the EV market. Among these companies, Hon Hai Precision Industry and Samsung Electronics have reassessed their manufacturing footprint in China because of trade tensions. A significant portion of their products, especially chips and high- technology electronics, are produced in fabrication plants in China and exported to the United States. Hon Hai reduced its greenfield projects in China from 23 to 6, while Samsung reduced its from 9 to 1. Both companies have started investing in new manufacturing facilities in their home markets and in other countries such as Viet Nam, India and Mexico – in order of investment size. Hon Hai Precision Industry tripled the number of manufacturing projects in Viet Nam. The share of strategic manufacturing investment in Central America has increased. Manufacturers in the automotive industry, such as Robert Bosch (Germany), Toyota Motor (Japan) and Volkswagen (Germany), have chosen to invest in Mexico, largely for its proximity to the United States and its market access under the United States–Mexico–Canada Agreement (USMCA). MNEs in the pharmaceutical and medical instrument industries, including Bayer (Germany), Medtronic (Ireland) and Johnson & Johnson (United States), have targeted Costa Rica for investment projects. North Africa and West and Central Asia have also emerged as strategic locations for manufacturing MNEs, offering proximity to both European and Asian markets. In North Africa, Morocco and Egypt stand out as key investment destinations. Morocco has attracted projects by automotive MNEs including Stellantis (Italy) and Renault (France). Egypt has attracted not only automotive MNEs such as BMW and Robert Bosch (both Germany) and Nissan (Japan) but also pharmaceutical companies such as GlaxoSmithKline (United Kingdom) and electronics producers such as Samsung Electronics (Republic of Korea). In West and Central Asia, Türkiye attracted the largest share of manufacturing projects. The decreasing share of manufacturing projects in South-East and South Asia might seem counterintuitive. However, the top 100 MNEs had already established a significant presence in ASEAN by the early 2010s. This is the case, for example, for the two leading investors in manufacturing MNEs in South-East Asia: Toyota Motors (Japan) and Samsung (Republic of Korea). From 2011 to 2013, Toyota announced 23 manufacturing projects in South-East Asia. This number declined to 13 projects during 2014–2019 and dropped farther to only 5 projects since then. Similarly, Samsung experienced a peak of 10 projects in South-East Asia during 2014–2019, but this number fell to 4 projects in the following years. Of the top manufacturing investors in South-East Asia, only Hon Hai Precision Industry (Taiwan Province of China) started reconfiguring its supply chain in the last five years, increasing its number of projects in the region from 3 during 2011–2019 to 12 since then. Greenfield projects in services activities have also shifted closer to home economies (figure I.17) with one notable exception. Over the last 10 years, about 10 per cent of services projects have been aimed at establishing regional headquarters and back-office functions. MNEs from Europe and North America have increasingly established regional headquarters throughout developing Asia, particularly Investment projects by top 100 MNEs in strategic manufacturing sectors are moving closer to home Chapter I International investment trends 43 Figure I.17 Top multinational enterprises are establishing regional headquarters closer to key markets Shares of selected regions/subregions in types of services projects, difference between 2019–2023 and 2014–2018 (Percentage points) Source: UNCTAD, based on information from The Financial Times, fDi Markets (www.fDimarkets.com). Notes: Projects aimed at setting up headquarters include the following business activities: headquarters, business services, shared and technical services. Caribbean economies are included in Central America. Other regions (developed Asia and Oceania) are not displayed as there were no significant changes in the share of projects attracted. Headquarters and back offce functions All other services Africa East Asia South-East Asia South Asia West and Central Asia Europe Central America South America North America -6 -4 -2 0 2 4 6 8 2.2 -1.6 2.7 -5.4 -5.5 -3.4 -4.7 -3.4 -0.4 1.5 6.5 6.3 1 -0.4 -0.1 2.3 0.8 -0.4 World Investment Report 2024 Investment facilitation and digital government 44 in East Asia. These regional hubs provide essential services and can help mitigate risks to local operations from geopolitical and trade tensions as well as supply chain disruptions. Specifically for investment in large markets, many MNEs are establishing almost autonomous subsidiaries that produce for the domestic rather than the global market. For example, the pharmaceutical MNE AstraZeneca (United Kingdom) announced five projects in China to set up headquarter offices and back-office functions. Its business there would become a legal entity listed in Hong Kong, China or Shanghai and controlled by the MNE. Consistent with the global FDI slowdown and similar to the trend observed in greenfield investment, the number of equity acquisitions since 2019 also decreased, by a little more than 10 per cent. M&As often respond to different drivers than greenfield investment. Importantly, acquisitions can be subject to screening and approval procedures. M&A deals traditionally are more prevalent in developed economies, and this concentration has only increased in the last five years, particularly for MNEs in strategic industries. Trends in M&As are consistent with those seen in greenfield projects. MNEs have decreased their shares of equity acquisitions in manufacturing companies in East Asian economies. However, the value of deals in the subregion has increased, driven largely by significant investment in the automotive sector, targeting Chinese producers. Although the number of transactions has fallen, their strategic importance and associated financial commitment have risen. Divestment trends among the top 100 MNEs do not reveal any clear relocation strategy. On the contrary, the number of divestments from China has decreased since 2019, indicating that MNEs recognize the strategic importance of maintaining a presence in the world’s second-largest economy, not only to tap into its large market but also to benefit from its advanced manufacturing capabilities and extensive supply chains. Regional headquarters functions are proliferating to increase regional autonomy and mitigate risks Chapter II Investment policy trends FDI stock covered by old-generation IIAs Not covered New-generation Old-generation Developed Developing Least developed 71% 65% 46% 137 national measures Key trends: facilitation and entry restrictions on the rise Less favourable measures by type Old-generation agreements cover half of global foreign direct investment stock – with greater exposure for developing countries Developing countries continue to prioritize investment attraction Share of measures more favourable to investors Developed countries Developing countries 43% 86% 68% 32% Treatment and operation Entry restrictions More favourable measures by type Countries with FDI screening 39% 33% Incentives 14% 12% 2% Promotion Liberalization Other Facilitation 2014 2023 +141% 17 41 2023 agreements address new investment governance issues, yet old-generation ones persist, raising the risk of investor–State disputes Commitments in 2023 IIAs Global FDI stock: IIA coverage Parties involved in 2023 cases 2023 cases: top sectors 16 15 Protection 14 9 Facilitation Liberalization Cooperation 75% 30% 25% 70% Developing Developed Respondent Claimant Construction Oil, gas, coal, mining Manufacturing 12 10 10 60 new ISDS cases 29 IIAs signed 49% 16% 35% Chapter II Investment policy trends 3 A. National investment policies 1. Overall trends The number of investment policy measures adopted in 2023 remained consistent with the five-year average, despite declining by 25 per cent compared with 2022. In developing countries, most measures aimed at promoting and facilitating investment. Developed countries continued to introduce restrictive measures to address national security concerns related to investment. In 2023, 73 countries introduced a total of 137 policy measures affecting foreign direct investment (FDI), a 25 per cent decrease from 2022 but in line with the five-year average (figure II.1). The majority — 72 per cent — were favourable to investors (70 per cent in 2022) (box II.1). This confirms a return to the pre-pandemic distribution between policy measures more and less favourable to investors. Figure II.1 Lower numbers of new investment policy measures in 2023 Nature of measures, worldwide (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 50 100 150 200 2022 2021 2023 2019 2018 2020 2016 2015 2014 2017 58 17 15 88 16 15 88 24 27 99 23 22 69 29 18 67 20 20 79 50 30 63 41 13 123 53 7 99 38 90 119 139 144 116 107 159 117 183 137 More favourable Less favourable Neutral/indeterminate World Investment Report 2024 Investment facilitation and digital government 4 The analysis of national investment policy trends in this chapter is based on official measures affecting FDI adopted by United Nations Member States, as compiled in the UNCTAD Investment Policy Monitor database. These encompass measures explicitly targeting FDI (FDI-specific), as well as general investment measures with a clear impact on foreign investment (FDI-related). The measures are either reported directly to UNCTAD by Member States through annual surveys or identified by UNCTAD researchers through publicly accessible sources (such as government websites and specialized policy databases). The analysis excludes restrictive economic measures that affect investment. The classification of measures as more or less favourable is based solely on their potential impact on investors. The types of measures included in each category are described in box table II.1.1. When a measure – for example, the adoption of an investment promotion strategy – contains more than one component, such as incentives and facilitation, these components are analysed separately. This classification does not reflect any value judgement by UNCTAD on the merit or suitability of the measure. Box table II.1.1 Classification of measures Source: UNCTAD. Abbreviations: FDI = foreign direct investment, SEZ = special economic zone. Category Type of measure More favourable Liberalization Privatization Lifting of entry restrictions (e.g. opening of sectors to FDI) and entry conditions (e.g. minimum capital requirement) Removal (total or partial) of FDI screening or approval mechanisms Other (e.g. liberalization of land access) Facilitation Streamlining of investment procedures (e.g. one-stop shops) Greater transparency of investment-related laws and procedures (e.g. information portals) Services by investment promotion agencies and other entities to assist investors (e.g. linkages programmes, investor visa facilitation and alternative dispute resolution mechanisms) Promotion Establishment of investment promotion agencies or other institutions with a remit as investment promoters Adoption of investment promotion strategy and plans Public–private partnership initiatives, auctions and concessions Outward FDI promotion initiatives Incentives Tax and financial incentives for investment Other incentives (e.g. citizenship by investment programmes) SEZ-related incentives Other Enhanced investor treatment and protection guarantees Easing of labour or migration regulations concerning foreign hires and key personnel Removal of operational restrictions on investment (e.g. local content requirements) Less favourable Entry Entry restrictions (e.g. total and partial ban on FDI in specific sectors) Entry conditions (e.g. minimum investment threshold, joint venture requirements or State participation in strategic sector) Introduction or expansion of screening mechanisms for national security Treatment and operation Foreign exchange restrictions Restrictions on foreign hires and key personnel Removal or reduction of investment incentives Post-establishment local content requirements or prioritization of national companies in procurement Other measures reducing guarantees for investment treatment and protection Restrictions on outward FDI Box II.1 Methodology for analysing national investment policy trends Chapter II Investment policy trends 5 Significant differences persist between developing and developed countries (figure II.2). Developing countries continue to prioritize investment attraction as part of their economic development strategies. The proportion of policies more favourable to investors in developing countries has remained stable at well above 80 per cent since 2014, except for a low point registered during the pandemic. In 2023, 86 per cent of the measures adopted by developing countries were favourable to investors. Initiatives to promote and facilitate investment by simplifying or streamlining administrative processes and introducing incentive schemes were among the measures most frequently adopted (see section A.2). In contrast, in developed countries, policies more favourable to investors, which represented between half and two thirds of the total in the mid- 2010s, started to decline in importance well before the pandemic. They reached an all-time low of 17 per cent in 2020 and have since stabilized at about 40 per cent of the total. In 2023, measures less favourable to investors adopted by developed countries made up two thirds of the world total. Many of these policies related directly or indirectly to national security concerns regarding foreign ownership of critical infrastructure, core technologies, or other sensitive assets (see section A.3). African countries were the most active in adopting new investment policy measures in 2023, followed closely by developing countries in Asia. Africa and developing Asia also produced the highest share of policy measures more favourable to investors. Among developed regions, Europe led in the adoption of new investment policy measures, despite a decrease compared with 2022. Most new measures were less favourable to investors. The number of new investment policy measures in North America and other developed regions also declined significantly. Three quarters of them were less favourable to investors (figure II.3). Figure II.2 Developing countries continue prioritizing investment attraction Share of policy measures more favourable to investors in total measures (Percentage) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 10 20 30 40 50 60 70 80 90 Developing countries 86 World 72 Developed countries 43 World Investment Report 2024 Investment facilitation and digital government 6 2. Policy measures more favourable to investors In 2023, investment facilitation measures and incentives remained the primary components of investment attraction initiatives in developed and developing countries. Facilitation measures reached a record 39 per cent of the measures favourable to investors. Over the last decade, the investment policy landscape has evolved significantly, with noticeable shifts not only in the distribution between measures more and less favourable to investors but also in their composition (figure II.4). A marked change has been the diminishing prominence of liberalization measures, especially following the pandemic. In the period from 2014 to 2019, liberalization measures constituted approximately 40 per cent of the total – peaking at 44 per cent in 2018. Yet from 2020 to 2022, they represented less than a quarter and in 2023 further declined to a mere 12 per cent. In contrast, the weight of investment incentives has increased significantly since the pandemic. Prior to 2020, measures related to the introduction of incentives represented about a quarter of all favourable measures. They have since grown to over a third of favourable measures, indicating a strategic pivot towards using incentives as a tool to foster investment. This trend is occurring despite ongoing international tax reforms that should make fiscal incentives a less effective tool for the attraction of FDI from large multinational enterprises (MNEs). Investment facilitation and investment promotion measures also display a notable upward trend since the pandemic. Together with incentives, they were all complementary components of country efforts to promote economic recovery and resilience. In 2023, investment facilitation and investment promotion initiatives reached record shares of 39 and 14 per cent of all favourable measures, respectively. Investment promotion measures were fuelled Figure II.3 Africa and developing Asia adopted the most investment policy measures in 2023 Nature of measures by region, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. More favourable Less favourable Africa Developing Asia Europe Latin America and the Caribbean Other developed countries 34 4 33 4 16 19 14 5 2 6 Chapter II Investment policy trends 7 Figure II.4 Investment policy shifts from liberalization to facilitation Measures more favourable to investors by category (Percentage) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 20 40 60 80 100 2014 2015 2017 2019 2021 2023 2016 2018 2020 2022 23 26 39 5 7 24 23 39 6 8 31 19 39 7 4 33 23 34 5 5 24 28 36 7 5 24 35 23 8 10 25 34 23 10 8 28 38 16 12 6 39 33 12 14 2 Facilitation Incentives Liberalization Promotion Other 23 26 44 2 5 Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Figure II.5 Investment facilitation is important across regions Measures more favourable to investors by category and region, 2014–2023 (Percentage) 50 100 29 41 16 8 6 29 18 37 8 8 26 40 19 13 2 26 32 30 6 6 Africa Developing Asia Latin America and the Caribbean countries Developed Facilitation Incentives Liberalization Promotion Other by an increase in the adoption of new investment promotion strategies and the creation of new investment promotion agencies (IPAs). The regional breakdown of policy measures more favourable to investors adopted in the last decade reveals important differences (figure II.5). In Africa and in Latin America World Investment Report 2024 Investment facilitation and digital government 8 and the Caribbean, incentives were the most common policy initiative, accounting for approximately 40 per cent of all measures in both regions. In contrast, Asia favoured liberalization, which accounted for 37 per cent of the measures, notably higher than in Africa (16 per cent) and in Latin America and the Caribbean (19 per cent). Investment facilitation measures consistently represented more than a quarter of the total across all regions. This underscores the widespread recognition of investment facilitation as a cornerstone of investment attraction efforts globally. a. Facilitation In 2023, investment facilitation measures reached a peak, constituting 39 per cent of the policy measures more favourable to investors implemented by countries worldwide, 45 per cent of the measures adopted by developed countries and 38 per cent of those adopted by developing ones. Investment facilitation measures fall into three main categories: transparency, streamlining and facilitation services. Transparency measures aim at improving the clarity and accessibility of laws and procedures related to investment. They made up 21 per cent (12) of the facilitation measures in 2023. Streamlining measures encompass initiatives designed to enhance the efficiency of procedures related to investments. They accounted for almost 1 Accessible at https://investmentpolicy.unctad.org/investment-policy-monitor. half (27) of the facilitation measures. Facilitation services are provided by IPAs, special economic zones or other administrative entities. They constituted 28 per cent (16) of the total (figure II.6). The introduction of single windows for investment figured prominently among the facilitation measures adopted in 2023. For instance, Egypt introduced a single- approval system for investment projects, encompassing various licences and permits relevant to investment activities. (Unless indicated otherwise, all examples provided in this section, including additional information and links to official sources, can be found in the UNCTAD Investment Policy Monitor database).1 The General Authority for Investment and Free Zones also announced plans to launch an online platform for company establishment. Uruguay introduced an online single window for investment, integrating various services related to company establishment and operation. Uzbekistan established a physical one-stop shop to assist investors upon entry and facilitate visa processes. Transparency measures included the introduction of information portals for foreign investors. Jordan and Mexico, for example, unveiled platforms providing detailed investment procedures, opportunities and incentives. Additional measures involved initiatives to clarify investment- related procedures. For instance, the Figure II.6 Streamlining of administrative procedures is top priority Investment facilitation measures by category, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Streamlining Other 27 Transparency 12 Facilitation services 16 2 Investment facilitation measures hit record high (39%) Chapter II Investment policy trends 9 Kingdom of the Netherlands and the United Kingdom issued guidance on the approval processes of their FDI screening regimes. Facilitation services ranged from assistance in obtaining specific permits to comprehensive support for foreign investors. Chile implemented a multi- agency cooperation agreement involving the Foreign Investment Promotion Agency, the National Immigration Service and the Economic Development Agency to streamline visa services for foreign investors and skilled professionals. Malaysia introduced a dedicated visa facilitation service for strategic investors identified by the Malaysian Investment Development Authority. Uzbekistan introduced the position of “investment managers” within the Ministry of Investments, Industry and Trade, to provide dedicated support to investors throughout the project life cycle, from resolving land acquisition issues to securing necessary permits. The rise in investment facilitation initiatives is discussed in greater detail in chapter IV. b. Incentives The introduction or expansion of investment incentives represented one third of the policy measures more favourable to investors in 2023 in both developed and developing countries. Although the number of new incentives decreased in comparison with 2022, it remained significantly higher than the average for the decade. Investment incentive measures encompass tax and financial incentives, including incentives related to special economic zones, alongside other types, such as infrastructure facilities or visa and work permits (e.g. citizenship-by-investment programmes). Approximately 50 per cent of the sector- specific incentives introduced in 2023 aimed at promoting investment in the services sector, followed by manufacturing and agriculture (figure II.7). This confirms a growing focus on promoting investment in services, illustrated by the increase in the share of new incentives for the services sector from 35 per cent of non-industry- specific incentives in 2014–2018 to 46 per cent in 2019–2023. New incentives for manufacturing and agriculture remained stable at 31 per cent and 15 per cent, respectively. New incentives for extractive industries declined from 19 per cent in 2014–2018 to 9 per cent in 2019–2023. As in 2022, the push for renewable energy investment stood out as the primary focus of new incentives enacted in 2023. Italy, Nigeria and South Africa adopted a range of fiscal and non-fiscal incentives aimed at encouraging investments in renewable energy. Canada and Egypt introduced an investment tax credit and other fiscal incentives focused specifically on the promotion of green hydrogen. New incentives in manufacturing also aimed to support clean technologies, as well as high-tech manufacturing. For instance, France introduced a tax credit for producing batteries, solar panels, wind turbines and heat pumps. The United Figure II.7 Sector-specific incentives primarily target services Incentive schemes by sector, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Agriculture 4 Manufacturing 11 Services 16 Cross-industry 27 Renewable energy: key target of incentives in 2023 World Investment Report 2024 Investment facilitation and digital government 10 Kingdom established new green freeports offering several fiscal incentives for advanced manufacturing and the production of renewable energy equipment. Israel offered a tax credit in the high-technology sector. Mexico launched incentives for nearshoring in semiconductors, electromobility and medical devices. c. Promotion Investment promotion measures accounted for 14 per cent of all measures more favourable to investors in 2023. They included the formulation of new national investment policies and investment promotion strategies, the establishment or strengthening of investment promotion institutions and the adoption of public–private partnership (PPP) initiatives (figure II.8). In recent years, several countries have adopted national investment policy documents to emphasize investment- related priorities and introduce measures to improve investment attraction. Notable examples include Kenya in 2019, Jamaica in 2020, El Salvador and New Zealand in 2021 and Australia in 2022. In 2023, Nigeria and Pakistan also introduced national investment policies. Both outlined comprehensive frameworks for regulating and promoting investments, identifying target sectors for investment attraction and enhancing the coordination among various entities involved in investment promotion at different levels of Government. The national investment policies of both Kenya and Nigeria were prepared with technical assistance from UNCTAD. Enhancing the coordination and effectiveness of investment promotion activities was also the key objective behind the creation or strengthening of investment promotion institutions in 2023. In Botswana, for instance, four investment- related institutions were merged into the Botswana Investment and Trade Centre. Egypt established a Supreme Council for Investments under the chairmanship of the country’s president. Papua New Guinea passed reforms to strengthen the Investment Promotion Authority, including through improved inter-agency coordination on investment matters. In addition, several investor targeting strategies were implemented in 2023. Jordan introduced the Investment Promotion Strategy for 2023–2026, entrusting all international promotion activities to specialized marketing agencies charged with identifying potential investors and conducting focused campaigns in select countries. China launched the Invest in China initiative, targeting foreign investment from specific countries. Costa Rica debuted an FDI strategy aimed at attracting investment beyond the capital’s metropolitan area. Efforts to foster investment through PPPs were undertaken by Ecuador, Ethiopia, Kenya, Peru and the Russian Federation. Ecuador rolled out a new PPP framework, and Ethiopia introduced a mechanism for direct PPP negotiations with foreign firms. Kenya encouraged the development and operation of port infrastructure through PPPs. Peru made land access easier for PPP investors. The Russian Federation strengthened its PPP Figure II.8 Adoption of new strategies leads investment promotion efforts Measures by type, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Investment promotion institutions 4 Public–private partnership initiatives 5 Investment promotion strategies 11 National investment policies on the rise Chapter II Investment policy trends 11 framework to reduce investment risks and initiated an electronic tender process. d. Liberalization Liberalization initiatives accounted for 12 per cent of all measures more favourable to investors in 2023. All of them were adopted by developing countries. The removal of FDI entry restrictions and conditions represented the majority of liberalization measures, followed by the removal of restrictions on foreign exchange, privatization initiatives and liberalization of land access (figure II.9). As in the case of incentives, though most measures were cross-sectoral, sector- specific liberalization initiatives concerned primarily services. For instance, Ethiopia allowed foreign investment in digital payment systems. India permitted foreign lawyers and law firms to “practice foreign law within the country” (i.e. to advise clients on the international elements of mergers and acquisitions or appear as arbitrators). Nigeria opened its electricity sector to FDI at the state level, granting each state the authority to create an independent electricity market within its jurisdiction. Figure II.9 Most liberalization measures lifted entry restrictions Liberalization measures by type, 2023 (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. Privatizing 2 Easing access to land 1 Relaxing foreign exchange restrictions 3 Easing entry conditions 3 Lifting entry restrictions 8 3. Policy measures less favourable to investors Heightened caution towards foreign investments in critical sectors persisted in 2023. New or expanded FDI screening mechanisms accounted for nearly half of the measures less favourable to investors (45 per cent). Four additional countries implemented FDI screening in 2023, and several others will follow in 2024. A series of global crises, including the pandemic, have intensified geopolitical tensions, disrupted global supply chains and raised food and energy prices. This has led to greater caution towards foreign investment in sectors that are essential for national and economic security, prompting many countries, particularly developed ones, to tighten regulations on foreign investment. FDI-specific restrictions, which accounted for the minority of measures unfavourable to investors a decade ago, have since represented about 60 per cent of the total number of measures, with peaks of more than 80 per cent during the pandemic (figure II.10). World Investment Report 2024 Investment facilitation and digital government 12 FDI entry restrictions represented the majority of the measures less favourable to investors over the last decade. These primarily involved the adoption of investment screening mechanisms in developed regions, especially Europe. Other entry-related measures adopted by both developed and developing countries included primarily restrictions on foreign ownership of land and limitations on foreign investment in strategic sectors (e.g. financial services, mining, media or transport). Tax-related measures, e.g. the removal or reduction of investment incentives, accounted for the bulk of treatment and operation measures affecting FDI. a. Investment screening for national security Nearly half of the investment policy measures less favourable to investors adopted in the last decade concerned investment screening for national security. As documented in recent World Investment Reports and in a dedicated issue of the Investment Policy Monitor (UNCTAD, 2023d), screening has been the largest category among all less favourable measures adopted by countries since 2017, except in 2022, when tax measures predominated (UNCTAD, 2023f). In 2023, this trend persisted, with investment Figure II.10 Entry restrictions remain prominent Policy measures less favourable to investors by category (Percentage) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 2014 2016 2018 2020 2022 2023 2021 2019 2017 2015 20 40 60 80 100 23 18 59 50 12 38 42 25 21 12 48 17 13 22 49 10 10 31 55 10 35 80 2 4 14 61 20 7 12 36 6 9 49 52 8 16 24 FDI entry FDI treatment and operation General investment entry General investment treatment and operation Chapter II Investment policy trends 13 Figure II.11 Screening regimes continue to expand Countries introducing or expanding security-related investment screening (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 31 March 2024. 5 10 15 20 25 30 35 40 45 2006 1995– 2005 2008 2010 2012 2014 2016 2018 2020 2022 2023 2021 2019 2017 2015 2013 2011 2009 2007 3 2 1 1 3 1 1 1 1 4 4 3 2 4 1 5 3 5 17 5 12 5 13 2 11 4 Expands screening Introduces screening Cumulative number of countries with screening 1 screening accounting for 45 per cent of all measures less favourable to investors. New FDI screening regimes were implemented in Belgium, Estonia, Luxembourg and Sweden, bringing the total number of countries with comprehensive FDI screening regimes to 41 (figure II.11). Of these, 26 are in Europe. Collectively, countries that conduct FDI screening for national security now represent more than half of global FDI flows and three quarters of FDI stock. As in previous years, countries continued to address vulnerabilities in their existing FDI screening mechanisms by covering a broader range of transactions to improve the detection of potential risks related to FDI. Only a limited number of countries report on their screening mechanisms. Table II.1 displays data compiled by UNCTAD from country surveys and official sources. UNCTAD has previously pointed out the lack of a standardized methodology for collecting data on screened projects, highlighting the variety in metrics and reporting periods employed by various screening authorities (UNCTAD, 2023f). Despite these methodological differences, discernible trends emerge. In the majority of countries for which historical data are available, there has been an uptick in the number of projects subject to review. The rejection rate remains low, at less than 1 per cent in most countries. Transactions that underwent screening for national security concerned a variety of sectors, including defence and security, energy and utilities, critical infrastructure, automotives, financial services, health care and pharmaceuticals, electronics and semiconductors, media, communication and Internet services, and metals and mining. The growing number of cases screened by authorities across several jurisdictions inevitably signifies a growing burden on administrative resources and World Investment Report 2024 Investment facilitation and digital government 14 Table II.1 Screened investment projects on the rise but low rejection rates Source: UNCTAD, based on official sources and country inputs. a The total number of cases screened by the end of the period may include cases carried over from previous periods, depending on the methodology employed by each country. b For Germany, the number of projects modified or authorized with conditions includes prohibitions, side conditions, public legal contracts and administrative orders. c In the United Kingdom, the review mechanism applies equally to domestic and foreign parties. The cumulative number of cases is subject to continuous adjustment as a result of verification processes, which may result in discrepancies with case numbers reported in previous years. Country Period Screeneda Authorized Modified or authorized with conditions Rejected Withdrawn Australia 4/2020–3/2021 .. 28 4 .. .. 7/2021–6/2022 .. 75 39 .. .. 7/2022–6/2023 .. 100 18 .. .. Belgium 7/2023–12/2023 32 26 .. 0 .. Canada 2022 35 24 0 3 8 2023 27 16 0 0 3 Czechia 2022 13 7 0 0 3 2023 28 20 0 0 1 Finland 2019 15 .. .. 0 .. 2020 15 .. .. 0 .. 2021 32 .. .. 0 .. 2022 34 .. .. 0 1 2023 39 .. .. 0 0 France 2021 328 57 67 .. .. 2022 325 61 70 .. .. Germanyb 2019 106 .. 12 .. .. 2020 160 .. 12 .. .. 2021 306 .. 14 .. .. 2022 306 .. 12 .. .. 2023 257 .. 10 .. .. Italy 2019 83 39 13 0 .. 2020 342 135 40 2 .. 2021 496 183 26 3 1 2022 608 242 18 4 3 Malta 2021 81 2 6 2 0 2022 22 0 10 1 3 2023 20 1 2 0 3 Spain 2019 6 6 0 0 0 2020 37 34 3 0 1 2021 57 51 6 0 1 2022 78 67 9 1 1 2023 108 94 10 0 4 United Kingdomc 1/2022–3/2022 209 3 0 0 .. 4/2022–3/2023 776 757 9 5 11 United States 2019 231 .. 28 2 12 2020 313 .. 16 2 9 2021 436 .. 26 0 11 2022 440 .. 46 1 20 Chapter II Investment policy trends 15 case management. In response, in 2023, some countries established procedures such as pre-authorization and consultation (e.g. Denmark and Spain). Others introduced fees for FDI screening (e.g. Germany and Romania). The trend towards the adoption of FDI screening regimes will continue in the coming years. The screening regimes of Bulgaria and Singapore entered into force in March 2024. The regime in Ireland is expected to become operational before the end of the year. The European Union has also put forward a reform proposal aimed at revising the current framework.2 It emphasizes the need for all member States to adopt ex ante screening mechanisms and suggests extending the scope of the screening regimes to cover intra-European Union transactions controlled by foreign investors. Bilateral initiatives also play a role in the expansion of FDI screening. They focus predominantly on establishing formal or informal mechanisms for exchanging information relating to national security and investment. In December 2023, Mexico and the United States signed a memorandum of intent to create a bilateral working group for regular exchanges of information.3 The United States and the European Union have created a working group on investment screening to promote best practices and develop a holistic policy approach to addressing risks pertaining to specific sensitive technologies.4 b. Other entry-related measures Other types of entry restrictions on investment accounted for 23 per cent of the measures less favourable to investors 2 European Commission, 2024, Proposal for a regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council, COM(2024 23 final, 2024/0017 (COD), https://circabc.europa.eu/ui/ group/aac710a0-4eb3-493e-a12a-e988b442a72a/library/f5091d46-475f-45d0-9813-7d2a7537bc1f/ details?download=true. 3 United States, Department of the Treasury, 2023, Secretary of the Treasury Janet L. Yellen and Mexico’s Secretary of Finance and Public Credit Rogelio Ramírez de la O announce intent to establish bilateral working group on foreign investment review, 7 December. See https://home.treasury.gov/news/press-releases/jy1965. 4 European Commission, Working Group 8 – Investment Screening, Part of EU–US Trade and Technology Council, https://futurium.ec.europa.eu/en/EU-US-TTC/wg8. in 2023, with a significant emphasis on enhancing State control over extractive industries. Key examples included the National Lithium Strategy in Chile, mandating State majority ownership throughout the lithium production cycle, and the revised Mining Code of Mali, granting the State a 10 per cent stake in new mining ventures. Mining law reforms in Mexico tightened concession conditions and removed the expropriation rights of concessionaires for mining exploitation. Panama introduced a moratorium on new metallic mineral concessions. Concerns regarding foreign investors’ ownership of certain types of property also prompted various countries to enact new prohibitions. Canada, for instance, restricted the purchase of residential properties by foreign investors. The Russian Federation limited foreign ownership of news aggregators, and the United States imposed restrictions on foreign acquisition of agricultural and forest properties, as well as land or property near military installations and critical infrastructure. c. Investor treatment and operation The remaining one third of policy measures less favourable to investors in 2023 (12 measures) comprised various treatment and operation provisions adopted by both developing and developed countries that aimed to address a diverse array of specific policy concerns. The extractive sector was often affected by these measures. For instance, Chad nationalized the assets of Esso Exploration and Production Chad, and Mali abolished several tax incentives previously available to mining companies. Countries with FDI screening represent more than half of global FDI flows, three quarters of FDI stock World Investment Report 2024 Investment facilitation and digital government 16 In line with the recent trend towards more stringent controls on outbound investment, three countries introduced measures to address concerns directly related to outward FDI (OFDI). South Africa established an approval requirement for transfers abroad of capital funds in amounts greater than R1 million per year (approximately $50,000) and increased related documentation requirements. Spain expanded the mandatory reporting of OFDI to encompass new types of transactions. The United States introduced outbound investment controls on certain transactions relating to national security technologies and products. From near the end of 2023 into the early months of 2024, at least 26 countries, primarily developed economies in Europe, 5 Based on data from OECD Pillar Two Country Tracker and Pillar Two Navigator, available at oecdpillars.com. enacted laws to implement the global minimum tax as outlined in the Pillar II reform of the Organisation for Economic Co-operation and Development (OECD).5 Known as the Global Anti-Base Erosion Model Rules, the objective is to ensure that MNEs contribute a minimum amount of tax on earnings within each operating country (UNCTAD, 2023f). The reform targets multinationals with annual revenues above €750 million, enabling jurisdictions to levy a top-up tax to achieve a minimum effective rate of 15 per cent on income taxed below this threshold. These developments are not captured in the Investment Policy Monitor database because of its methodological specifications (see box II.1). 4. Outward foreign direct investment policies The global landscape of OFDI promotion, facilitation and regulation has undergone substantial changes since the early 2000s. These changes reflect the evolving patterns of global investment and production, the sharpening focus on sustainability and the heightened geopolitical tensions and gradual shift from liberalization to regulation that have characterized FDI policies over the past decade. a. Promotion and facilitation of outward investment As highlighted in a recent issue of the Investment Policy Monitor (UNCTAD, 2024b), OFDI promotion and facilitation policies have been a significant component of economic strategies of developed countries for several decades. At least 31 of them (79 per cent of the total tracked) have adopted initiatives to promote outbound investment. Support for companies that are investing abroad typically serves two main objectives: the development and internationalization of domestic businesses, particularly small and medium-sized enterprises (SMEs), and the promotion of international cooperation and development efforts. The number of developing countries that have adopted OFDI promotion mechanisms has expanded in line with their expanding role as sources of investment. At least 19 developing countries (14 per cent) have established formal mechanisms to promote OFDI, including 11 countries in Asia, 6 in Africa, and 2 in Latin America and the Caribbean (figure II.12). Four principal types of direct promotion instruments to support OFDI exist: fiscal and Chapter II Investment policy trends 17 financial support, investment guarantees, investment facilitation services and direct capital participation. Facilitation services are the most widespread, adopted by 23 per cent of countries globally, including 64 per cent of developed countries and 11 per cent of developing countries. These services may include providing advisory assistance, supporting participation in international events, coordinating economic missions abroad, connecting with partners in the host country, training, and preparing feasibility and country risk analyses. Fiscal or financial support encompasses loans, grants and tax incentives for companies that venture into OFDI. Loans are usually provided by home-country export promotion agencies, development banks or similar institutions. They generally offer better conditions than market standards or support projects that might otherwise struggle to secure private financing. This type of support is common in developed countries (62 per cent) but rare in developing countries (10 per cent). Foreign investment insurance or guarantees secure some level of political risk protection for domestic firms investing in more unpredictable and volatile markets. They are offered by 18 per cent of countries globally – 67 per cent of developed countries and 5 per cent of developing countries. Direct capital participation through State- sponsored programmes is offered in 49 per cent of developed countries and 3 per cent of developing countries (figure II.13). These programmes enable domestic firms to invest abroad by providing patient capital through direct equity participation and private enterprise funds. These are made available through import–export banks, development banks or dedicated funds targeting particular sectors, countries or types of firms, such as SMEs. A growing number of countries are leveraging OFDI as a tool to further the goals of the 2030 Agenda. Among the 50 countries worldwide with OFDI promotion mechanisms, 18 developed countries (58 per cent) and 5 developing countries (26 per cent) have put in place at least one instrument specifically designed to encourage OFDI in developing countries. In addition, numerous developed countries, especially in Europe, have integrated OFDI promotion schemes into their broader development assistance strategies. They actively engage the private sector in development cooperation initiatives, so as to capitalize on its strengths and capabilities to advance development goals, while promoting growth and global competitiveness of domestic firms. Consequently, OFDI promotion schemes often incorporate criteria that emphasize the benefits to the host country, particularly as regards investments that target developing countries (figure II.14). Figure II.12 Outward investment promotion and facilitation schemes introduced mainly in developed countries Countries with a scheme, 2023 (Number) Source: UNCTAD. Latin America and the Caribbean 2 Africa 6 Developing Asia 11 Developed countries 31 More countries using outward investment as a tool for Agenda 2030 World Investment Report 2024 Investment facilitation and digital government 18 Figure II.14 Leveraging promotion of outward investment to achieve the Sustainable Development Goals Criteria for accessing support schemes, by economic grouping (Percentage) Source: UNCTAD. Developed countries Developing countries Investment in developing economies Host-country benefts Sustainability 58 26 52 16 39 11 Figure II.13 Facilitation is the main support tool worldwide for outward investment Tools offered and share of countries using them, 2023 (Percentage) Source: UNCTAD. Developed countries Developing countries World Fiscal/fnancial support 62 10 21 Direct capital participation 49 3 13 Investment facilitation services 64 11 23 Investment guarantee 67 5 18 Chapter II Investment policy trends 19 b. Regulation and screening of outward investment OFDI promotion and regulation policies often coexist within the same country. Historically, restrictions on OFDI were mainly observed in developing countries and related to balance- of-payments risks (UNCTAD, 2024b). In the early 2000s, the liberalization of OFDI gained momentum, as countries increasingly removed foreign exchange restrictions. In the last decade, by contrast, an observable shift in the regulatory approach to OFDI has seen restrictions increase by nearly one third in both developing and developed countries (figure II.15). This increase can be partially explained by growing concerns over money- laundering practices, tax evasion and other illicit financial flows disguised as FDI. It was accentuated by the coronavirus pandemic of 2019, which led to a general slowdown in both inward and outward liberalization efforts. Finally, in recent years, concerns have been brought forward related to the potential risks that OFDI could pose to national and economic security, particularly in relation to strategic sectors and technologies. 6 President of the United States, 2023, Addressing United States investments in certain national security technologies and products in countries of concern, Presidential Documents: Executive Order 14105 of August 9, 2023, Federal Register, 88:154, https://www.federalregister.gov/documents/2023/08/11/2023-17449/ addressing-united-states-investments-in-certain-national-security-technologies-and-products-in. In 2023, restrictions on OFDI were in place in nearly half (95) of the world’s economies, including a majority of developing countries and least developed countries. The most common involve either the necessity for investors to secure prior approval for their projects (69 per cent of countries with OFDI restrictions) or to register their planned OFDI with authorities (14 per cent). Total bans on OFDI are in place in only three countries: Ethiopia, Nepal and the Syrian Arab Republic. Screening mechanisms for OFDI based on national security concerns are also gaining traction. While some Asian countries have implemented them for decades (e.g. China, India and Japan), the focus on the security aspects of OFDI has recently broadened to include other major sources. Since 2020, the United States has introduced several initiatives to monitor and regulate OFDI, culminating in an executive order aimed at scrutinizing investments in key national security technologies in certain countries (August 2023).6 In January 2024, the European Commission responded to growing national security concerns related to OFDI by proposing a framework to monitor outbound investment in critical sectors Figure II.15 Outward investment restrictions on the rise Measures by nature and economic grouping (Percentage) Sources: UNCTAD, based on Investment Policy Monitor database and IMF Annual Report on Exchange Arrangements and Exchange Restrictions database, both accessed on 31 March 2024. Less favourable More favourable Developing countries 1999–2010 2011–2022 1999–2010 2011–2022 Developed countries 22 78 49 51 21 79 54 46 World Investment Report 2024 Investment facilitation and digital government 20 such as advanced semiconductors and biotechnology. Member States have been tasked to provide initial risk assessments by mid-2025. Based on these assessments, the Commission will advise member States 7 European Commission, 2024, White paper on outbound investments, 24 January, https://circabc.europa.eu/ ui/group/aac710a0-4eb3-493e-a12a-e988b442a72a/library/51124c0d-58d8-4cd9-8a22-4779f6647899/ details?download=true. on the extent to which existing tools can mitigate these risks and whether additional proportionate policy actions are warranted at the European Union or national level.7 Chapter II Investment policy trends 21 B. International investment policies 1. Trends in international investment agreements In 2023, new-generation international investment agreements (IIAs) included innovative provisions on investment facilitation and cooperation and tended to safeguard States’ right to regulate. However, old-generation IIAs still cover about half of global FDI stock, making IIA reform more urgent. The year was also marked by intensified efforts to reform the IIA and ISDS regimes. a. Conclusion and termination of investment agreements In 2023, countries and regional organizations concluded at least 29 IIAs – 12 bilateral investment treaties (BITs) and 17 treaties with investment provisions (TIPs). This brought the size of the IIA universe to 3,291 (2,831 BITs and 460 TIPs), according to the UNCTAD IIA Navigator (figure II.16). Figure II.16 Agreements from the 1990s and 2000s dominate the international investment agreements universe (Annual number of agreements signed) Source: UNCTAD, IIA Navigator database, accessed 25 March 2024. Note: The UNCTAD IIA Navigator is updated continuously as new IIA-related information becomes available. Abbreviations: IIA = international investment agreement. 50 100 150 200 250 1959 2023 2018 2013 2008 2003 1998 1993 1988 1983 1978 1973 1968 1963 IIAs in force IIAs signed, not in force IIAs terminated Number of IIAs in force 2 608 World Investment Report 2024 Investment facilitation and digital government 22 100 200 300 400 1994–2003 2004–2013 2014–2023 Total number of IIAs terminated 585 In addition, at least 15 IIAs entered into force and 4 were terminated in 2023, bringing the total number of IIAs in force to at least 2,608 by the end of the year. These IIAs are largely dominated by old-generation treaties, signed in the 1990s and 2000s. The total number of terminations reached at least 585 by 2023; about 70 per cent of these IIAs were terminated in the last decade (figure II.17). Under sunset clauses, IIAs may continue to protect investments in existence at the time of termination or withdrawal and grant investors access to investor–State dispute settlement (ISDS) for up to 20 years afterward. IIAs signed and/or adopted in 2023 cover a range of investment governance issues that go beyond protection, such as investment facilitation, cooperation or liberalization (figure II.18). Notably, the majority of TIPs signed or adopted in 2023 included commitments on facilitation or cooperation. About half contained protection or liberalization provisions. In the Agreement Establishing the African Continental Free Trade Area (AfCFTA), the Protocol on Investment – adopted in February 2023 – provides an example of this nascent shift (box II.2). Newly concluded protection-focused IIAs continued the trend towards safeguarding States’ right to regulate as well as reforming or omitting ISDS. It remains to be seen whether these refinements will be interpreted in line with the treaty parties’ intent in ISDS. A lot remains to be done to focus the coverage of IIAs on sustainable investment and foster responsible business conduct by investors. New IIAs also commonly continue to bind countries for long periods of time, limiting their ability to adapt to changing economic realities and new regulatory imperatives (figure II.19). The reform of old-generation IIAs continues to advance at a slow pace. Only 19 per cent of the IIAs signed since 2020 replace an old-generation IIA; 39 per cent ensure that the reformed provisions they contain would be effectively applied where parallel old-generation IIAs exist. Source: UNCTAD, IIA Navigator database, accessed 25 March 2024. Abbreviations: IIAs = international investment agreements. Figure II.17 Terminations of investment agreements reach nearly 600 (Annual number of terminations) Chapter II Investment policy trends 23 The Investment Protocol to the AfCFTA, which involves 54 countries, is the first megaregional IIA covering the African continent in its entirety. It was adopted by the Heads of the State and Government during the Assembly of the African Union on 18–19 February 2023. The Protocol builds on existing investment treaty reform objectives and best practices recognized by the African Union and the regional economic communities, as well as UNCTAD. UNCTAD’s work on IIA reform is recognized in the preamble of the Protocol. The Protocol provides a balanced approach to international investment governance and contains the following elements: • Proactive promotion and facilitation commitments for investment that fosters sustainable development • Refined investment protection provisions that preserve the contracting parties’ right and duty to regulate in the public interest and are extended to sustainable investments only • A dedicated chapter on investment and sustainable development, with proactive commitments on climate action, health and pandemics, human capital development and technology transfer • Enforceable investor obligations related to environmental and labour protection, human rights, the rights of local communities, transparent corporate governance, tax and non-interference in local governance • Firm commitments on technical assistance and capacity-building for contracting parties, as well as support for implementation by the Pan-African Trade and Investment Agency established under the Protocol. Upon entry into force, the Protocol will consolidate the IIA regime in Africa. Under its terms, 183 intra-African BITs will be replaced and regional economic organizations in Africa undertake to harmonize regional IIAs with the content of the Protocol. UNCTAD is a member of the task force that assisted the AfCFTA Secretariat in the negotiation of the Investment Protocol and continues to assist in the negotiation of the Investment Dispute Settlement Annex to it. Source: UNCTAD. Box II.2 AfCFTA Investment Protocol (2023) Figure II.18 Content of investment agreements is becoming more diverse (Number of agreements signed in 2023 by type of commitment) Source: UNCTAD, IIA Navigator database, accessed 25 March 2024. Notes: Based on 22 IIAs (14 TIPs and 8 BITs) signed and/or adopted in 2023 for which text or other public information on content is available. Cooperation commitments refer to the establishment of institutional frameworks to cooperate on investment activities (investment committee) and/or undertakings to conduct joint activities on investment in one or more economic sectors. Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with investment provisions. BITs TIPs Cooperation 5 11 Protection 8 7 Facilitation/promotion 4 10 Liberalization 1 8 World Investment Report 2024 Investment facilitation and digital government 24 IIAs in force cover 65 per cent of global FDI stock. TIPs, which include regional and megaregional agreements and relate to a broad range of economic issues beyond investment disciplines, account for the largest share – 53 per cent. BITs, which typically include investment protection provisions only and apply bilaterally, cover about 7 per cent. The remaining 5 per cent are covered simultaneously by a TIP and a BIT (figure II.20). The coverage of TIPs has increased by at least 10 per cent in the past decade, following the growing relevance of regional investment policymaking. Old-generation IIAs, which provide broad and unrefined provisions that often expose host countries to greater risk of ISDS, cover 49 per cent of the total global FDI stock. For 53 countries, more than 80 per cent of total FDI stock is covered by an old-generation IIA. The exposure to ISDS is overall higher for developing economies and LDCs. Old-generation IIAs cover 65 Figure II.19 Recently signed investment agreements include reform features Agreements signed between 2020 and 2023 with selected reform features (Percentage) Source: UNCTAD. Note: Based on 36 IIAs concluded in 2020–2023 for which texts are available, not including agreements that lack investment protection provisions. Abbreviations: IIA = international investment agreement, ISDS = investor–State dispute settlement. a The IIAs counted contain reform language for five or more key substantive provisions, including at least a circumscribed fair and equitable treatment standard and a clarified indirect expropriation clause, or a general exceptions clause with other reformed clauses, in line with the UNCTAD IIA Reform Accelerator (UNCTAD, 2020a). Right-to-regulate safeguards Promotion/facilitation commitments ISDS reformed Importation excluded Duration/survival clause of fewer than 10 years Old-generation IIA(s) replaced Investor obligations Scope defned by reference to sustainability 72 64 50 39 31 19 14 3 Selected features of IIAs Right-to-regulate safeguards. Reforms language of the majority of key substantive IIA provisions, as defned in the UNCTAD IIA Reform Accelerator, including those most often invoked in ISDS.a Duration/survival clause of fewer than 10 years. Provides for initial duration of validity and survival clause of fewer than 10 years or omits them. ISDS reformed. Contains procedural improvements, limits the access to ISDS for certain types of claims or omits ISDS altogether. Old-generation IIA(s) replaced. Provides for the termination or suspension of at least one IIA upon entry into force. Promotion/facilitation commitments. Includes commitments to transparency and/or the improvement of the regulatory environment, stakeholder engagement on investment policies or cooperation. Investor obligations. Contains obligations applicable to investors, such as responsible business conduct, avoiding corruption, environmental management and the like. Importation of elements from unreformed IIAs excluded. Excludes application of most-favoured-nation and non-derogation provisions to obligations in other IIAs. Scope defned by reference to sustainability. The IIA scope of coverage is defned by reference to "sustainable development" and/or "sustainable investment". Chapter II Investment policy trends 25 per cent of developing countries’ FDI stock. This is 16 per cent higher than the global average and more than 20 per cent higher than the share for developed economies. The difference is even higher for LDCs, for which old-generation treaties cover 71 per cent of FDI stock (figure II.21). IIA terminations and replacements since 2012 have affected the IIA coverage of about 13 per cent of the total FDI stock.8 Following terminations, 6 per cent of the stock is no longer covered; 4 per cent relates to developed economies and 2 per cent to developing economies. The remaining 7 per cent are now covered by a new-generation IIA. Barely any 8 Analysis based on 424 IIAs (415 BITs and 9 TIPs) terminated since 2012 (including IIAs that were terminated by mutual consent, unilaterally terminated, expired or replaced by a new treaty). FDI stock of LDCs has been affected by terminations or replacements. Taken together, these data suggest that to date IIA reform has had a limited effect on mitigating the risk of ISDS in developing countries and has largely left the FDI stock of LDCs subject to old-generation IIAs. Old-generation IIAs have served as the basis for almost all ISDS cases to date (about 97 per cent), and developing countries have been respondents in the majority of them (about 62 per cent). Of these, at least 58 cases based on old- generation IIAs were initiated against LDCs. ISDS proceedings represent a significant financial risk for developing countries and TIPs 53 None 35 BITs and TIPs 5 BITs 7 Figure II.20 Investment agreements in force cover 65 per cent of global stock of foreign direct investment Share of stock covered, by type of IIA (Percentage) Sources: UNCTAD, IIA Navigator database, accessed 25 March 2024, and IMF Coordinated Direct Investment Survey database, accessed 19 March 2024. Notes: FDI stocks estimated on the basis of information about 193 United Nations Member States’ shares of world FDI inward stock for 2022. Does not include confidential and unspecified stock data. Analysis based on 2,429 IIAs in force (2,220 BITs and 209 TIPs) with substantive investment commitments. For TIPs that include a relevant regional economic integration organization, only the FDI stock of members for which the IIA is in force was counted. Excludes the Energy Charter Treaty (1994) in view of its sector-specific scope. Abbreviations: BIT = bilateral investment treaty, FDI = foreign direct investment, IIA = international investment agreement, TIP = treaty with investment provisions. World Investment Report 2024 Investment facilitation and digital government 26 LDCs, in particular. The average amount sought by investors in ISDS cases is $1.1 billion and the average amount awarded is $385 million. In at least eight ISDS cases developing countries were required to pay compensation of more than $1 billion. At the end of 2023, the amount that LDCs were required to pay totalled $595 million, with one case alone accounting for $270 million. b. Other developments relating to investment rule-making The withdrawals of France, Germany and Poland from the Energy Charter Treaty (ECT) (1994) became effective in 2023. At least three more countries have deposited notices to exit the ECT over concerns related to climate change, and the European Parliament voted in favour of the withdrawal of the European Union in April 2024. The trend towards negotiating flexible international instruments aimed at channelling investment towards the green economy also continued. Partners concluded negotiations on the Clean Economy Agreement in the context of the Indo-Pacific Economic Framework for Prosperity. Figure II.21 Old-generation investment agreements cover the majority of foreign direct investment stock in developing and least developed countries Stock covered, by economic grouping and generation of agreement (Percentage) Sources: UNCTAD, IIA Navigator database, accessed 25 March 2024, and IMF Coordinated Direct Investment Survey database, accessed 19 March 2024. Notes: FDI stocks estimated on the basis of information about 193 United Nations Member States’ shares of world FDI inward stock for 2022. Does not include confidential and unspecified stock data. Analysis based on 2,429 IIAs in force (2,220 BITs and 209 TIPs) with substantive investment commitments. For TIPs that include a relevant regional economic integration organization, only the FDI stock of members for which the IIA is in force was counted. Excludes the Energy Charter Treaty (1994) in view of its sector-specific scope. Where a new- generation IIA coexists with an old-generation IIA covering the same FDI stock without suspending its effect, the relevant FDI stock is considered covered by an old-generation IIA. Abbreviations: BIT = bilateral investment treaty, FDI = foreign direct investment, IIA = international investment agreement, TIP = treaty with investment provisions. 49 16 35 45 18 37 65 8 27 71 2 27 World Developed Developing (except least developed) Least developed Old-generation New-generation Not covered Chapter II Investment policy trends 27 The year witnessed the first outputs of the work of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III on ISDS reform. In July 2023 the UNCITRAL Commission adopted the Model Provisions and the Guidelines on Mediation for International Investment Disputes, and the Code of Conduct for Arbitrators in International Investment Dispute Resolution. In April 2024, Working Group III finalized the draft statute for the establishment of an advisory centre on investment disputes. The text of the Investment Facilitation for Development Agreement was made public on 25 February 2024 by the ministers of 123 participating members of the World Trade Organization. The status of the text in relation to the Organization’s architecture remains to be determined. The UNCTAD World Investment Forum 2023 took place in Abu Dhabi on 16–20 October 2023 ahead of the twenty-eighth Conference of the Parties (COP28). At the Forum investment policymakers and experts discussed urgent reforms of the IIA regime in light of the climate crisis, resulting in the launch of the UNCTAD Multistakeholder Platform for IIA Reform (box II.3). Work on diverse aspects of international investment governance continued in a number of international forums (table II.2). Notably, Brazil – which holds the Group of 20 Presidency in 2024 – identified sustainable development in IIAs as one of the key priorities for the Group of 20 Trade and Investment Working Group. The events in the IIA track at the UNCTAD World Investment Forum 2023 brought together key actors in IIA reform: High-level IIA conference 2023 (18 October 2023). Investment policymakers and experts from governments, international organizations, think tanks, academia and the private sector noted the challenges that the current IIA regime may pose to climate action, explored options for aligning IIAs with climate mitigation and adaptation goals, and called for the urgent reform of the stock of old-generation treaties. Based on requests by participants to identify ways to fast-track investment treaty reform for sustainable development and climate action, UNCTAD launched a Multi-Stakeholder Platform for IIA Reform. International policy developments in investment facilitation (19 October 2023). The session united key actors in investment facilitation from Governments, development partners, private sector representatives and regional/international organizations, to analyse global trends and challenges in investment facilitation policies for sustainable development. Speakers welcomed UNCTAD’s policy options for facilitating investment in sustainable development, part of the IIA Issues Note Investment Facilitation in IIAs: Trends and Policy Options (UNCTAD, 2023a). Regional sessions (16–18 October 2023). Three sessions co-organized with key regional partner organizations complemented the UNCTAD World Investment Forum IIA track and highlighted the role that such organizations can play in shaping coherent international investment policies among their members: • D-8 Organization for Economic Cooperation – UNCTAD Guiding Principles for Investment • AfCFTA Investment Protocol: towards a new generation of investment policies in Africa • Islamic Development Bank–UNCTAD Investment Policy Principles Source: UNCTAD. Notes: For more information on the UNCTAD World Investment Forum, see https:// worldinvestmentforum.unctad.org/wif-events-programme?event=80. For information on the UNCTAD Multi-Stakeholder Platform for IIA Reform, see https://investmentpolicy.unctad.org/news/ hub/1732/20231020-launch-of-multi-stakeholder-platform-for-investment-treaty-reforms. Box II.3 UNCTAD World Investment Forum 2023 – IIA track highlights World Investment Report 2024 Investment facilitation and digital government 28 Table II.2 Work relating to investment rule-making in international forums, 2023–2024 Source: UNCTAD, based on various sources. Abbreviations: ICC = International Chamber of Commerce, IIA = international investment agreement, ISDS = investor–State dispute settlement, OECD = Organisation for Economic Co-operation and Development, OHCHR = Office of the United Nations High Commissioner for Human Rights, OIC = Organisation of Islamic Cooperation, UNCITRAL = United Nations Commission on International Trade Law, UNIDROIT = International Institute for the Unification of Private Law, WTO = World Trade Organization. Organization/initiative IIA-related coverage Most recent outputs/events Americas Partnership for Economic Prosperity Financing/investment for sustainable infrastructure East Room Declaration (November 2023) Asia-Pacific Economic Cooperation Sustainability considerations for investment policy San Francisco principles on integrating inclusivity and sustainability into trade and investment policy (November 2023) Draft legally binding instrument on the right to development Right to regulate Draft instrument presented to Human Rights Council (September 2023) Interaction with the scope of IIAs Group of 20 Trade and Investment Working Group Sustainable development in IIAs Second meeting (April 2024) Investment facilitation in IIAs UNCTAD-OECD Report mapping of sustainable development and investment facilitation provisions in IIAs by Group of 20 members and invited countries (April 2024) Investment Facilitation for Development, WTO Investment facilitation Joint Ministerial Declaration on the Investment Facilitation for Development Agreement by participating countries (February 2024) OECD Work Programme on the Future of Investment Treaties IIAs and climate change OECD Investment Treaty Conference (March 2024) IIA reform OHCHR Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment ISDS Report on risks of ISDS for the right to a healthy environment (July 2023) Safe, clean, healthy and sustainable environment OIC Intergovernmental Experts Group on ISDS ISDS, permanent mechanism Second expert meeting (September 2023) OIC investment agreement UNCITRAL Working Group III ISDS reform Model provisions and guidelines on mediation, and codes of conduct for arbitrators and judges adopted by the UNCITRAL Commission (July 2023) Draft statute of advisory center for ISDS finalized (April 2024) UNCTAD IIA reform for sustainable development First meeting of Multi-stakeholder Platform for IIA Reform (February 2024) Policy analysis, technical assistance, consensus building Capacity-building and technical assistance on IIA reform provided for more than 90 countries UNIDROIT and ICC Working Group International investment contracts (codification) Second working group meeting (March 2024) Chapter II Investment policy trends 29 2. Trends in investor–State dispute settlement The total ISDS case count reached 1,332, with 60 new arbitrations initiated in 2023. About 70 per cent of them were brought against developing countries, including three LDCs. Investors in construction, manufacturing and extractives accounted for over half of the claims. a. New cases initiated in 2023 In 2023, 60 known treaty-based ISDS cases were initiated – 48 cases at the International Centre for Settlement of Investment Disputes (ICSID) and 12 cases before other forums (figure II.22). As some arbitrations can be kept confidential, the actual number of arbitrations filed in 2023 (and previous years) is likely to be higher. In the past 10 years, the total number of ISDS cases has more than doubled. There were fewer than Figure II.22 Investor–State dispute settlement cases surpassed 1,300 at the end of 2023 (Annual number of known treaty-based cases) Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024. Notes: Information has been compiled from public sources, including specialized reporting services. UNCTAD statistics do not cover investor–State cases that are based exclusively on investment contracts (State contracts) or national investment laws, or cases in which a party has signalled its intention to submit a claim to ISDS but has not commenced the arbitration. Annual and cumulative case numbers are continually adjusted as a result of verification processes and may not match exactly case numbers reported in previous years. Abbreviations: ICSID = International Centre for Settlement of Investment Disputes, ISDS = investor–State dispute settlement. 20 40 60 80 100 1987 1993 1997 1995 2001 1999 2005 2003 2007 2015 2013 2011 2009 2017 2021 2019 2023 ICSID Non-ICSID Cumulative number of known ISDS cases 1 332 World Investment Report 2024 Investment facilitation and digital government 30 600 known ISDS cases at the end of 2013, against more than 1,300 at the end of 2023. To date, 132 countries and one economic grouping are known to have been respondents to one or more ISDS claims. The new cases in 2023 were initiated against 37 countries and one economic grouping (the European Union). About 70 per cent of them were brought against developing countries, including LDCs (Myanmar, Senegal and the United Republic of Tanzania). Mexico was the most frequent respondent, with 10 new known cases. Honduras faced five cases, followed by Argentina and the Bolivarian Republic of Venezuela with three cases each. The largest share of claims was directed at countries in Latin America and the Caribbean, with about half of the 60 cases. In regional terms, between 1987 and 2023, respondent States in Europe and in Latin America and the 9 Fossil fuel-related cases include those related to mining of coal and lignite; extraction of crude petroleum and natural gas; power generation from coal, oil and gas; transportation and storage of fossil fuels; and manufacture of coke and refined petroleum products. Caribbean each accounted for about 30 per cent of the total 1,332 known ISDS cases. Developed-country claimants brought most – about 75 per cent – of the 60 known cases in 2023. The highest numbers of cases were brought by claimants from the United States (13), the United Kingdom (8) and Switzerland (5). Between 1987 and 2023, claimants invoking the IIAs of five countries – the United States, the Kingdom of the Netherlands, the United Kingdom, Germany and Spain – initiated about 45 per cent of the 1,332 known ISDS cases. The ISDS cases filed in 2023 involved disputes related to several economic sectors (figure II.23). Construction, manufacturing and extractive industries accounted for over half of them, with 10 or more cases each. By the end of 2023, investors had filed a total of 235 fossil fuel-related cases,9 making such activities Construction Manufacturing Mining, oil, gas and coal extraction Transportation and storage Financial and insurance services Supply of electricity, gas and related Real estate WASH and waste management Information and communication Agriculture, forestry and fshing Tourism and sports 12 10 10 7 6 6 5 3 2 2 2 Figure II.23 Construction, manufacturing, and extraction activities account for over half of investor–State cases filed in 2023 (Number of known cases by sector) Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024. Note: Some cases concerned multiple sectors. Abbreviations: WASH = water, sanitation and hygiene. Chapter II Investment policy trends 31 among those most frequently brought to the ISDS system. Construction and manufacturing activities, which commonly involve lengthy and asset-intensive projects, are typically prone to litigation risk. About 70 per cent of investor–State arbitrations in 2023 were brought under BITs and TIPs signed in the 1990s or earlier. In combination, the North American Free Trade Agreement (NAFTA) (1992) and the Agreement between Canada, the United States and Mexico (USMCA) (2018) were the IIAs most frequently invoked in 2023. They gave rise to 11 cases based on so-called “legacy claims” under the NAFTA. Five cases were based on the ECT (1994), followed by the Central America–Dominican Republic Free Trade Agreement (FTA) (2004) with three cases and the Association of Southeast Asian Nations–Australia–New Zealand FTA (2009) with two cases. Between 1987 and 2023, about 20 per cent of the 1,332 known ISDS cases invoked either the ECT (162 cases) or the NAFTA (92 cases). b. Outcomes of investor–State dispute settlement In 2023, ISDS tribunals rendered at least 49 known substantive decisions in investor– State disputes, 28 of which were in the public domain at the time of writing. Ten of the public decisions principally addressed jurisdictional and preliminary objections. In four of them, tribunals dismissed such objections (at least in part) and continued the arbitration proceedings; in six of them, tribunals upheld the objections and ceased the proceedings for lack of jurisdiction or admissibility. Another 18 public decisions were rendered on the merits, with 9 holding the State liable for IIA breaches and 9 dismissing all investor claims. In addition, six publicly available decisions in annulment proceedings at ICSID were rendered. In all of them, the ad hoc committees of ICSID rejected the applications for annulment. By the end of 2023, at least 958 ISDS proceedings had been concluded, leading to different results (figure II.24). Figure II.24 Outcomes of investor–State dispute settlement cases can differ greatly Share of concluded cases, 1987–2023 (Percentage) Source: UNCTAD, ISDS Navigator database, accessed 25 March 2024. a Decided in favour of neither party (liability found but no damages awarded). Decided in favour of State 38 Breach but no damagesa 3 Discontinued 13 Settled 18 Decided in favour of investor 28 World Investment Report 2024 Investment facilitation and digital government 32 Newly concluded IIAs increasingly incorporate proactive commitments aimed at improving the investment climate in the contracting parties. They increasingly steer towards investment facilitation commitments (see chapter IV.C). There is growing interest also in establishing continuous cooperation mechanisms for investment activities, sometimes geared towards specific development objectives. The majority of investment protection elements in newly concluded IIAs also continued to include refinements, clarifications and flexibility mechanisms that aim to preserve countries’ right to regulate in the public interest. IIA reform continues to advance at a slow pace, accentuating the dichotomy in the IIA regime between newer and older treaties. Old-generation IIAs continue to dominate the regime as much in terms of number of IIAs in force as in coverage of FDI stock. They also continue to form the basis of most ISDS cases. Developing countries – and LDCs in particular – are the most disadvantaged by the slow pace of reform, as their exposure to the risks of ISDS is significantly higher than that of developed economies. In addition, the dichotomy is producing a progressively more complex IIA regime with overlapping and sometimes contradictory commitments, making it difficult for countries to navigate, especially developing ones and least developed ones. UNCTAD’s Multi-Stakeholder Platform for IIA Reform, established in 2023 as an outcome of UNCTAD’s World Investment Forum, aims to fast-track IIA reform and underscores the importance of providing an inclusive forum that promotes the alignment of investment governance with sustainable development priorities. Since 2012, UNCTAD has played a leading role in facilitating IIA reform action by developing core policy guidance tools. UNCTAD will continue to work with all stakeholders to build the capacity of country negotiators and policymakers to ensure that the IIA regime works for – rather than impedes – sustainable development objectives. * * * Chapter III Sustainable finance trends Regulations and standards are proliferating; greenwashing remains a challenge Stock exchanges help drive sustainability disclosure The sustainable finance market grew but signs of a slowdown persist More institutional investors reported on sustainability performance in 2023 Sustainable bond market Sustainable fund market Sustainable finance regulation Sustainability disclosure Global issuance, 2023: $872 billion Cumulative issuance since 2018: $4 trillion 2022 2023 63 94 Green Social Sustainability Sustainability- linked 587 154 109 22 Market value, 2023: $3 trillion +7% Net inflows ($ billions) -89% 2018 2019 2020 557 2021 161 2022 63 2023 58 public pension funds and sovereign wealth funds report… 50% growth in sustainable finance measures, 2023 Developing economies: 60% of new policies 59% provide written guidance 31% enforce mandatory rules …but only 17 target fossil fuel divestment and renewables investment Top 100 58 42 17 countries adopted new ISSB standards Greenwashing: only 20% of “green fund” portfolios are exposed to climate-positive assets provide training 66% 3% 12% Chapter III Sustainable finance trends 79 A. Sustainability-themed capital market products The sustainable finance market continues to grow. In 2023, the value of sustainable investment products, encompassing bonds and funds,1 reached more than $7 trillion, a 20 per cent increase from 2022. Although the picture is nuanced, the overall positive trend in the sustainable finance market points to continued investor confidence and the resilience of sustainable investment strategies. Sustainable bonds were the main driver of growth in sustainable capital market products. Issuance climbed to $872 billion, a 3 per cent rise from 2022, bringing the cumulative value of the market since 2018 to more than $4 trillion. Despite continued growth in number and asset value, though, sustainable funds experienced strong headwinds in 2023. Net inflows dropped from $161 billion in 2022 to $63 billion in 2023. Greenwashing remains the most significant challenge to the sustainable fund market. 1. Sustainable bond markets 1 This chapter covers publicly traded sustainable finance products only, namely bonds and funds. It excludes derivatives whose value may be unrealized, as well as voluntary carbon markets, whose value - for now - remains insignificant Global issuance of green, social, sustainability and sustainability-linked bonds (box III.1) has grown fourfold since 2018. As a share of global bond markets, the sustainable segment represented 5 per cent in 2023, unchanged from 2022. This consistent share as well as record levels of outstanding bonds and increased annual issuance of sustainable bonds signal the rising importance of such bonds as a mechanism for financing sustainable development. However, the near-record levels of issuance of green bonds and sustainability-linked bonds were offset by falls in issuance of social and sustainability bonds – partly related to the phasing out of social and sustainability bonds related to the coronavirus disease (COVID-19) pandemic (generally referred to as COVID-response bonds) – which contributed to a slowing in the five-year compound annual growth rate of the sustainable bond segment (figure III.1). World Investment Report 2024 Investment facilitation and digital government 80 Box III.1 What is the difference between green, social, sustainability and sustainability-linked bonds? All four types of sustainable bonds are fixed-income securities designed to target sustainable outcomes while offering a financial return to investors. Green, social and sustainability bonds are generally tied to the financing of a specific project or use of proceeds, whereas sustainability-linked bonds instead integrate in their design a level of sustainability performance (such as greenhouse gas (GHG) emissions). Green bonds raise funds specifically for projects with environmental benefits, such as renewable energy or pollution prevention, with issuers providing transparency on how the proceeds are used. These bonds are typically linked to assets and backed by the issuer’s balance sheet. Historically, the focus has been on direct financing of physical assets and projects and indirect financing thereof (e.g. loans to suitable assets or projects). Social bonds raise funds for projects with positive social outcomes, such as education, health care, affordable housing and employment generation, especially for underserved or marginalized communities. Issuers of social bonds also commit to transparency regarding the use of proceeds and the impact of the projects funded, ensuring that investors can see the social benefits derived from their investments. Sustainability bonds combine elements of both green and social bonds to finance projects with both environmental and social benefits. The proceeds from these bonds are used to fund a diverse range of initiatives, such as renewable energy projects, water conservation, sustainable agriculture, affordable housing and health-care facilities. Sustainability bonds are also designed for investors looking to support comprehensive projects that contribute to the Sustainable Development Goals. Like green and social bonds, issuers of sustainability bonds provide transparency and reporting on the allocation of proceeds and the impact of the projects financed, ensuring accountability and alignment with sustainability objectives. Sustainability-linked bonds tie the cost of financing to key performance indicators of sustainability. These bonds differ from green, social and sustainability bonds in their structure and objectives. Whereas traditional green, social and sustainability bonds focus on financing or refinancing projects that have specific environmental or social benefits, sustainability-linked bonds are uniquely characterized by their performance-based approach. The financial or structural characteristics of the bond (such as the interest rate) are directly linked to the issuer’s achievement of predefined sustainability targets. Transparency and credibility are maintained through regular reporting on progress towards the targets and through third-party verification to ensure objectives are met, making these bonds a powerful tool for promoting sustainability in finance. Sources: UNCTAD and Climate Bonds Initiative. Figure III.1 The sustainable bond market recovered in 2023, aided by green bond growth Global sustainable bond issuance by year and by category (Billions of dollars and percentage year-on-year growth) Source: UNCTAD, based on information from Climate Bonds Initiative. 227 358 716 1 015 843 872 587 154 109 22 +27% +58% +100% +42% -17% +3% +15% -7% -31% +83% 2018 2019 2020 2021 2022 2023 Green Social Sustainability Sustainability- linked Total sustainable bond market 25% CAGR 2018−2023 $4 trillion cumulative issuance since 2018 Chapter III Sustainable finance trends 81 Issuers based in Europe account for 46 per cent of the global market, with 2023 issuance up slightly from 2022 (figure III.2). The Asia-Pacific region accounted for a third of total issuance, a rise of nearly 40 per cent from 2022. Issuers in North America accounted for 11 per cent of the global market in 2023. Supranational issuance, which is an important source of sustainable bonds, fell to $24 billion in 2023, from $106 billion in 2022, a drop of 77 per cent. Reflecting this regional distribution, the euro is the most common currency used for sustainable debt issuance, accounting for over 40 per cent of total cumulative issuance to date (in equivalent United States dollars). This is followed by the dollar (30 per cent), renminbi (9 per cent) and pound sterling (4 per cent), with the remaining 17 per cent in other currencies. Developing countries that issue bonds in major reserve currencies while generating revenues in local currencies encounter currency mismatch risks. Investors, especially large institutional ones, often have better access to a variety of financial instruments such as futures, options or swaps, allowing them to hedge against these currency risks. However, this hedging can lead to demand for higher yields to compensate for the additional risks, ultimately increasing the costs of financing. The involvement of international development finance institutions such as the World Bank, the International Finance Corporation and regional development banks can be crucial in mitigating these risks and reducing the financing costs linked to currency mismatches in bond issuances (UNCTAD, 2023f). In addition, deepening local capital markets and issuing debt instruments in local currencies can also be effective, ensuring that sustainable bonds make a greater contribution to sustainable outcomes. In terms of cumulative issuance (outstanding debt), supranational issuance remains larger than any single country and thus an important generator of finance for sustainable projects. As a group, developing countries remain underrepresented in global sustainable bond markets, even compared with traditional bond markets, although China and Chile rank among the top 15 issuers for cumulative sustainable bond issuance, with $431 billion and $53 billion, respectively, at the end of the third quarter of 2023. Their sustainable bond issuance has been helped by strong policy support Figure III.2 European issuers of sustainable bonds lead the market Global sustainable bond issuance by region, 2023 (Billions of dollars and percentage change from 2022) Source: UNCTAD, based on information from Climate Bonds Initiative and Environmental Finance. a Percentage change not available because data source and coverage for 2022 differed. Asia-Pacifc North America Latin America and the Caribbean Supranational Africaa 288 Europe 405 97 54 24 4 +0.75% +39% -28% +74% -77% World Investment Report 2024 Investment facilitation and digital government 82 for the growth of local and international markets (Climate Bonds Initiative, 2023). Financial and non-financial corporate entities were the largest issuers of sustainable bonds in 2023, followed by government- backed entities (figure III.3). Among the latter, public pension and sovereign wealth funds (PPFs and SWFs) have become more active issuers of sustainable debt as well as more active buyers. Sovereign issuers, the next largest issuer type, account for one tenth of total cumulative issuance of sustainable bonds but about two thirds of the overall debt market, suggesting that there is significant potential to expand the share of sovereign debt in sustainable bond markets (Climate Bonds Initiative). a. Green bonds The value of green bonds issued grew 15 per cent to $587 billion in 2023, from $509 billion in 2022, representing two thirds of sustainable bond issuance. Looking at use of proceeds categories, this strong growth – reversing 2022 trends – was mainly driven by increases in the energy, transport, information and communication technology, waste and industry sectors (figure III.4). The increase was also supported by a recovery in sustainable bonds issued by financial corporates to $163 billion, eclipsing the record highs of 2021, and by non-financial corporates to $172 billion, which was just short of the 2021 high point of $174 billion. Notably, sovereign issuance jumped 45 per cent to $120 billion in 2023, up from $83 billion in 2022 and surging past the previous all-time high in 2021 of $92 billion (figure III.5). In a year of declining values for some sustainable equity investments, the rising demand for green bonds in 2023 could be the result of investors looking for lower- risk routes to gain exposure to sustainable sectors and/or emerging markets, in addition to a general rebalancing towards fixed income in an environment of higher interest rates. Research by the Climate Bonds Initiative has shown that investors are willing to absorb a “greenium” (lower yield and/or higher price) that is usually associated with green bonds, indicating the strength of demand for green versus traditional bonds (Climate Bonds Initiative, 2021). On the supply side, the rise in sovereign issuance may be helping countries to diversify their investor base and provide credibility to green policies. Figure III.3 Corporate issuers dominated sustainable bond issuance in 2023 Global sustainable bond issuance by issuer type (Billions of dollars) Source: UNCTAD, based on information from Climate Bonds Initiative. Green Sustainability-linked Social Sustainability Non-fnancial corporate 172 22 13 2 Financial corporate 163 25 1 17 Government-backed entity 73 91 11 Sovereign 120 25 7 6 Development bank 48 15 10 Local government 18 12 18 Chapter III Sustainable finance trends 83 b. Social, sustainability and sustainability-linked bonds The values of both social and sustainability bond issuance both fell in 2023. Social bonds issuance declined by 7 per cent, from $165 billion to $153 billion, while that of sustainability bonds fell by 30 per cent, from $157 billion to $109 billion. Despite the growing awareness of climate and environmental sustainability issues and the opening of more investment opportunities in social and sustainable projects, both types of bonds continued falling to pre- pandemic levels of issuance (figure III.6). The fall is likely directly related to recovery Figure III.4 Energy, transport and buildings accounted for 75 per cent of the green bond market in 2023 Global green bond issuance by sector (Percentage) Source: UNCTAD, based on information from Climate Bonds Initiative. Energy Transport Green buildings Land use and marine resources Water Waste Climate adaptation and resilience Information and communication technology Industry 35 22 18 6 6 5 4 2 2 Figure III.5 Sovereign issuance of green bonds saw the largest gains in 2023 Green bond market size by type of issuer (Billions of dollars and percentage change from 2022) Source: UNCTAD, based on information from Climate Bonds Initiative. +35% +13% +45% -26% +2% – Non-financial corporate 172 Financial corporate 163 Sovereign 120 Government-backed entity 73 Development bank 48 Local government 12 World Investment Report 2024 Investment facilitation and digital government 84 from the pandemic, during which the value of COVID-response bonds surged – momentum that has now subsided. Nevertheless, together these two categories still represent 38 per cent of cumulative sustainable bond issuance since 2018. In contrast, the annual issuance of sustainability-linked bonds increased 83 per cent, from $12 billion in 2022 to $22 billion in 2023. This continues a constant annual increase since the introduction of the first such bond by Enel (Italy) in 2019, bringing cumulative issuance of such bonds to $47 billion. Unlike green, social and sustainability bonds, sustainability-linked bonds are not tied to use of proceeds. This potentially gives issuers more flexibility but may also call into question the sustainability impact of this debt instrument, reflected in the lower alignment of this category with sustainability screening criteria (for further discussion, see WIR 2020 (UNCTAD, 2020). Latin America and the Caribbean is the only region where the value of outstanding social, sustainability and sustainability- linked bonds is higher than that of green bonds; they account for more than 90 per cent of total cumulative issuance, according to the Climate Bonds Initiative. Despite social bond issuance there being on a par with that in Europe and in Asia, the region could be missing out on considerable financing opportunities in the green bond segment, especially in sectors such as energy, transport and industry. In 2023, social bonds were more favoured by government-backed entities and financial corporate entities. Sustainability bonds were more popular with local government, non-financial corporates and sovereign issuers. Sustainability-linked bonds were overwhelmingly favoured by non-financial corporates and sovereign lenders. Figure III.6 Social and sustainability bond issuance continued to decline in 2023 (Billions of dollars) Source: UNCTAD, based on information from Climate Bonds Initiative. 15 39 15 68 238 169 212 199 165 157 154 109 Social Sustainability 2018 2019 2020 2021 2022 2023 $1.5 trillion cumulative issuance since 2018 -7% combined CAGR 2020–2023 Chapter III Sustainable finance trends 85 2. Sustainable funds a. Market trends The sustainable fund market continued to expand in 2023, albeit at a slower pace. The number of sustainability-themed funds worldwide reached 7,485, up 7 per cent from 2022. These funds remain highly concentrated in Europe and the United States, representing 73 per cent and 9 per cent of the global market, respectively. The share of the market in the rest of the world increased slightly, from 16 per cent to 19 per cent, with growth witnessed in Australia and Canada and in developing Asia (figure III.7). The total assets of sustainable funds reached almost $3 trillion in 2023, mainly driven by rising share prices in equity markets, in particular in Europe and the United States. Europe remains by far the largest market, with assets of nearly $2.5 trillion, or 85 per cent of the global market. The value of sustainable funds in the United States increased from $286 billion in 2022 to $324 billion in 2023, representing about 11 per cent of the global market. The market share in the rest of the world remains at about 5 per cent. Although the increasing number and value of sustainable funds indicate continued growth, sustainable funds faced a challenging environment in 2023. High interest rates, lagging performance, lukewarm demand and rising concerns about greenwashing issues all contributed to growing uncertainties in the market. As a result, the number of new launches has continued to drop, from a record high of 240 in the fourth quarter of 2021 to 121 in the fourth quarter of 2023. In total, 565 launches were recorded in 2023, down from 682 in 2022. The decline was more than offset by the restructuring of conventional funds into sustainable ones, in particular in Europe, leading to continued expansion of the universe of sustainable funds. Sustainability-themed funds remain an important tool to tilt capital markets Figure III.7 The market value of sustainable funds recovered in 2023, reaching a record high (Billions of dollars and number) Source: UNCTAD, based on Morningstar data. 277 262 302 389 428 673 1 460 2 231 2 078 2 492 49 51 63 82 89 140 236 74 357 286 324 40 56 68 91 106 83 112 1 714 7 485 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Europe United States Rest of the world Number of sustainable funds World Investment Report 2024 Investment facilitation and digital government 86 towards more sustainable investment and thus direct capital to sectors and areas that can contribute to sustainable development. Net investment flows to sustainable funds also continued to drop, from $161 billion in 2022 to $63 billion in 2023, marking a significant decrease from the record of $557 billion set in 2021 (figure III.8). Throughout 2023, European sustainable funds received net investment inflows of $76 billion, nearly halved from the $149 billion of 2022. In addition to a challenging macroeconomic environment and persistent geopolitical risks, some investors have remained cautious about environmental, social and governance (ESG) investing because of the overall underperformance in 2022 and lukewarm returns from popular sustainable investment assets, such as renewables, in 2023. However, compared with annual outflows of $50 billion from European conventional funds, the European sustainable fund market has remained relatively resilient, demonstrating continued interest by investors in this asset category. The investment momentum in sustainable funds in the United States reversed completely in 2023. Following a surge in inflows in 2020 and 2021 ($290 billion and $472 billion, respectively), new inflows plummeted to only $3 billion in 2022. Moreover, 2023 marked the first annual outflows, which totalled $13 billion. In addition to dismal returns, persisting greenwashing concerns and a backlash against sustainable investment strategies in the United States market (see section C.2) also contributed to a chilling effect on demand. In terms of financial performance, sustainable equity funds underperformed relative to conventional funds for the second consecutive year (Henry and Furdak, 2024). Article 9 funds, the “dark green” products known for their commitment to specific sustainable investment objectives and substantive approach to sustainability integration under the European Union Sustainable Finance Disclosure Regulation (SFDR), underperformed their benchmark by more than 6 per cent in 2023. Article 8 funds, the “light green” products that take environmental or social sustainability into consideration in asset allocation, also underperformed, but by a narrower margin of less than 1 per cent. Only Article 6 funds, which do not incorporate sustainability considerations into their investment strategies beyond basic ESG risk assessments, nearly matched their benchmarks. Figure III.8 Net flows to sustainable funds continued their slide in 2023 (Billions of dollars) Source: UNCTAD, based on Morningstar data. a The figure for 2022 has been updated since its publication in WIR 2023. 28 24 33 72 60 159 352 557 161 63 2014 2015 2017 2016 2018 2019 2020 2021 2022a 2023 Chapter III Sustainable finance trends 87 This disparity in performance may be attributed to short-term market dynamics that work against some popular sectors in sustainable investments. Renewable energy, for example, has been particularly affected by elevated interest rates, since the sector is particularly characterized by higher upfront costs and lower operational expenses over time. Such short-term fluctuations should not overshadow the long-term benefits of sustainable investing, underscoring the importance of taking a long-term perspective. b. The greenwashing challenge As sustainable investment products gain popularity, concerns about greenwashing are also growing. Greenwashing poses the most significant challenge to the sustainable fund market, primarily because of the lack of specific product standards for sustainable funds, including in leading markets. UNCTAD analysis of global green funds published in WIR 2023 revealed that their average net exposure to climate- positive assets (low-carbon assets minus total fossil fuels) is slightly more than 20 per cent, casting doubt on their proclaimed green credentials. According to Morningstar data, just over 20 per cent of Article 9 funds reported minimum sustainable investments aligned with the European Union taxonomy between 0 and 10 per cent, and only 8 per cent target taxonomy-aligned investments of at least 10 per cent. Meanwhile, only 4 per cent are completely free from oil and gas investments, and 15 per cent allocate more than 5 per cent of their assets to oil and gas as of December 2023 (Bioy et al., 2024). These figures suggest that, even among products regarded as “dark green”, a substantial portion might not live up to their sustainability claims. It is not surprising that concerns about greenwashing have dampened investor demand, partly explaining the loss of momentum in investment within the European market and leading to outflows in the United States market. The persistence of greenwashing has demonstrated that more systemic efforts are needed to tackle the issue. In response to concerns about the implementation of the SFDR, in December 2023 the European Union Commission launched a consultation with the industry and other stakeholders on a general review of the regulation, focusing on bringing more clarity and credibility to the sustainable fund market so as to tackle greenwashing concerns. This consultation addresses critical issues such as the interaction with the European Union taxonomy and other sustainable finance legislation, potential changes to disclosure requirements and the establishment of a categorization system for financial products. In parallel, the European Supervisory Authorities published a final report amending the draft Regulatory Technical Standards for the Delegated Regulation supplementing the SFDR. The report proposes additional social indicators for disclosing the principal adverse impacts of investment decisions on the environment and society, new product disclosure requirements regarding GHG emissions reduction and improvements to disclosures on the “do no significant harm” principle. These measures are designed to bring more clarity to the SFDR and its implementation standards and enhance its consistency with the European Union Taxonomy Regulation with the aim of improving its robustness and effectiveness in addressing greenwashing. (For further discussion of policy responses to greenwashing in other countries, see section C.) The complexity of defining and combating greenwashing underscores the critical need for clear, verifiable sustainability disclosure rules and effective enforcement to ensure market integrity. In addition, it is essential to establish well-defined rules and product standards that clearly outline the criteria required for a product to be labelled as sustainable. Moreover, reliance on self- assessment should be replaced by external auditing and third-party ratings to ensure market transparency and credibility. Exposure to climate- positive assets only 20 per cent, casting doubt on green credentials World Investment Report 2024 Investment facilitation and digital government 88 B. Sovereign and public institutional investors Institutional investors made progress on sustainability performance and compliance with international sustainability reporting standards in 2023. Since UNCTAD began monitoring in 2019, the number of these funds that report has grown from one in four to almost three in five. Nevertheless, this means that a significant number of these funds still do not disclose any information on their sustainability performance. SWFs and PPFs, with their long-term investment horizons, continued to integrate sustainability into their investment strategies and improve their climate risk management. Yet, a majority of funds still have not committed to net zero in their investment strategies. Both SWFs and PPFs must comply with a range of reporting standards and obligations and have tried to keep pace with the rapidly evolving international landscape for sustainability reporting, especially on climate action. With assets of more than $30 trillion at the end of 2023 – a significant portion originating from developing economies – SWFs and PPFs have received growing attention as potential sources of investment, especially in sectors relevant to the Sustainable Development Goals and in developing countries. As the world’s largest institutional asset owners, some SWFs and PPFs have substantial market influence through their allocation decisions and strategic influence over the investments they hold through active ownership. PPFs and SWFs also differ from other investors in terms of their liabilities, which are generally long term, and their mandates, which are often aligned with public policy objectives, such as achieving net zero. However, these funds are not always required to disclose and report on their governance or sustainability performance. Robust regulatory and policy frameworks are needed to ensure that institutional investment can contribute to the sustainable development agenda, especially in developing countries. For many funds, fiduciary obligations still limit their exposure to sustainable sectors and to developing countries, which have a higher risk premium. Addressing this challenge may require education and training for funds about markets and opportunities in developing countries. UNCTAD analysis of the top 100 institutional asset owners identified 70 PPFs and 30 SWFs, representing more than $24 trillion in assets under management in 2023, or 80 per cent of global PPF and SWF assets. More than two thirds of the top 100 are from developed economies; SWFs are predominantly based in developing countries (figure III.9). In 2023, some 58 of them reported on their sustainability performance, either in a dedicated sustainability report or in annual financial reporting. Among these funds, PPFs are, in general, relatively better at disclosing sustainability-related information Chapter III Sustainable finance trends 89 than SWFs (60 per cent of PPFs disclose, against just over 50 per cent of SWFs). Disclosure is strongly linked to the regulatory environment in a fund’s jurisdiction. Europe stands out, where 90 per cent of the funds report on sustainability performance, a figure related to the more comprehensive reporting requirements of the European Union. Among the funds that report, Canadian pension funds make up the majority of those in North America, again reflecting the relatively advanced regulatory environment in that country. Conversely, 2 Economist Intelligence Unit (2023), Anti-ESG sentiment in the US weakens ESG markets, 29 June, https:// www.eiu.com/n/anti-esg-sentiment-in-the-us-weakens-esg-markets. 3 UNCTAD Sustainable Finance Regulation Platform: http://gsfo.org. some funds in the United States recently experienced pushback against their sustainable investment strategies and sustainability disclosure at the State level as well as from public campaigning.2 Among the top 100, developing-country funds tend to report on sustainability performance less than developed-country funds. A majority of funds in the emerging Asia-Pacific markets do report, but even in countries that have relatively advanced policy environments, such as China and Singapore (see section C),3 several Figure III.9 The top 100 sovereign wealth funds and public pension funds manage $24 trillion in assets Funds by type and by region and economic grouping (Number) Source: UNCTAD, based on Global SWF (2023). Abbreviations: PPF = public pension fund, SWF = sovereign wealth fund. $24 trillion Middle East 11 Emerging Asia-Pacifc 9 Developed Asia-Pacifc 4 North America 2 Europe 3 Africa 1 Middle East 2 Emerging Asia-Pacifc 7 Developed Asia-Pacifc 12 North America 33 Europe 15 Africa 1 Developed- economy funds 69 Developing- economy funds 31 PPFs 70 SWFs 30 World Investment Report 2024 Investment facilitation and digital government 90 funds in the top 100 do not report. This reflects some implementation challenges and weaker disclosure obligations in these jurisdictions. In the Middle East, a region with many SWFs, fewer than one in three SWFs – and no PPF – reports sustainability-related information, indicating that policy measures to strengthen sustainability reporting would be helpful. Despite advances, the dichotomy in disclosure persists. Forty-two funds still do not report on their sustainability performance. This group includes almost half of the SWFs in the top 100, with a noticeable concentration in the Middle East and emerging Asia. In the case of PPFs, the tendency not to report is skewed towards North America. This is partly the result of the weight of these regions in the top 100 but also likely related to regulatory requirements that are weaker than in Europe. At the same time, the funds that do report exhibit some of the most advanced policies on sustainability integration. They are making sustained efforts to address sustainability risks, both for the material threat to their business models and out of an ethical stance towards future generations. This group of asset owners comprises many first movers, several of which have been addressing sustainability issues for many years already and now employ, for example, complex climate modelling analysis and valuation models and rigorous screening of investments. The following analysis is based on the public disclosures of the 58 reporting funds in the top 100. 1. Sustainability integration strategies and practices Most reporting funds articulate a clear vision for sustainability integration and have implemented policies and guidelines to manage sustainability risk, such as specific strategies on climate change mitigation. Many funds have also created dedicated sustainable investment teams. Yet, despite the existence of such climate strategies, only one in three of these funds reported a target for fossil fuel divestment in 2023, a share unchanged from the preceding year. a. Investment strategies Sustainability risk has been driving PPF and SWF investment strategies and decision- making for several years. In 2023, 9 out of every 10 funds reported the general integration of sustainability considerations in their investment strategies (figure III.10). Four out of every five funds reported the integration of social and governance dimensions in their investment strategies by taking into account issues such as labour rights, executive pay, tax contributions and board diversity. A similar number of funds also reported impact strategies, especially on the environmental side; these can involve sectoral targeting, such as renewables, and capital market instruments, such as green or sustainability bonds. Less than half mentioned the integration of the Sustainable Development Goals in their investment decisions. Another way funds integrate a sustainability perspective in their investment strategies is through active ownership. In 2023, almost 80 per cent report engagement with their investees (figure III.11). This enables funds to influence the behaviour of their portfolio holdings through discussion or voting for policy changes. While more than two thirds of funds reported providing guidance on ESG criteria and Goals criteria to their asset managers and investees, less than a quarter offered their asset managers training on these topics. 58 of top 100 PPFs and SWFs reported on sustainability performance in 2023 Chapter III Sustainable finance trends 91 Figure III.10 Sustainability shapes investment strategies used by funds in 2023 (Percentage of reporting funds) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Note: Funds can report more than one strategy. Abbreviation: ESG = environmental, social and governance. a Includes issues related to child labour, diversity and others. b Includes issues related to to executive pay, board diversity, tax and others. c Includes ESG-oriented sectors (e.g. renewable energy, green housing) or capital market instruments (e.g. green bonds, ESG funds) or markets (emerging and developing economies) in ESG investment. General integration of sustainability considerations Integration of social dimensiona Integration of governance dimensionb Impact investmentc Negative screening or exclusion Positive or best-in-class screening Integration of Sustainable Development Goals considerations 91 84 80 79 61 59 45 Figure III.11 Institutional investors are active owners of their assets (Percentage of reporting funds) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Abbreviation: ESG = environmental, social and governance; Active engagement activities Guidance on ESG (and Sustainable Development Goals) provided to asset managers or investees Voting policy that takes ESG factors into account Training provided for asset managers or investees 79 68 63 23 World Investment Report 2024 Investment facilitation and digital government 92 b. Climate-related actions Reporting funds demonstrate significant engagement on climate change mitigation, with 9 out of 10 funds having developed specific strategies addressing climate issues. This is partly the result of regulations and fund commitments in this area and partly because of the nature of climate- related reporting metrics available to funds. Nonetheless, while this commitment is significant, the actions taken vary in depth and potential effectiveness and point to areas for further development. Funds are more likely to set targets for investment in renewable energy than to define a target for divestment from fossil fuels, with just under a third of funds doing both (figure III.12). Among those that do have targets for both, funds in Europe, particularly those in Nordic countries, take the lead with a dual strategy that includes significant investments in renewable energy and assertive fossil fuel divestments. This approach aligns with the comprehensive climate policies in Europe and reflects strategic diversification. This is also true for hydrocarbon funds, such as Norges Bank Investment Management (Norway), which are transitioning towards more sustainable energy solutions. Despite robust investments in renewable energies, PPFs in North America take varied approaches to fossil fuel divestment, influenced by diverse state- level policies and public opinion. PPFs, such as the Healthcare of Ontario Pension Plan (Canada) and the New York State Common Retirement Fund (United States), lean heavily towards renewable energy investments, but these funds are less proactive in divesting from fossil fuels. This difference reflects the balancing act between sustainable commitments and funds’ fiduciary duty to ensure stable returns. Middle Eastern and African funds, such as Mubadala (United Arab Emirates), which receives funding from sources in the hydrocarbons industry, and the Public Investment Corporation (South Africa), which is linked to an energy sector still dependent on coal, temper their approach. The result is a careful balance between exploring renewable energy investments and maintaining stakes in fossil fuels. This nuanced approach reflects the complex interplay between these Figure III.12 Only 30 per cent of funds have targets for renewables investment and fossil fuel divestment Funds by type of target (Number) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Target for investment in renewable energy 22 Target for divestment from fossil fuels 2 Targets for both 17 No targets for either 17 Chapter III Sustainable finance trends 93 regions’ economic priorities, including employment in fossil fuel industries, and their sustainable development objectives. Among funds that have committed to achieving net zero or carbon neutrality, most have set the target year of 2050. Some have set more ambitious targets, while others, particularly those associated with hydrocarbon sectors, have set later targets, such as 2060. Three quarters of reporting funds have adopted sophisticated, systematic climate risk assessment strategies. This signifies a commitment by a majority of reporting funds to integrate climate risk into their risk management frameworks, aiming to mitigate vulnerabilities and exposure to transitional and physical risks, and to explore new opportunities (table III.1). North American funds, such as the California State Teachers’ Retirement System, are pioneers in climate scenario analysis, exploring how various global warming scenarios could influence its portfolio. SWFs in oil-rich regions often integrate broader risk management approaches, possibly because of their exposure to the fluctuating dynamics of the energy sector amid global decarbonization efforts. Sectoral analysis is gaining traction among European funds, which scrutinize specific industries for climate-related vulnerabilities, allowing for more targeted risk mitigation efforts. About 20 per cent of funds also conduct climate stress testing of their investment portfolio. Table III.1 Most funds systematically assess sustainability and climate risk Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2021 and 2022. Note: Number of reporting funds = 41. Category Number of funds Integrated risk management 25 Climate scenario analysis 20 Sectorial analysis 7 Stress testing 7 Portfolio testing 6 2. Sustainability disclosure a. Reporting frameworks and standards used by funds In 2023, PPFs and SWFs maintained their commitment to the standardization of sustainability reporting. The Task Force on Climate-related Financial Disclosures (TCFD) and the Principles for Responsible Investment are the two main frameworks that funds use for their sustainability reporting (figure III.13). Following closely are the new International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards set by the International Sustainability Standards Board (ISSB), the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). The growing adoption of the new ISSB standard, which incorporates the elements of the TCFD standard, represents a significant development in SWF and PPF sustainability reporting, showing the World Investment Report 2024 Investment facilitation and digital government 94 potential rise of the standard as a global baseline for sustainability disclosure. Nonetheless, the variety of frameworks and standards in use shows that further convergence will be beneficial for enhancing comparability and consistency in disclosure among SWFs and PPFs. b. The main reporting metrics used for sustainability disclosure While almost 95 per cent of reporting funds have put in place policies on sustainability, fewer funds – 64 per cent – clearly disclose the metrics or methodologies they use to measure sustainability performance and impact. Reporting funds mainly use 16 indicators to measure their sustainability performance, categorized into five reporting areas (figure III.14). Climate and GHG emissions are the main area of disclosure and measurement: among the 37 funds reporting on indicators, more than 60 per cent have set specific ones for GHG accounting. The indicators are categorized into three types: absolute emissions, emissions intensity and total carbon footprint. These calculations are typically applied to portfolios: funds generally monitor scope 1 and scope 2 GHG emissions (in tons of carbon dioxide equivalent), with a small minority of funds going further and reporting on scope 3 emissions. For those funds that use emissions intensity metrics, the largest number use the carbon footprint indicator, describing the total carbon emissions for a portfolio. Nearly half use the TFCD-recommended weighted average carbon intensity, which indicates the portfolio’s exposure to carbon- intensive companies, expressed in tons of carbon dioxide equivalent per million dollars of revenue. It assesses a portfolio’s carbon efficiency by considering each investment asset’s revenue-based emissions intensity and its weight in the portfolio. Some funds consider operational emission reduction actions of invested companies, including energy consumption, renewable energy usage and operational carbon footprint calculation. However, few funds incorporate science-based climate targets into their metrics system. Regarding environmental protection and resource consumption, specific indicators include Figure III.13 Most funds use a global sustainability reporting standard or framework (Number of reporting funds) Source: UNCTAD, based on latest fund reporting (2023); some latest reports from 2022. a CDP was formerly known as the Carbon Disclosure Project. Task Force on Climate-Related Financial Disclosures Principles for Responsible Investment International Sustainability Standards Board Global Reporting Initiative Sustainability Accounting Standards Board Corporate Sustainability Reporting Directive CDPa European Union Taxonomy 33 22 16 13 12 5 5 4 Chapter III Sustainable finance trends 95 expenditure on environmental protection by portfolio companies, water withdrawal rates and whether portfolio companies have a responsible waste management system. Regarding corporate governance, funds predominantly use ESG and sustainability-related metrics; company diversity and issues such as employee training are also reported. In general, social areas are underreported compared with environmental and climate areas. Social issues are typically considered within the broader context of sustainability, with only one fund specifically addressing the social impact of portfolio companies. To ensure the quality of sustainability reporting, third-party verification or auditing is important, in the same way that financial reporting is audited. Yet only one in four reporting funds use third-party verification. Despite its importance for ensuring credibility and trust (and combating greenwashing), auditing is currently voluntary. Nevertheless, the International Auditing and Assurance Standards Board (IAASB) is developing the International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements, which will be issued before the end of 2024. It is intended to serve as a general standard suitable for any assurance purpose. According to the IAASB, it will apply to sustainability information reported across any sustainability topic and prepared under multiple frameworks, including the recently released IFRS Sustainability Disclosure Standards S1 and S2. Figure III.14 SWFs and PPFs reported sustainability metrics in five areas in 2023 Source: UNCTAD, based on latest fund reporting. Abbreviations: ESG = environmental, social and governance, GHG = greenhouse gas, PPF = public pension fund, SWF = sovereign wealth fund, tCO2e = tons of carbon dioxide equivalent. Reporting indicator Number of funds reporting Examples • Carbon footprint of investments • Scope 1 and 2 GHG emissions of investments • Carbon intensity (no specifc calculation methods) • Scope 3 GHG emissions of investments • Weighted average carbon intensity • Absolute emissions of investments (no scope) • Total portfolio emissions (tCO2e) • Portfolio carbon intensity (tCO2e/$ million of portfolio value) • Portfolio weighted average carbon intensity (tCO2e/$ million of revenue) • Electricity production from renewable energy sources • Fossil fuel revenue • Climate-neutral and circular internal business operations • Number of portfolio companies with science-based net-zero 2050 target • Waste management, environmental performance of properties • Water withdrawal • Sustainability considerations in investments • Investments in Sustainable Development Goals and climate solutions • Exposure to fossil fuels • Climate risk and climate stress test • Emissions reduction of operations • Science-based climate target • Work-related injuries, net new hires and employee engagement • Gender, age, ethnic and cultural background, and work capacity • ESG/sustainability related • Others • Diversity related 13 7 5 4 4 3 5 4 3 8 6 3 7 7 3 36 GHG accounting 17 Climate risk and emissions reduction 17 Corporate governance-related targets 12 Environment-related targets 5 Sustainable investment targets • Environmental protection and resource consumption 5 World Investment Report 2024 Investment facilitation and digital government 96 C. Policies, regulations and standards In 2023, the IFRS Foundation launched the Sustainability Disclosure Standards, which have attracted significant interest globally. The emergence of international standards, including the IFRS and European standards, has created spillover effects that affect developing economies and their small and medium-sized enterprises (SMEs). Progress has been made in enhancing the interoperability of international standards. Stock exchanges also continue to play a vital role in the adoption and implementation of sustainability reporting. Governments from both developed and developing economies have accelerated sustainable finance policymaking, focusing on leveraging capital markets for climate transition. In 2023, 26 of the 35 economies tracked by the UNCTAD Global Sustainable Finance Observatory introduced more than 90 measures dedicated to sustainable finance, marking a significant increase from the 63 measures adopted in 2022. Countries are integrating sustainable finance into national development strategies more and more, prioritizing policy impact and effectiveness. 1. International sustainability reporting standards a. New standards June 2023 saw the launch of the first two of the IFRS Sustainability Disclosure Standards by the ISSB, after a global consultation process. The International Organization for Securities Commissions (IOSCO) issued a statement endorsing the standards and called on its 130 member jurisdictions, which regulate more than 95 per cent of the world’s financial markets, “to consider ways in which they might adopt, apply or otherwise be informed by the ISSB standards within the context of their jurisdictional arrangements, in a way that promotes consistent and comparable climate-related and other sustainability- related disclosures for investors.” This statement has been received as a strong signal from market regulators to encourage the adoption of the ISSB standards. The ISSB, created in 2021 by the IFRS Foundation, develops standards that form a global baseline for disclosure of sustainability-related risks and opportunities, to meet the needs of investors and other capital market participants. It was formed in response to strong demand from capital market participants and international policymakers, including the members of the Group of Seven, the Group of 20 and the Financial Stability Board, to harmonize and simplify the landscape of investor- oriented sustainability disclosure standards. Chapter III Sustainable finance trends 97 The first standard, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, sets out a requirement for an entity to disclose information about all risks and opportunities related to material sustainability that could reasonably be expected to affect the entity’s prospects. It provides conceptual foundations to aid the disclosure of this information, as well as core content requirements applicable to all sustainability-related risks and opportunities. IFRS S2 Climate-related Disclosures provides more detailed requirements for the disclosure of climate-related information. At its formation, the ISSB merged with four formerly independent bodies: the TCFD, the Climate Disclosure Standards Board (CDSB), the SASB and the International Integrated Reporting Council (IIRC). As a result, the ISSB standards draw heavily from the voluntary investor-focused standards and frameworks produced by those four bodies. Companies using ISSB standards should make disclosures about their governance and risk management of sustainability and climate-related risks and opportunities, as well as the strategy, metrics and targets used to manage those risks and opportunities. In line with the concept of providing a globally consistent baseline, national policymakers may add building blocks to the ISSB’s standards in order to meet local reporting objectives, provided that local provisions do not obscure information required by the global baseline. Following the launch of the ISSB standards and their endorsement by IOSCO, the ISSB set three new priorities. First, for future areas of disclosure standardization, the ISSB is exploring biodiversity, ecosystems and ecosystem services, as well as human capital. It has also published educational material on nature and social aspects of climate-related risks and opportunities. Second, in support of adoption of the standards by market participants, the ISSB has established a partnership framework for capacity-building, working with public and private organizations, global and local, to ensure accelerated readiness among jurisdictions to adopt the standards. A dedicated IFRS Sustainability Knowledge Hub was also launched to guide report preparers. Third, in support of adoption of the standards by jurisdictions, the ISSB has been engaging with regulators worldwide and has published a preview of a jurisdictional guide for the adoption or other use of the standards. b. Status of adoption An increasing number of jurisdictions have already adopted the ISSB standards, with many others working on adoption (table III.2). While some intend to implement the standards fully as the globally consistent baseline, others plan to introduce amendments to them, which may result in inconsistencies in the information reported by complying entities. In response to the rise of international and regional standards and their spillover effects through global supply and investment chains, many countries, including developing ones, are taking action to modernize their company reporting systems by aligning them more closely with international best practices. However, several challenges could pose severe barriers to policymaking in this area in developing economies (UNCTAD, 2024c). They include (a) the fragmentation of international standards, (b) the lack of robust national sustainability reporting infrastructure, (c) insufficient knowledge and human capacity, and (d) limited access to sustainability data. Addressing these issues would require enhanced international coordination on sustainable finance regulations, especially in standard-setting, while considering the specific needs and challenges faced by developing economies. Technical support will also be essential. Towards this end, UNCTAD, through its Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting, is supporting countries in reinforcing their regulations and 17 jurisdictions using ISSB standards, with others working towards adoption World Investment Report 2024 Investment facilitation and digital government 98 institutions, and building human capacity to implement international standards, such as those of the ISSB. Since 2021, UNCTAD has been launching regional partnerships to promote high-quality sustainability reporting in developing countries. The Partnerships in Africa (29 countries and 58 institutions) and in Latin America (30 institutions in 15 countries) have become operational over the past two years. At the 2023 World Investment Forum, UNCTAD announced additional regional partnerships for Asia, Eurasia, and the Gulf States and neighbouring countries. These partnerships are vehicles for facilitating the exchange of good practices in the implementation of sustainability reporting standards. c. Policy spillover effects The effects of these international standards can extend beyond the jurisdictions where they are formally adopted, through global supply chains. Large companies and financial institutions increasingly require their suppliers or investee companies to report on sustainability. For example, beyond disclosing scope 3 GHG emissions Table III.2 Jurisdictions move toward adopting ISSB standards Source: UNCTAD. Jurisdiction Status as of April 2024 Implementation date Australia Consulting on standards until 1 March (currently adopting only IFRS S2) Staggered implementation from January 2025 Bangladesh Introduced mandatory requirements for banks and finance companies January 2024 Brazil Adopting in full (IFRS S1 and S2) January 2026 Canada Consulting on draft standards from March to June 2024 January 2025 for listed companies, January 2027 for unlisted companies with assets of more than $1 billion Costa Rica Adopted in full (IFRS S1 and S2) in 2024 Phased mandatory adoption for public companies (January 2025) and companies classed as large taxpayers (January 2026) Japan Issued standards for consultation March 2025 Kenya Developing a road map - Malaysia Consulted on standards Phased mandatory adoption for listed and unlisted companies December 2025–December 2027 Morocco Reviewing disclosure and target-setting requirements Early 2025 (currently only for banks) Nigeria Consulted on adoption road map Phased mandatory adoption for listed companies and SMEs between January 2027 and January 2030 Pakistan Consulting on adopting IFRS S1 and S2 Phased mandatory reporting between January 2025 and January 2027 Philippines Revising sustainability reporting guidelines for listed companies to incorporate IFRS S1 and S2 January 2025 for listed companies, January 2027 for unlisted companies with assets of more than $1 billion Republic of Korea Finalizing standards for June 2024 January 2026 or later Singapore Introduced mandatory climate-related disclosures (currently adopting only IFRS S1 for climate reporting) January 2025 for listed companies, January 2027 for unlisted companies with assets of more than $1 billion Türkiye Adopted in full (IFRS S1 and S2) January 2024 United Kingdom Consulting on standards until July 2024 - Hong Kong, China Developing adoption road map - Chapter III Sustainable finance trends 99 along supply chains, the ISSB S2 standard requires financial institutions to report “financed emissions” – the emissions associated with their investments, including those in SMEs. The SFDR of the European Union includes similar requirements. As sustainable finance gains traction, all companies, including SMEs, are increasingly expected to provide sustainability reports to meet investor demands. In some cases, companies may need to comply with regulations in markets where they have significant operations, even if they are not listed there. For example, under the European Union Corporate Sustainability Reporting Directive (CSRD), non-European Union companies will have to report if they generate more than €150 million in the European Union market. It is estimated that about 3,000 United States companies and more than 10,000 businesses worldwide will be affected by the requirements (Huck, 2023). Similarly, the climate disclosure rules released recently by the United States Securities and Exchange Commission (SEC) include requirements for not only local, but also foreign incorporated entities (SEC, 2024). Sustainability reporting requirements can further arise from legislative developments beyond the immediate standard-setting community. For instance, the European Union Carbon Border Adjustment Mechanism is not specifically a sustainability disclosure regulation, yet its implications for climate-related disclosures will extend well beyond Europe. Starting in October 2023, importers of certain goods into the European Union are required to report quarterly on the direct and indirect emissions embedded in each product. The requirements related to these standards and related regulations will have a cascading effect, affecting exporters and their suppliers, including SMEs from other regions, and posing notable challenges for developing economies. This challenge urgently requires international coordination, including enhanced interoperability and consistency among international and regional standards. d. Interoperability With the shift from voluntary disclosure initiatives towards mandatory reporting requirements, there has been a renewed impetus to examine the consistency and interoperability of the sustainability reporting landscape. As new requirements are introduced, businesses operating across jurisdictions may face inconsistent disclosure obligations, leading to greater workloads and potential inconsistencies in the information reported from one jurisdiction to another. Similarly, investors operating internationally may face an additional challenge when comparing the disclosures of companies they are assessing. Overall, the newly developed requirements can be classified by their focus on single materiality or double materiality. Single materiality (sometimes referred to as “investor materiality” or “financial materiality”) is primarily intended to inform a general investor audience and thus focuses on the impact of sustainability on an entity’s prospects and financial performance. Examples of such requirements include the ISSB standards and the climate rule of the United States Securities and Exchange Commission. Other requirements, such as the European Sustainability Reporting Standards and the proposed requirements in China, take a double materiality (also known as “impact materiality”) approach, covering both the impact of sustainability on the entity and the impact of the entity on sustainability. The GRI standards focus specifically on double materiality. To minimize potential inconsistencies and issues with interoperability, standard- setters have been working to align their standards more closely. Notable examples are the efforts by the European Financial Reporting Advisory Group, which develops the European Sustainability Reporting Standards, in achieving a “high level of alignment” with the GRI standards and the ISSB IFRS S2 standard on climate change. The IFRS Foundation and GRI have also published a summary of interoperability Inconsistent disclosure obligations across jurisdictions creates more work for reporting entities World Investment Report 2024 Investment facilitation and digital government 100 considerations for GHG emissions, to support more efficient reporting for companies that use both the ISSB standards and the GRI standards. This resource was developed under the two organizations’ collaboration agreement, to coordinate their sustainability-related work programs and standard-setting activities. As jurisdictions continue their implementation of sustainability disclosure regimes, international investors and others continue to highlight the importance of consistent requirements. Where existing requirements are in place or well under way, some have proposed that international standards should be given equivalence to local requirements, especially in the case of foreign entities, to avoid potential conflicts within the requirements and allow for more streamlined global sustainability reporting. Such equivalence has been achieved in financial reporting, where for example foreign private issuers listed on a United States exchange are permitted to prepare their financial statements according to IFRS accounting standards as an alternative to the Generally Accepted Accounting Principles standards more commonly used by United States companies. e. Stock exchanges promoting adoption and implementation As the interface between market regulators, issuers (both bond and equity), investors and standard-setters, stock exchanges are playing an important practical role in promoting the implementation and adoption of sustainability reporting standards and new sustainable finance products (figure III.15). In 2023, the number of exchanges with ESG-themed bond segments increased, continuing a sharp rise in these segments since 2017 and for the first time exceeding the number of markets covered by an ESG equity index. For many years, sustainable finance focused primarily on equity markets, but this has changed in recent years as sustainability-themed products also emerged in the bond market, derivatives markets and elsewhere. The past year also saw a continued upward trend in mandatory listing requirements related to sustainability reporting, with 38 markets having such rules, up from close to zero just a decade ago. The standardization and regulation of sustainability reporting is also creating greater demand for market education on this topic, as a core mandate of exchanges is to educate market participants on compliance issues and transparency and reporting. The past year saw a continued sharp upward trend in the number of exchanges providing such training. As of the close of 2023, about 59 per cent (71) of all exchanges offered written guidance to issuers on sustainability reporting, a more than tenfold increase from a decade earlier. This written guidance, often voluntary, plays a critical role in preparing market participants for mandatory rules that typically follow. The trend lines over the past decade show a strong relationship between exchange guidance issuance and mandatory listing rules. In light of these ongoing trends, the objective of Sustainable Development Goal 12.6 concerning sustainability reporting is on track to be attained by 2030. The market is gravitating towards a more concentrated set of standards. Exchanges are actively endorsing global ESG reporting frameworks. The GRI standards remain the most frequently cited, followed by the four component standards of the ISSB (those of CDSB, IIRC, SASB and TCFD). Markets that require sustainability reporting: 38 and growing. SDG 12.6 on track Chapter III Sustainable finance trends 101 Figure III.15 Stock exchanges continue to play an important role in promoting sustainability standards and products (Number of exchanges with standard or product) Source: UNCTAD, Sustainable Stock Exchanges database. Abbreviation: ESG = environmental, social and governance. 2004 2005 2007 2003 2006 2008 2009 2010 2011 2013 2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 10 20 30 40 50 60 70 80 90 100 Sustainability reports Written guidance on ESG reporting Training on ESG topics Markets covered by an ESG index Mandatory ESG listing requirements ESG bond segments World Investment Report 2024 Investment facilitation and digital government 102 2. Policymaking at national and regional levels a. Overview The rapid expansion in the sustainable finance market has brought about the parallel growth of national sustainable finance measures. National and regional governments are increasingly creating policies and regulatory frameworks to leverage capital markets to achieve their net-zero goals. The UNCTAD Global Sustainable Finance Observatory monitors sustainable finance regulations and policy measures in 35 economies (countries and economic groupings). They include the members of the Group of 20, the largest developing economies outside the Group of 20 and selected financial centres. Together these economies represent more than 90 per cent of global GDP and the world’s largest capital markets. In 2023, these economies introduced a total of 94 sustainable finance policies and regulations. This brings the cumulative number of sustainable finance measures since 2014 to 516, with nearly 60 per cent of them introduced in the past five years, partly in response to the rapid expansion of the sustainable finance market and product availability (figure III.16). Meanwhile, at least 69 sustainable finance measures are in development. Figure III.16 Record level of new sustainable finance policy measures and regulations adopted in selected economies in 2023 (Number of measures adopted by year) Source: Global Sustainable Finance Observatory (GSFO.org), based on UNCTAD, PRI and World Bank data. Notes: Encompasses seven key policy areas for sustainable finance: national strategy, national framework and guidelines, taxonomy, product standards, sustainability disclosure, sector-specific regulations and carbon pricing. Other economies are Switzerland; 13 developing economies (Bangladesh, Chile, Colombia, Egypt, Kenya, Malaysia, Nigeria, the Philippines, Singapore, Thailand, the United Arab Emirates and Viet Nam, as well as Hong Kong, China); and ASEAN. Relevant measures of the European Union included in Group of 20 economies. a Number updated to include incentive-related measures. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 14 2 12 7 10 7 18 8 20 5 24 6 14 15 75 9 50 13 64 30 Group of 20 economies Other economies Chapter III Sustainable finance trends 103 The most popular policy area is sustainability disclosure, accounting for 37 per cent of all measures (figure III.17). This highlights the priorities of improving market clarity and credibility and addressing greenwashing concerns. Sector-specific measures, which covered sustainable banking, insurance, asset management and others, constituted 23 per cent of total measures, and national strategies and frameworks another 17 per cent. Although specific measures targeting products such as sustainable bonds and funds, carbon pricing and taxonomy represent a smaller portion of the policy pool, policymaking in these areas has been notably dynamic in recent years, with a significant number of measures currently in development. Thematically, most of the policy measures introduced in the last five years have focused on climate change and the green transition; however, social sustainability and inclusive development have started to attract more attention. Examples include the development in the European Union of a social taxonomy, the inclusion of economic activities targeting social sustainable development in the South Africa taxonomy and policy measures adopted by Bangladesh and China and by the Association of Southeast Asian Nations (ASEAN) to support the development of SMEs. Figure III.17 Sustainability disclosure measures remain the most common policy category Sustainable finance policy measures by category, 2014–2023 (Percentage) Source: Global Sustainable Finance Observatory (GSFO.org). Sustainability disclosure 37 Sector-specific measures 23 Taxonomy 3 Carbon pricing 9 Product-specific measures 11 National strategy or framework 17 World Investment Report 2024 Investment facilitation and digital government 104 b. Regional developments In 2023, the 35 economies or country groupings tracked by the Global Sustainable Finance Observatory adopted substantive measures across six key policy areas: national strategy or framework, taxonomy, sustainability disclosure, sector-specific measures, product-specific measures and carbon pricing. Policymaking was most active in national strategies and frameworks, sustainability disclosure, and sector- or product-specific measures focusing on green bonds, sustainable banking and investment (table III.3). The European Union established a comprehensive sustainable finance regulatory framework with the CSRD, which entered into force in January 2023. Together with the Taxonomy Regulation and the SFDR, these regulations lay the foundation of an integrated policy framework governing sustainable finance in the European Union. To further strengthen the framework, the European Union is conducting a comprehensive review of the SFDR, the taxonomy and related technical standards, aiming to improve their usability and effectiveness and to ensure consistency among different pillars of the framework. It also announced a new package of measures to further strengthen its sustainable finance regime, which includes expanding the taxonomy to cover additional activities contributing to climate as well as non-climate environmental objectives, such as water and marine resources protection, circular economy transition, pollution prevention and control, and biodiversity and ecosystem restoration. The measures also bring more transparency and integrity to the market by introducing rules on the ESG rating and provide guidance to support transition finance. In the United States, at the federal level, measures were adopted to promote climate disclosure and sustainable finance; however, at the State level, the backlash against sustainable investment strategies continues: 17 States have passed legislation prohibiting fund managers from considering ESG factors in their investment decisions or prohibiting States from contracting with asset managers that exclude certain industries, such as fossil fuels, from their portfolios (Malone et al., 2023). A sharpening focus on policy effectiveness has also led to policy consolidation in other developed economies. Australia, Japan, Switzerland and the United Kingdom are reviewing legislation related to sustainable Policy area Economy National strategy or framework Argentina, Brazil, China, France, India, Japan, Mexico, Switzerland, Türkiye, United Arab Emirates, ASEAN Taxonomy Mexico Sustainability disclosure Brazil, China, France, Germany, India, Republic of Korea, United Kingdom, United States, European Union Sector-specific measures Argentina, Australia, Brazil, China, India, Indonesia, Italy, Mexico, Switzerland, European Union Product-specific measures Argentina, Australia, Brazil, China, Republic of Korea, European Union Carbon pricing Australia, Canada, European Union Table III.3 Measures in six policy areas adopted by monitored economies, 2023 Source: UNCTAD GSFO Sustainable Finance Regulations Platform. Note: Sector-specific measures cover sustainable banking, insurance, investment and credit ratings; product- specific measures cover sustainable funds and bonds. Measures in development are not included. Chapter III Sustainable finance trends 105 finance, with a focus on sustainability disclosure and the development of sustainable finance taxonomies. Developing economies are becoming increasingly active in sustainable finance policymaking. They accounted for 60 per cent of new policy measures in 2023 – a record high. This surge demonstrates their systemic efforts to leverage sustainable finance for sustainable development. They are actively developing national strategies and frameworks for sustainable finance. In 2023, seven of them (Argentina, Brazil, China, India, Mexico, Türkiye and the United Arab Emirates), together with ASEAN member States, rolled out national strategies or frameworks on sustainable finance. Most of these national strategies were informed by the overall national development agenda, aligning with national objectives under the 2030 Agenda for Sustainable Development and the Paris Agreement. Such strategies help establish policy objectives, priorities and key areas for actions to provide guidance and stimulate national efforts to support the growth of sustainable finance. This trend underscores a growing commitment among countries to adopt a systematic approach to policymaking related to sustainable finance. Another important development concerns the increase in sector- or product-specific measures, focusing on sustainable banking, sustainable insurance and green bonds. For example, in 2023, Brazil and Chile adopted national frameworks for sustainable bonds; the Philippines released guidelines on the issuance of “blue” or ESG bonds; and Bangladesh, China, India, Singapore and Thailand released policies to support the banking industry in integrating sustainable development considerations into operations, covering sustainable deposits, sustainable loans and green credits (see table III.3). Except for the largest States, developing countries in general continue to face challenges in leveraging sustainable finance for development owing to a lack of human resources and knowledge, weak market infrastructure, and the fragmentation and inconsistency in international standards (UNCTAD, 2024c). The persistently low level of sustainable investment in many developing economies poses another challenge to their adoption of sustainable finance policies. Larger developing economies are active in sustainable finance policymaking, but smaller economies face multiple challenges Some of the findings in this chapter are positive and give hope for a future financial system that is sensitive to sustainability criteria and measures of performance that go beyond financial return. Other findings are less positive, including the continued prevalence of greenwashing, a backlash against sustainable investment in some jurisdictions and foot-dragging by some important categories of investors that are reluctant to report on sustainability risks. Overall, the analysis in this chapter shows that the sustainable finance market continues to expand and offers further potential for financing sustainable growth, including in developing countries. It shows that a majority of the top 100 PPFs and SWFs, with patient capital, understand the threat of sustainability risks to their business model. Finally, it reveals the positive trend in sustainable finance policymaking, as governments have made more efforts to leverage the potential of sustainable finance, including through better harmonization of international standards to achieve comparable, high-quality reporting criteria. Going forward, policymakers, regulators and other stakeholders will have to address three challenges: First is spillover effects resulting from national and regional standard-setting and regulation, which have implications for companies around the world. These effects primarily occur through global supply and * * * World Investment Report 2024 Investment facilitation and digital government 106 investment chains, where large companies and financial institutions increasingly require their suppliers or investee companies to report on their sustainability. Second is integrating sustainable finance frameworks into national sustainable development strategies. Most such strategies have been informed by the overall national development agenda, aligning with national objectives under the 2030 Agenda for Sustainable Development and the Paris Agreement. Such strategies help establish policy objectives, priorities and key areas for actions to provide guidance and stimulate national efforts in supporting the growth of sustainable finance. Third is ensuring that sustainable finance policymaking becomes more impact oriented, focusing on policy effectiveness. Prioritizing the impact and effectiveness of sustainable finance measures is essential, given the concerns about a rising backlash against sustainable investment. Addressing the issue will require improving the credibility of sustainable finance and combatting the persistent challenge of greenwashing, in particular through enhanced disclosure aligned with leading international standards, and the clear definition of sustainability concerning economic activities and sustainable financial products. Meanwhile, delivering visible impact would also be important, particularly for developing economies that have not yet benefited from increased sustainable investment flows to the real economy. The signals sent through capital markets can influence, direct and ultimately shape a future economy that is environmentally sustainable, socially equitable and fairly governed. Addressing policy challenges and implementation issues, including policy harmonization and spillover effects, will be essential for realizing any benefits from sustainable finance for the 2030 Agenda for Sustainable Development. Chapter IV Investment facilitation and digital government More investment agreements encourage digitalization Investment facilitation policy measures are increasingly digital 2015–2016 2021–2023 36% 60% +67% 2012–2015 2016–2019 64 3 89 22 2020–2023 121 34 Non-digital Digital 2016 Developed 2024 43 48 2016 Developing 2024 82 124 Number Quality (1–10) 4.6 6.5 4.8 5.8 2016 Developed 2024 12 28 2016 Developing 2024 13 67 Number Quality (1–10) 6.4 8.2 5.3 6.8 Investment facilitation portals are growing in number and quality Information portals Single windows Digitalization has broad benefits Top three business services provided online Countries with better digital government solutions… Higher FDI inflows Higher business creation rates Higher institutional quality +8% Filing taxes Registering businesses Obtaining licences Chapter IV Investment facilitation and digital government 109 A. Introduction Business and investment facilitation have become central to efforts to develop the private sector and attract foreign direct investment (FDI) in developing countries. Facilitation aims to make it easier for domestic firms and international investors to establish and operate their businesses. Core elements include providing information, making rules and regulations transparent, and streamlining administrative procedures. Because these elements are based on both information and procedures, digitalization is central to their effective implementation. They have thus led to a wave of digital government initiatives, including information portals and online single windows. Investment facilitation encompasses policies, measures and practices aimed at minimizing or eliminating obstacles faced by investors in a country (UNCTAD, 2016). Key elements include enhancing transparency and access to information for investors, streamlining administrative procedures, ensuring the predictability of the policy environment and promoting the accountability and efficiency of government officials. Facilitation can also include initiatives focused on preventing or resolving investment disputes. Distinct from investment promotion, which is focused on marketing a location as an investment destination, investment facilitation involves a government-wide approach, engaging multiple agencies and levels. Business and investment facilitation are closely intertwined. Business facilitation aims to create a favourable environment for all firms – large and small, foreign and domestic – to start, operate and grow their operations. Investment facilitation adds mechanisms and initiatives aimed at easing processes specific to foreign investors, such as foreign investment approvals or the admission of foreign personnel. Facilitation efforts can extend into other policy areas. Trade facilitation, for example, complements business and investment facilitation by reducing complexities in cross-border commerce. Business and investment facilitation can play a pivotal role not just in attracting investment but also in supporting attainment of the Sustainable Development Goals. By creating a more transparent and accessible business environment, they can encourage small firms to move from the informal to the formal sector, a vital step in enhancing domestic revenue mobilization. By removing barriers to investment and providing equal opportunities for all, business and investment facilitation can also play a role in promoting more inclusive economic growth, enhancing the access of women, young people and rural populations to economic activity. The UNCTAD Division on Investment and Enterprise has been instrumental in supporting progress on investment facilitation. Since 1999, its Investment Policy Reviews have provided comprehensive advice to nearly 60 countries and regions on a wide array of investment facilitation policies. The Division offers advisory services on investment facilitation to investment promotion agencies (IPAs) and special economic zones (SEZs). Its digital World Investment Report 2024 Investment facilitation and digital government 110 government platforms, including information portals and single windows for business, investment and trade facilitation, have been deployed in more than 60 countries. UNCTAD guides on digital investment provide investors with essential information to evaluate investment opportunities in specific countries and regions (box IV.1). UNCTAD has been a catalyst for international debate on investment facilitation. In 2016, the Global Action Menu on Investment Facilitation outlined the main elements of investment facilitation (box IV.2). Since its publication, an international agreement on investment facilitation for development has been negotiated, facilitation has become a mainstay in regional and bilateral trade and investment agreements, and national implementation efforts have proliferated. By 2023, more than a quarter of investment policy measures worldwide centred on facilitation mechanisms (chapter II). Together with the Action Menu, UNCTAD launched the Global Enterprise Registration (GER) index, an objective rating of countries’ provision of digital information and services for businesses and investors. It was used as a baseline for the state of play on these instruments during the early stages of discussions on the IFD agreement, which was finalized by Box IV.1 UNCTAD: Tools and technical assistance for digital business and investment facilitation UNCTAD offers a series of tools and participatory methodologies for documenting and simplifying procedures and for implementing online platforms. Applied sequentially, they form an integrated programme for the modernization of public administration. Document and publish procedures: the eRegulations information portal The eRegulations system offers an affordable, turnkey solution for governments aiming to simplify administrative procedures and to make them transparent. Designed from the user’s perspective, it breaks down each procedure step by step, providing essential information for each. This includes contact details (entity, office, responsible person), expected outcomes, required documents, costs, duration, legal justifications and options for lodging complaints. Importantly, creating and maintaining the eRegulations portal requires no programming skills, making it accessible for government staff who lack technical backgrounds. The system’s versatility allows its use for any administrative process, including company registration, tax payments, licensing activities, construction permits and import–export operations. Currently, eRegulations portals are operational in more than 50 countries. Simplify procedures: 10 principles to simplify administrative procedures Once administrative procedures are clearly defined, they become easier to simplify. This can be achieved by comparing existing practices with legal requirements and reducing interactions and document demands to only what is necessary and sufficient. The “10 principles to simplify administrative procedures” from UNCTAD guide Governments in reducing procedural steps and requirements, often by more than 50 per cent, without necessitating changes to existing laws. Digitalize procedures: the eRegistrations system eRegistrations is a no-code development platform that allows the creation of online services without programming skills. It can be easily adapted and configured to any administrative process and may apply to procedures such as company registration, construction permits, export licences or transfers of property titles. eRegistrations is suited both to operations involving only one administration (such as the business registry) and to simultaneous operations at multiple administrations (such as registering a company at the tax office, with the municipal council, with social security, at the labour department and at the business registry). It can thus operate as an online single window. It can be installed at any level of government. Monitoring progress: regional digital investment facilitation monitors UNCTAD has developed online tools to support the monitoring of progress on digital business and investment facilitation within the context of regional economic integration organizations. The tools are based on the GER.co methodology, which assesses the coverage, quality and user-friendliness of information portals and online single windows for establishing a business. Examples include the digital investment facilitation monitor of the Association of Southeast Asian Nations (ASEAN) (https://asean.investmentfacilitation.org) and, most recently, the Southern African Customs Union monitor (https://sacu.investmentfacilitation.org). Source: UNCTAD. See also https://digitalgovernment.world/ and https://businessfacilitation.org. Chapter IV Investment facilitation and digital government 111 some 120 members of the World Trade Organization (WTO) in February 2024. At the regional level, UNCTAD assisted the members of ASEAN in reviewing the implementation of the ASEAN Investment Facilitation Framework (AIFF) in 2022 (box IV.3). It was also part of the task force assisting African countries during the negotiations of the Protocol on Investment to the African Continental Free Trade Area (AfCFTA), which includes a chapter on investment facilitation. At the bilateral level, UNCTAD has been advocating for the introduction of proactive investment promotion and facilitation provisions for sustainable investment in international investment agreements (IIAs), based on the Investment Policy Framework for Sustainable Development (UNCTAD, 2015). UNCTAD recently developed a set of policy options to enable governments to transform their IIAs into tools to channel investment towards sustainable development (UNCTAD, 2023a). It is working with the Group of 20 Trade and Investment Working Group under the Brazilian Presidency on mapping investment facilitation and sustainable development provisions in the IIAs of members of the Group. Notwithstanding the diverse positions in debates on investment facilitation at the international level, the need for robust investment facilitation practices at the national level is universally acknowledged. Policymakers have firmly shifted their focus to the most effective implementation strategies and tools. Because investment facilitation is about enhancing transparency and providing information to investors and about making administrative procedures for businesses easier to complete, digitalization is at the heart of most facilitation initiatives. The use of digital government tools for investment facilitation has several important benefits. Because of the economies of scale and scope in the establishment of digital platforms, they tend to improve not only foreign investment procedures but also general business establishment procedures (e.g. business registration tax, social security and operating licences), thereby reducing administrative hurdles not only for foreign investors but also for domestic Box IV.2 The UNCTAD Global Action Menu for Investment Facilitation UNCTAD published its Global Action Menu for Investment Facilitation in 2016. It was debated among investment stakeholders at the World Investment Forum 2016 and subsequently endorsed by the Trade and Development Board, the governing body of UNCTAD. The Menu lists 10 action lines, each with a series of options for policymakers: 1. Promote accessibility and transparency in investment policies, and regulations and procedures relevant to investors. 2. Enhance predictability and consistency in the application of investment policies. 3. Improve the efficiency of investment administrative procedures. 4. Build constructive stakeholder relationships in investment policy practice. 5. Designate a lead agency, focal point or investment facilitator. 6. Establish monitoring and review mechanisms for investment facilitation. 7. Enhance international cooperation on investment facilitation. 8. Strengthen investment facilitation efforts in developing-country partners. 9. Enhance proactive investment project development in developing-country partners through capacity-building. 10. Complement investment facilitation by enhancing international cooperation for investment promotion for development through provisions in international investment agreements. Source: UNCTAD (2016). World Investment Report 2024 Investment facilitation and digital government 112 firms, including micro, small and medium- sized enterprises (MSMEs). Moreover, the implementation of digital government can positively affect the business climate in ways that go beyond the immediate scope of business and investment facilitation and the reduction of red tape. It has the potential to tackle the root causes of low investment attractiveness in many developing countries by mitigating weaknesses in governance and institutions more broadly. For that reason, the focus of this chapter is on investment facilitation and digital government. The aim is to take stock of progress in the implementation of digital business and investment facilitation worldwide; to look at the challenges, opportunities and policy priorities for its effective implementation; and to examine how it connects with wider digital government strategies to promote good governance and institutional robustness; to create a more transparent, efficient and investor-friendly environment; and to accelerate economic development. Section B provides an overview of progress in digital investment facilitation worldwide, with a focus on information portals and online single windows, including through an update on the UNCTAD GER survey on the spread and quality of digital services for business in all Member States of the United Nations. Section C examines the growing importance of investment facilitation and its digital component in national investment policies and IIAs. Section D evaluates the impact of digital business and investment facilitation on investment attraction, business creation, and institutional governance and transparency. Section E looks at lessons learned about the implementation of digital business and investment facilitation, identifying challenges and opportunities, and exploring wider implications for the development of digital government. Section F summarizes policy implications and recommendations spanning investment policy and digital government development. Box IV.3 ASEAN: regional cooperation on digital investment facilitation In 2021, the ASEAN countries adopted the ASEAN Investment Facilitation Framework (AIFF), a significant step in regional investment cooperation. This framework aims to enhance investment attraction across member States by increasing transparency, streamlining administrative procedures, promoting policy alignment and building the capacity of investment-related agencies. The ASEAN region has long been proactive in adopting strategies and policy measures to support investment. These efforts have intensified in recent years, accelerating during the pandemic, with an increase from 6 new investment facilitation measures in 2019 to 28 in 2020. These included the introduction of online facilities, e-application systems and streamlined administrative processes, reflecting a strong regional commitment to digitalizing and simplifying investment procedures. Notable initiatives include the Philippines and Malaysia implementing fast-track “green” lanes and simplified processes to ease investment. Member countries have also developed investment portals and digital platforms for e-payment and acceptance of electronic documents and certificates, further enhancing the investment landscape. Overall, investment facilitation efforts in ASEAN are characterized by a dynamic policy environment and innovative approaches to attract and streamline investment, emphasizing digitalization and institutional strengthening. The AIFF acts as a strategic blueprint to guide efficient and integrated investment facilitation across the region, including through the creation of a digital investment facilitation monitor. Progress on AIFF implementation was assessed in the ASEAN Investment Report 2022 (produced with the support of UNCTAD). Source: UNCTAD; ASEAN Secretariat and UNCTAD (2022). See also https://asean.investmentfacilitation.org. Chapter IV Investment facilitation and digital government 113 B. Progress on digital investment facilitation worldwide Administrative procedures for businesses and investors are often the first government services to be digitalized. Information portals and online single windows covering mandatory procedures for the establishment of a business have spread rapidly and are now available in most countries. Their quality and level of sophistication varies. Some portals in the least developed countries (LDCs) rival those in developed countries, showing that digital business and investment facilitation can provide leapfrogging opportunities. However, gaps remain, as evidenced by missing coverage, portal closures, problems in the maintenance of information and “single window dressing”. 1 UNCTAD contributed to the development of the self-assessment tool, with inputs on sections dealing with transparency and streamlining of administrative procedures, as well as single windows and technical cooperation. It is challenging to assess the state of progress in the implementation of investment facilitation – in general, not just digital – around the world in a systematic manner. Early World Bank research and the World Bank Doing Business indicators were among the more comprehensive efforts before investment facilitation was clearly defined. Investment Policy Reviews by both UNCTAD and the Organisation for Economic Co-operation and Development include many elements of investment facilitation assessments. The lack of updated systematic information across countries was one of the reasons for the development of a self-assessment tool to support the implementation of the IFD agreement.1 The WTO Secretariat has developed a standardized self- assessment guide to help countries with such assessments (WTO, 2023). The number of investment facilitation measures implemented worldwide is on the rise (chapter II), and with the use of digital technologies and platforms, these measures are evolving. This section mostly discusses progress in the development of information portals for businesses and investors, which are platforms that explain the administrative steps required to establish and operate a business, and online single windows, which are transactional portals that allow users to complete multiple procedures administered by multiple government agencies online. 1. The wider digital government context While systematic research on the application of business and investment facilitation practices is scarce, information is available to assess the state of progress on digital services for business as part of broader development of digital government. The United Nations Department of Economic and Social Affairs (UN DESA) conducts a biennial eGovernment Survey that provides an assessment of the digital government World Investment Report 2024 Investment facilitation and digital government 114 landscape across 193 Member States. The survey uses the eGovernment Development Index (EGDI) to rank countries, shedding light on online services and specific eGovernment components that benefit businesses. In its latest edition, the report examines these online services: business registration, business licence application, business tax filing and payment, land title registration application, environmental permit application, and access to and modification of a business’s own data. The 2022 survey findings unequivocally underscore the pivotal role of business facilitation as one of the foremost priorities in digital government (figure IV.1). Of the 20 administrative procedures that are most commonly available as online government services, half relate to business establishment and operation (others include services to citizens such as provision of birth certificates or residency documentation, and government administrative functions such as public sector vacancy announcements or public procurement). The two most common procedures – ranked first and second by some distance – are business registration and business licensing. Business and investment facilitation are clearly important entry points for the development of digital government. The survey highlights a global trend in the use of online services, especially related to the registration of new businesses. According to the survey, the number of countries offering this online service, either as an information portal or within a single window – a transactional portal where (part of) the service can be conducted online – has grown from 162 in 2020 to 176 in 2022. Similarly, there has been notable growth in other online services, such as applications for business licences (from 151 to 167) and options for payment of value added tax (from 130 to 141). The EGDI survey primarily assesses the presence of some form of eGovernment service (more than its substance or comprehensiveness) and does not focus solely on business and investment facilitation services. EGDI ratings are highly correlated with levels of development. Europe and North America lead in eGovernment development, with an average EGDI value exceeding 0.80 out of 1, followed by Asia (0.65), Latin America (0.64), Oceania Figure IV.1 Business services are usually the starting point for digital government Digital government services available to businesses, 2022 (Number of countries with service) Source: UNCTAD. Elaborated from the questionnaire of the 2022 Online Services Index (most recent survey year), a component of the United Nations Department of Economic and Social Affairs eGovernment Development Index. Note: Includes information portals and online single windows. Business registration Business licenses Utilities payment (electricity) Building permits Land title registration Utilities payment (water) Environmental permits 0 20 40 60 80 100 120 140 160 180 176 167 152 149 145 141 138 136 134 Business tax filing Value added tax filing Chapter IV Investment facilitation and digital government 115 (0.51) and Africa (0.41). Despite significant progress in Africa, the EGDI average for the continent remains low, highlighting the persistence of a digital divide. The new Business Ready (B-READY) index of the World Bank Group, intended to replace its well-known Ease of Doing Business rankings, also places significant weight on the provision of digital government services, including single windows and information portals. The UN DESA and World Bank initiatives reflect a global trend: countries are increasingly leveraging digital technologies to streamline information provision and administrative procedures to enhance their efforts to facilitate investment. 2. The spread and quality of business portals UNCTAD survey data (based on the GER methodology; box IV.4) confirm many of the findings of the EGDI. In contrast to the EGDI, the GER survey focuses specifically on business and investment facilitation portals. It distinguishes between types (information portals and single windows), and it assesses their content and quality. These differences explain several discrepancies between the two surveys. Nevertheless, the data show a clear trend in the development of digital tools to streamline business registration processes and other procedures (figure IV.2). The growth trajectory is evident, with the utilization of information portals for business and investment processes in Box IV.4 The UNCTAD Global Enterprise Registration survey To comprehensively evaluate the landscape of digital business and investment facilitation, UNCTAD introduced the Global Enterprise Registration (GER.co) online rating system and associated index in 2016. In its inaugural version, the platform was developed in collaboration with the Kauffman Foundation’s Global Entrepreneurship Network and the United States Department of State. GER.co assesses information portals, gauging their transparency regarding mandatory procedures for the establishment of a business. These typically include business registration, tax and social security enrolment and operating licence procurement, and – in the case of foreign investors – investment approval. GER.co also evaluates online single windows, measuring their effectiveness in enabling businesses and investors to complete mandatory procedures online. The assessment uses a 10-point scale, calculated on the basis of objective criteria, thus ensuring a standardized and transparent evaluation process. The highest-rated information portals provide comprehensive information about each step of an administrative procedure, what documents are required, how much the procedure costs, how long the process takes, which laws apply and how to appeal a negative decision. The highest-rated online single windows enable firms to complete a single form, submit a unified set of documents and make a single payment covering multiple procedures administered by multiple agencies. In return, investors receive digitally verifiable certificates. GER.co provides an interactive interface, allowing stakeholders in each country to submit revised ratings. This feature ensures that the platform remains current and reflects the evolving digital landscape in different countries. For this World Investment Report, UNCTAD reviewed the GER ratings of United Nations Member States in 2016, 2021 and 2024. The information portals or single windows evaluated may have changed across the three assessments as older sites were replaced or new government agencies created. Given the overlapping mandates of government agencies in investment promotion and business registration, multiple sites may be available for evaluation in a single country. In each such case, for this analysis UNCTAD retained the information portal or single window with the best score. In countries with federal systems or where business registration is administered by a subnational entity, UNCTAD evaluated the situation in the main commercial city. Since GER.co focuses on business registration, evaluations were made separately of the extent to which the sites benefit foreign investors and registrations for special economic zones. Source: UNCTAD. See also https://www.genglobal.org/ger. World Investment Report 2024 Investment facilitation and digital government 116 developing countries increasing from 82 economies in 2016, when the UNCTAD Global Action Menu for Investment Facilitation was launched, to 124 today. The number of developing economies with online single windows has risen from a modest 13 to 67 (figure IV.3). The observed increase in the number of portals is the result of growing policy attention to investment facilitation since 2016 as well as a push following the COVID-19 pandemic, which accelerated the implementation of digital business facilitation measures in many countries. Several developing countries responded by streamlining business establishment procedures, adopting online application systems, reinforcing one-stop centres, expediting operating licence approvals and providing additional support to investors. Digital tools also became important for administering support services for small businesses. The quality of both information portals and single windows has also generally increased, in terms of their comprehensiveness and coverage of mandatory procedures, accessibility and user-friendliness. A slight decline in the average rating of information portals in LDCs can be explained by the addition to the sample of new countries with relatively basic portals. For developing countries as a group, the average rating has gone up significantly despite the increase in the number of portals. Although information portals in developed countries improved over the observation period, their ratings still barely exceed those in developing countries. This may be because developed-country governments are generally considered to have greater regulatory transparency and more sophisticated public services, reducing their incentive to develop comprehensive online portals. There may also be a displacement effect: where comprehensive online single Figure IV.2 Information portals are now present in most countries and their quality is improving Information portals for business registration Source: UNCTAD, GER.co survey. Notes: Includes only Member States of the United Nations. GER.co rates quality on the basis of 10 objective criteria (box IV.4). The last assessment for GER.co was undertaken between February and April 2024. 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 43 41 48 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 56 73 85 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 26 35 39 b. Developing countries excluding least developed (n = 97) c. Least developed countries (n = 45) Number (left axes) Quality (right axes) a. Developed countries (n = 51) Chapter IV Investment facilitation and digital government 117 Figure IV.3 There is still room for growth in online single windows Online single windows for business registration Source: UNCTAD, GER.co survey. Notes: Includes only Member States of the United Nations. GER.co rates quality on the basis of 10 objective criteria (box IV.4). The last assessment for GER.co was undertaken between February and April 2024. 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 12 17 28 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 12 31 51 20 0 40 60 80 100 2 0 4 6 8 10 2016 2021 2024 1 14 16 Number (left axes) Quality (right axes) b. Developing countries excluding least developed (n = 97) a. Developed countries (n = 51) c. Least developed countries (n = 45) windows are introduced but separate information portals remain operational, the value of such portals is reduced. For online single windows, which can be more technologically complex and require greater integration and coordination between government agencies, the ratings for developed countries remain higher than those for developing countries. Yet ratings among developing countries vary significantly, with some clear outliers. Several developing countries, among them some LDCs, feature among the countries with the world’s best information portals and single windows, illustrating that there is a leapfrogging opportunity. This effect is especially strong for online single windows, as countries with relatively few legacy systems may have an advantage in building online services. Crucially, many of the developing countries that lead in the adoption of these digital tools have received technical assistance, including from UNCTAD. This underscores the importance of international cooperation in facilitating the digital transformation of business and investment processes, ensuring that developing countries can harness the full potential of these tools to drive economic growth and attract investment. Appropriately, the IFD agreement includes provisions that promote international cooperation and technical assistance to developing countries (box IV.5). Such cooperation can also take place at regional levels, supporting regional integration efforts. Whereas almost all LDCs now have information portals that detail mandatory business registration and investor procedures, only one third have introduced online single windows, as compared with more than half of the other developing countries. LDCs face considerable challenges in consolidating relevant administrative procedures into a unified platform. Key difficulties include costs, gaps in skills and know-how, greater divergence in the way regulations are translated into administrative procedures across agencies and subnational bodies, and frictions in World Investment Report 2024 Investment facilitation and digital government 118 coordination among the agencies involved in facilitating businesses and investment. These difficulties are also evident from other findings of the survey. In 2024, seven economies discontinued online single windows that had been rated in the previous assessments.2 Ten discontinued information portals, and nine of these were developing economies. The cessation of these single windows and information portals could be the result of resource constraints, changes in ownership and responsibility for sites between ministries or agencies, changes in regulations prompting the need for updates or issues with information maintenance. A significant number of portals refer to dated legislation or procedures or offer relatively old forms. Both information portals and online single windows need clear ownership and resources for continuous updates and improvements. Another phenomenon found during the survey is that of “single window dressing”, where significant communication efforts appear to have been made to market a portal to investors or the public, but upon 2 Discontinued online single windows were found in Eswatini, Ghana, Serbia, Somalia, South Sudan, Uganda and Zambia. Discontinued information portals were found in Azerbaijan, the Republic of Congo, Costa Rica, Eritrea, the Islamic Republic of Iran, Mali, Micronesia, the Russian Federation, Tajikistan and Zimbabwe. close inspection key procedures either are not accessible, refer to physical processes that cannot be conducted online or present other technical barriers that diminish the value of the portal. Such limitations are often revealed only when testing the process through the creation of a dummy company. As observed earlier, business registration is usually the first step in and the basis for wider digitalization programmes. The GER survey results indicate that tax services, social security enrolment and operating licence acquisition are the most common additional services included in online single windows for business and investment facilitation. Together, these services constitute the core mandatory procedures for business establishment. Other, complementary services often provided online on the same platform include the reservation of company names (part of business registration procedures), processes to obtain digital identities or signatures, registrations for statistical purposes and connections with chambers of commerce (figure IV.4). Box IV.5 Investment Facilitation for Development agreement: Digitalization aspects The Investment Facilitation for Development (IFD) agreement encourages the use of digitalization expressly through commitments related to the creation of single information portals for transparency; the acceptance of electronic applications, documents and payments for streamlining; and the establishment of local supplier databases to facilitate investment. In addition to such digital government tools, digitalization can also ensure the effective implementation of other IFD commitments. These include avoiding multiple applications, establishing focal points for informational purposes and providing investors with the opportunity to comment on proposed measures. Investment facilitation commitments can be resource intensive. Under the IFD agreement, developing and least developed countries may designate provisions for which implementation is conditional upon the receipt of technical assistance and capacity-building. Donor-country signatories commit to facilitate the provision of technical assistance for the implementation of the IFD agreement. Both donor and recipient countries can direct such support towards digitalization. Source: UNCTAD, based on the text of the IFD agreement. Chapter IV Investment facilitation and digital government 119 3. Foreign investor-specific online procedures 3 Available on the Investment Policy Hub, at https://investmentpolicy.unctad.org/investment-laws. The distinction between business facilitation and investment facilitation through digital government platforms depends on the degree to which countries require foreign investors to complete additional or distinct administrative procedures to establish their operations. Several scenarios can be distinguished (table IV.1). In most countries, foreign investors follow the same procedures as domestic investors to establish a business. This is the case for three quarters of the 141 countries with an investment law recorded in the UNCTAD Investment Laws Navigator.3 The same information portals and single windows created for domestic firms therefore also serve foreign investors. This can be especially beneficial for SME foreign investors and entrepreneurs from neighbouring countries (box IV.6).Some countries (16 per cent of those with an investment law) require foreign companies to seek government approval to invest. This authorization, typically referred to as an investment licence or permit, is usually delivered after an evaluation process that considers the investor’s business plan in light of host-country criteria that can range from economic development objectives to national security considerations. This is the case for several small island developing States (SIDS) (e.g. Cook Islands, Kiribati, Maldives, Niue, Papua New Guinea and Solomon Islands), as well as countries in the Middle East (e.g. Iran, Oman, Qatar, Saudi Arabia and the United Arab Emirates) and in Africa (e.g. Ethiopia, Namibia and Somalia). In these cases, digital government solutions need to provide additional services for foreign investors, either through dedicated portals or through separate procedures on the same platform.In other cases, government approval is required for investment in specific sectors only. Where the list of sectors is limited to activities considered sensitive from a national security perspective, as in most developed countries, such approval processes are referred to as FDI screening (UNCTAD, 2023c). In some countries (e.g. China, India, Nepal and Thailand), the approval requirement can extend to a broad range of sectors and aim to protect domestic industries or address other public interest concerns. In this scenario, foreign investors Figure IV.4 Online single windows offer various services in addition to business registration Additional services provided by online single windows, 2024 (Percentage) Source: UNCTAD, GER.co survey. Notes: Includes only Member States of the United Nations. The last assessment for GER.co was undertaken between February and April 2024. Tax registration Social security Business licenses Digital signature Chamber of commerce registration Statistics office registration 66 42 30 14 4 3 World Investment Report 2024 Investment facilitation and digital government 120 Table IV.1 Digital government solutions for foreign investment facilitation are shaped by legislative scenarios Foreign investor-specific requirements and implications for digital investment facilitation Source: UNCTAD. Scenario Description Common business facilitation practices Example countries No distinction Foreign and domestic investors follow the same business establishment procedures General-purpose business facilitation portals Most countries Foreign investment license/permit All foreign investors are required to follow an approval procedure General-purpose business facilitation portals with dedicated digital procedures Papua New Guinea Solomon Islands Separate foreign investment facilitation portals, digital procedures Ethiopia Saudi Arabia Somalia Separate foreign investment facilitation portals, non-digital procedures Lesotho Maldives Sector-specific FDI approval Most foreign investors follow domestic procedures but approval is required in specific sectors based on national security (screening) or other public interest concerns Separate foreign investment facilitation portals, digital procedures France Germany India Nepal Separate foreign investment facilitation portals, non-digital procedures Belgium Canada Thailand United States Foreign investor registry Foreign investors are included in a dedicated registry, often as a prerequisite to obtain the advantages of the investment law (e.g. incentives) Separate foreign investment facilitation portals, digital procedures Bhutan Dominican Republic Separate foreign investment facilitation portals, non-digital procedures Chile Colombia Peru can use business facilitation portals, but with some restrictions or additional requirements in sectors of concern. A small share of countries (11 per cent of countries with an investment law) require foreign investors to register their companies in a dedicated registry, either as an alternative or in addition to registering them as domestic businesses. Registration is typically done at the IPA or investment authority or at the central bank. The purpose of the registration is often to collect statistics on FDI (e.g. in the Plurinational State of Bolivia, Cabo Verde, Colombia, the Dominican Republic and Georgia), or to enable investors to access the benefits of the investment law, including incentives (e.g. in Chile, Nicaragua, Peru and the Bolivarian Republic of Venezuela). The dedicated registry can either be separate Chapter IV Investment facilitation and digital government 121 from a general business registration portal or be connected to or integrated in it. Some countries (17 per cent) impose investment registration requirements on both foreign and domestic investors. The purpose is often to benefit from the provisions of the investment law – which usually applies to both foreign and domestic investment – including eligibility for incentives (e.g. in Cambodia, Chad, Kenya, Malawi, the Philippines and Uganda). Access to the treatment and protection guarantees of the law can be a crucial consideration for investors in their decision to establish and operate in a country, making this registration equivalent to an investment permit. In Angola, for instance, to benefit from the provisions of the Private Investment Law, both domestic and foreign businesses that invest more than $1 million must obtain an investment licence. The provisions include the ability to access land concessions, secure fiscal incentives, transfer funds abroad and obtain other necessary permits. Complex procedures specific to foreign investors usually prompt the establishment of dedicated information portals or online single windows, distinct from those for domestic investors. These different scenarios are reflected in the accessibility to foreign investors of online single windows (figure IV.5). For such investors, portals in developing countries, and especially in LDCs, have comparatively more dedicated services or additional forms or procedures. Most investment laws are adopted in developing countries, whereas developed countries tend to rely instead on general commercial law for business establishment procedures. Nonetheless, accessibility to foreign investors is not actually better in developed countries. Many developed-country single windows prevent foreign investors from carrying out procedures online through requirements such as electronic identities or certified email addresses that can be obtained only through government offices that require residency or physical presence in the country. These requirements often stem from anti-money- laundering legislation or general efforts to curb illicit financial activities. Such legitimate regulatory obstacles to the complete digitalization of business establishment processes are an important reason for the continued relevance of information portals in addition to online single windows. Box IV.6 Burundi: Fueling business creation and regional integration through digital investment facilitation In November 2022, the Burundi Development Agency introduced a digital platform designed to simplify the process of starting a business in the country (EasyBusiness.bi). Developed using the eRegistrations platform of UNCTAD and supported by the World Bank through the Local Development Project for Employment, the platform offers a comprehensive online service for business registration across the country, eliminating the need for entrepreneurs to travel to the capital. The platform has reduced the registration requirements by 70 per cent, which has had a profound effect on the number of businesses being established. Since its launch, registrations have increased by 59 per cent, including a notable rise in participation from foreign individuals in limited liability companies. More than half of these foreign partners are from neighbouring countries, and more than 70 per cent from the region. The introduction of the platform has not only facilitated local business creation but also attracted international interest, fostering economic growth and development in Burundi. Source: UNCTAD. See also https://easybusiness.bi. World Investment Report 2024 Investment facilitation and digital government 122 4. Portal ownership and the role of IPAs Both information portals and online single windows for business and investment facilitation can be managed by different government entities, depending on their scope. In countries surveyed by the GER, over 40 per cent of both types are administered by line ministries, often for economic affairs or for trade and investment (figure IV.6). Investment authorities and IPAs also frequently manage information portals, including for general-purpose business facilitation (not just foreign investor procedures). Transactional online single windows are more commonly managed by business registries and developed as part of the process of automating such registries. The lower involvement of IPAs in the management of online single windows is understandable, as they are not direct owners of the resulting registries. Nonetheless, many IPAs do play a role in the development of online services for investors in their country. Only about one quarter of respondents in the annual UNCTAD IPA survey reported having no involvement of any kind in the development of an online single window for business and investment facilitation (figure IV.7). The rest reported various levels of engagement, ranging from advocacy to advisory roles to participation in government-wide task forces. The result of this active engagement is that IPAs have a generally positive perception of the share of mandatory administrative processes that can be completed online, a perception that contrasts to some degree Figure IV.5 Single windows in developing countries are often more accessible to foreign investors than those in developed countries Accessibility to foreigners of online single windows, 2024 (Percentage) Source: UNCTAD, GER.co survey. Notes: Rules-based barriers pose requirements that are not immediately accessible or available to foreigners (e.g. certified e-identities or work permits). Technical barriers are challenges in accessing the platform at the time of research (e.g. website inaccessible). 25 14 18 43 39 14 22 20 6 25 19 50 6 Developed countries Developing countries (excluding least developed) Least developed countries Fully accessible Dedicated services that redirect to other sites Different forms or procedures Rules-based barriers Technical barriers Chapter IV Investment facilitation and digital government 123 Figure IV.6 Portals are generally managed by government ministries, IPAs and business registries Ownership of information portals and digital single windows, 2024 (Percentage) Source: UNCTAD, GER.co survey. Abbreviation: IPA = investment promotion agency. Ministry Trade and investment Economic affairs Finance Justice Industry Other line ministry Business registry Digital government body Investment promotion agency Chamber of commerce Other 43 15 7 6 5 2 7 25 14 10 3 4 Ministry Economic affairs Trade and investment Finance Industry Justice Other line ministry Investment promotion agency Digital government body Business registry Chamber of commerce Other 44 12 12 7 4 3 6 32 14 3 2 5 b. Single windows a. Information portals Figure IV.7 Only about one quarter of IPAs have no involvement in developing online single windows Role of IPAs in development of online single windows, 2024 (Percentage of survey respondents) Source: UNCTAD, 2024–2026 World Investment Prospects Survey. Notes: The survey, conducted in April 2024, collected 96 responses from national and subnational IPAs. Percentages may not sum to 100 due to rounding. Abbreviation: IPA = investment promotion agency. 26 19 18 18 14 12 No direct involvement Advocacy role Leading development of online single window Part of task force developing digital service Advisory role Leading development of selected digital service with the results of the GER survey. Some 70 per cent of IPAs report that most mandatory procedures for business establishment – including registration, tax and social security enrolment, and operating licence acquisition – can be conducted online in their country, whereas the GER survey of transactional portals shows lower shares for social World Investment Report 2024 Investment facilitation and digital government 124 security enrolment and operating licence acquisition. Either IPAs have lower visibility of requirements that may be sector specific or not immediately urgent in the establishment phase, or these services are provided mostly through separate online systems not connected to an online single window. There is scope for further engagement by IPAs in the development of digital government (see, for example, the proactive role that the Kenyan IPA Keninvest is taking in this regard (box IV.7)). The digital transformation of IPAs is ongoing (UNCTAD, 2023b). They often provide other types of digital investment promotion and facilitation tools, in combination with or separate from information portals that deal purely with administrative procedures. Tools that connect well with typical investment facilitation practices include investor feedback and grievance communication, online databases to support searches for local suppliers, and incentives calculators. Box IV.7 Kenya: Connecting digital tools for investment promotion and facilitation Despite significant advances in digital government services in Kenya, notably through the eCitizen platform, new businesses and investors still encounter multiple, disjointed registration processes and authorizations, including for licences and permits needed to operate in regulated sectors and counties. Although some applications can be completed online, the lack of integration among systems adds significant barriers for investors and entrepreneurs. There is a pressing need for enhanced facilitation to elevate investment levels sufficiently to address interconnected economic, health, security and climate challenges. The Kenya Investment Authority (Keninvest) offers one-stop, in-person services such as assistance with foreign taxpayer registration, electrical grid connection and work permits. However, its services do not extend to crucial permits and licences at the county, sectoral or environmental levels. In addition, it lacks the capability to comprehensively register investment projects online, collect data or provide effective investor aftercare services, which are essential for monitoring and supporting successful investment outcomes. The Kenya Investment Single Window project, being developed by UNCTAD, aims to tackle these issues. It will introduce an online system to streamline the investment process in the country and enhance the Government’s capacity to attract and monitor investments effectively. The system will connect with existing government databases such as the eCitizen portal, the Kenya Revenue Authority’s iTax system and county government portals. This integration will enhance the functionality of existing platforms, making it easier for businesses to navigate the regulatory environment. Source: UNCTAD. See also https://eregulations.invest.go.ke. Chapter IV Investment facilitation and digital government 125 C. Facilitation in national and international investment policies Investment facilitation plays an increasingly prominent role in both national and international investment policies. Facilitation measures are now the largest category of national investment policy measures, and especially important in developing countries. More recent national policy measures refer explicitly to digital government tools. Most modern IIAs and instruments also include facilitation provisions and act as catalysts for the use of digital government solutions. 1. National policies 4 For more details regarding the definition of investment-related policy measures and their classification into less and more favourable to investors, see chapter II, box II.2. 5 The facilitation measures included in this analysis relate to FDI and primarily encompass policy measures enacted through national legislation. They comprise 333 measures implemented across 99 countries, including 23 developed and 76 developing countries, over the past 12 years. Investment facilitation measures have become a key component of the global investment policy landscape, constituting between a quarter and a third of the investment policy measures more favourable to investors that countries adopted over the last decade, and nearly two fifths of such measures in 2023 (chapter II).4 The total number of investment facilitation measures introduced each year has more than doubled since the early 2000s, growing by 150 per cent in developing countries and 82 per cent in developed countries from 2012–2015 to 2020–2023 (figure IV.8).5Streamlining initiatives emerged as the predominant type of investment facilitation measure over the past decade (53 per cent), followed by facilitation services (31 per cent) and transparency initiatives (16 per cent). This trend was similar across developing and developed regions. During the second half of the 2010s, digital tools emerged in investment policy measures. Digital investment facilitation services, absent from the measures adopted between 2012 and 2015, constituted 15 per cent of all investment facilitation service initiatives in 2020–2023. Between the two periods, the share of digital streamlining measures grew from less than 10 to 25 per cent and the share of digital transparency measures grew from 0 to almost 30 per cent (figure IV.9). Transparency measures related to investment included primarily the consolidation of investment-related provisions (for instance, in Fiji and Uzbekistan), the issuance of guidelines on investment legislation (notably in China and India) and the establishment of online investment portals (as seen in Oman and World Investment Report 2024 Investment facilitation and digital government 126 Uruguay). In addition, the recent expansion of investment screening regimes (chapter II) – by itself not among the measures that are favourable to investors – has prompted several developed countries (including Australia, France, the Kingdom of the Netherlands and the United Kingdom), to clarify their investment review frameworks by publishing guidelines. Streamlining initiatives span a wide array of measures designed to simplify and modernize investment policies and administrative procedures. Non-digital measures include the simplification of business registration (e.g. in Mauritius, Romania and Viet Nam), licensing procedures (e.g. in Jordan, Mozambique, Peru and the Philippines) and screening mechanisms (e.g. in Canada and New Zealand). They also include the creation of physical one-stop shops (e.g. in Algeria, Mongolia and South Africa). Digital initiatives represented a quarter of streamlining efforts. The largest category was the establishment of digital one- stop shops (10 per cent) or online single windows. Other digital streamlining initiatives encompass the digitalization of various investment-related processes (e.g. the introduction of online applications, forms, certificates and payment facilities). As in the case of transparency measures, several new digital initiatives aim to simplify investment screening processes by introducing portals designed for this purpose (e.g. in France and Germany). Facilitation services provide tailored support from IPAs, SEZs or other entities designed to aid investors in establishing or expanding their operations within a country. During the last decade, measures in this category were evenly split between services related to SEZs and those offered by IPAs or governmental agencies. The latter included services such as alternative dispute resolution mechanisms, visa facilitation, linkage programmes and aftercare services. Digital tools are increasingly utilized in delivering investment facilitation services. This trend strengthened after the COVID-19 pandemic, which saw an expansion in the offering of digital investment facilitation and aftercare services by IPAs, with a sharper focus on promoting linkages between foreign companies and the local economy (UNCTAD, 2020b). Oman, for instance, recently launched an online platform to connect local companies with global investors. In Cambodia, the online supplier database aims not only to link foreign and Figure IV.8 Facilitation measures are increasingly prevalent in national investment policies Facilitation measures by economic grouping and period of adoption (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 15 April 2024. Developing countries Developed countries 50 17 95 16 124 31 2012–2015 2016–2019 2020–2023 Chapter IV Investment facilitation and digital government 127 domestic firms, but also to generate a “sustainable investment cycle” by rewarding and motivating sustainable operations. Traditional approaches to resolving investor grievances are increasingly incorporating digital solutions. The Investment Ombudsman model of the Republic of Korea serves as a prime example (box IV.8). Facilitation provisions are increasingly common not only in investment policy measures and initiatives, as discussed earlier, but also in investment laws. Of 141 such laws currently in force, as recorded by UNCTAD in the Investment Laws Navigator, 64 (45 per cent) include clauses on investment facilitation. These clauses have become more common in laws enacted after the early 2000s (figure IV.10). There are some regional differences; 63 per cent of investment laws in Africa incorporate investment facilitation provisions, but only 20 per cent do so in Latin America and the Caribbean. As in the case of policy measures, investment facilitation provisions in investment laws relate to streamlining, services and transparency (figure IV.11). Transparency provisions are present in 19 investment laws currently in force. They typically commit the State to publishing all laws, rules and regulations concerning investment. Only two such laws emphasize the digital accessibility of such information, and one mandates its publication on the official Government website. Another law requires the online publication of supplementary information relevant for investors, such as socioeconomic data on the country. Streamlining provisions largely involve the establishment of one-stop shops for investors (in 33 of 36 investment laws with streamlining provisions). Most of these one-stop shops serve all investors, but some are tailored specifically to foreign or strategic investors. Only five laws establish Figure IV.9 Digital government tools are increasingly common in investment facilitation measures Measures by type and period of adoption (Number) Source: UNCTAD, Investment Policy Monitor database, accessed 15 April 2024. 7 15 4 21 8 33 3 44 17 58 19 24 30 1 42 7 2012–2015 2016–2019 2020–2023 2012–2015 2016–2019 2020–2023 2012–2015 2016–2019 2020–2023 Non-digital Digital b. Streamlining a. Transparency c. Facilitation services World Investment Report 2024 Investment facilitation and digital government 128 Figure IV.10 Recent investment laws frequently include facilitation provisions Laws by period of adoption (Number) Source: UNCTAD, Investment Laws Navigator database, accessed 14 April 2024. Before 1988 1988–1999 2000–2011 2012–2023 6 11 29 22 13 31 29 With faciliation provisions Without facilitation provisions Box IV.8 Republic of Korea: Digital solutions improve investment grievance settlement The Republic of Korea pioneered the institutionalization of an ombudsman mechanism for resolving foreign investment-related grievances. The Office of the Foreign Investment Ombudsman (OFIO), introduced in 1999, acts as a grievance resolution centre and advocacy body for foreign investors. Its digital portal offers a real-time grievance management system, enabling foreign companies to report issues and monitor case progress online. The portal also allows virtual meetings with experts, who then coordinate solutions with relevant ministries or organizations. The digitalization of OFIO services has accelerated the exchange of information with public entities, which is critical for resolving foreign investors’ grievances. From 2018 to 2022, OFIO settled 1,746 grievances, contributing to an increase in decisions to reinvest and a better business environment. This support resulted in $1.73 billion in reinvestment in 2022 alone. These results have led several countries, including Brazil, Kazakhstan and the Russian Federation, to adopt similar investment ombudsman mechanisms. Source: UNCTAD, based on information from the Office of the Foreign Investment Ombudsman and the Korea Trade- Investment Promotion Agency. Chapter IV Investment facilitation and digital government 129 digital one-stop shops. Additional provisions to streamline investor processes include simplifying administrative procedures, promoting digitalization and establishing maximum timelines for government processes related to investment. Facilitation services provisions in investment laws encompass alternative dispute resolution (22 laws), including mediation, conciliation and dedicated mechanisms for resolving investment-related grievances, such as investment ombudsmen. They also include investor support services by IPAs or other agencies (12 laws). These services comprise counselling, administrative assistance for permits and licensing, visa facilitation for investors and skilled workers, and assistance in access to land and utilities. 2. International investment agreements New-generation IIAs increasingly embrace proactive investment facilitation features. Yet, much more is needed to direct facilitation commitments in IIAs towards sustainable investment and to ensure that treaty provisions translate into practical interventions. Recent IIAs increasingly contain provisions aimed at improving the regulatory environment in host countries, encouraging stakeholder engagement, setting up regular cooperation mechanisms between the contracting parties and facilitating investment for sustainable development (figure IV.12). Prominent examples of these provisions appear in treaties and instruments concluded at the plurilateral, regional and bilateral levels. The plurilateral Investment Facilitation for Development (IFD) agreement strongly emphasizes transparency and streamlining of administrative procedures and contains elements to support sustainable development, responsible business conduct and international cooperation. At the regional level, the Protocol on Investment (2023) to the AfCFTA, as well as the Association of Southeast Asian Nations (ASEAN) Investment Facilitation Framework (2021) and the Intra-MERCOSUR Cooperation and Facilitation Investment Protocol (2017), contain proactive commitments to sustainable investment, digitalization and cooperation. At the bilateral level various models promote investment facilitation, including the Cooperation and Facilitation Investment Agreements concluded by Brazil, the Angola–European Union Sustainable Investment Facilitation Agreement (SIFA) (2023) or the framework agreements such as the Australia–Singapore Green Economy Agreement (2022). Digitalization, expressly encouraged in several recent IIAs, can serve as a tool for effectively implementing IIA facilitation commitments. It is the natural implementation mechanism for transparency commitments, the most common facilitation feature in recent IIAs. Figure IV.11 Streamlining and facilitation services are more common than transparency provisions in investment laws Laws with specific investment facilitation measures, 2023 (Number) Source: UNCTAD, Investment Laws Navigator database, accessed 14 April 2024. Streamlining Facilitation services Transparency 19 36 31 World Investment Report 2024 Investment facilitation and digital government 130 Figure IV.12 Recent IIAs include a wide range of facilitation commitments Share of IIAs signed during 2015–2023, by investment facilitation feature (Percentage) Source: UNCTAD. Note: Based on 235 IIAs, 148 BITs and 87 TIPs concluded in the period 2015–2023 for which texts are available. Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with investment provision. Regulatory environment Stakeholder engagement Cooperation mechanisms Sustainable investment Transparency of investment-related measures Entry and stay of personnel Objective application of investment- related measures Regulatory practices and coherence Streamlining of administrative procedures Right to comment on proposed regulatory measures Focal points for investors Institutional framework for cooperation Technical assistance and capacity- building Proactive provisions facilitating sustainable investment 54 37 22 14 7 30 17 46 14 24 Selected features of IIAs Transparency of investment-related measures. Commitment to publish investment-related measures and/or measures that affect the application of the IIA, including online. Right to comment on proposed regulatory measures. Commitment to provide investors the opportunity to comment on proposed measures. Entry and stay of personnel. Commitment to streamline and/or render more transparent procedures for granting entry and stay of investors, including sympathetic consideration commitments. Focal points for investors. Commitment to establish institutions available to investors with information, aftercare, dispute avoidance and/or broader functions. Objective application of investment-related measures. Commitment to objective and predictable application, independence of administering authorities and/or maintenance of appeal and review mechanisms. Institutional framework for cooperation. Establishment of a cooperation mechanism under the IIA, including for contracting parties’ institutions responsible for investment. Streamlining of administrative procedures. Commitment to eliminate redundant bureaucratic steps and clarify the administrative process, including through digitalization and eGovernment tools. Regulatory practices and coherence. Encouragement of good rule-making practices (e.g. regulatory impact assessment, periodic review) and/or inter-agency coordination. Technical assistance and capacity-building. Reference to technical assistance and/or capacity-building activities in the IIA. Proactive provisions facilitating sustainable investment. Commitment to proactive measures aimed at promoting and facilitating investment linked to the Sustainable Development Goals (e.g. environment, health, climate action). Chapter IV Investment facilitation and digital government 131 It can also operationalize IIA commitments to streamline investment administrative procedures and improve stakeholder engagement. Recent treaties increasingly encourage digitalization or include commitments regarding online information provision or single windows (figure IV.13). Over half of all IIAs signed since 2015 contain a commitment to publish investment-related measures. Such transparency provisions are among the earliest investment facilitation commitments to appear in IIAs, and the share of IIAs that contain them has grown steadily. IIAs commonly extend this commitment to proposed measures and at times include a detailed indicative list of measures to publish. These can cover regulations directed specifically at investors, such as incentive schemes, as well as measures or laws that are likely to affect investments indirectly, such as regulations concerning corporate governance, insolvency, property or taxation. Examples of such detailed provisions can be found in the Angola– European Union SIFA, the IFD agreement, the Türkiye–United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA) (2023) and the ASEAN Investment Facilitation Framework, among others. These treaties illustrate the catalytic role that international agreements can play in the adoption of facilitation measures and digital government tools – an effect already observed with the WTO Trade Facilitation Agreement (box IV.9). Digital government tools are the most effective way to operationalize transparency commitments. About half of IIAs with transparency provisions signed in the Figure IV.13 IIAs increasingly encourage digitalization Facilitation provisions in IIAs that refer to digital tools (Percentage) Source: UNCTAD. Note: Based on 131 IIAs, 70 BITs and 61 TIPs concluded in 2015–2023 that contain at least one facilitation provision. Data based in part on International Economic Law Clinic (2024). Abbreviations: BIT = bilateral investment treaty, IIA = international investment agreement, TIP = treaty with investment provision. 2015–2016 2017–2018 2019–2020 2021–2023 36 40 47 60 World Investment Report 2024 Investment facilitation and digital government 132 past five years contain a commitment to online publication, and several expressly encourage the contracting parties to create a digital information portal. For example, under the Angola–European Union SIFA, each contracting party commits to make a wide range of information available to investors by electronic means and, where practicable, through a single portal. A key national policy component that recent IIAs have begun to incorporate is the simplification and streamlining of investment-related administrative procedures. These provisions usually aim to eliminate redundant bureaucratic steps and to clarify the administrative process for investment-related application procedures. They often require a reasonable time frame and cost for licence applications, encourage countries to consolidate the application process under a single agency and establish certain procedural commitments for the application process. Recent examples include the Angola–European Union SIFA, the China–Ecuador FTA (2023), the IFD agreement, the Türkiye–United Arab Emirates CEPA and the ASEAN IFF. More recently, treaty partners have also begun to commit to streamlining procedures in the energy sector to support energy transition efforts or to facilitate investment in the energy transition (see the AfCFTA Investment Protocol and the European Union–New Zealand FTA) (UNCTAD, 2023d). Another provision that can benefit from digitalization is the streamlining of procedures for the entry and stay of investors and key personnel (see, for example, the Regional Comprehensive Economic Partnership Agreement (2020) and the Israel–Republic of Korea FTA (2021)). Box IV.9 Information portals for trade Transparency in import, export and transit procedures is essential for businesses to ensure predictability in cross-border trade. Despite progress in trade facilitation, many companies – particularly micro, small, and medium-sized enterprises (MSMEs) – still find it challenging to complete trade formalities and documentation. The challenge often arises from a lack of transparency, cumbersome and redundant procedures, and uncoordinated legal frameworks, causing businesses to spend excessive time and resources to comply with trade and customs procedures. The WTO Trade Facilitation Agreement includes transparency provisions that require members to make certain information available online, such as detailed descriptions of import, export and transit procedures; required forms and documents; and contact information for enquiry points. Although the Agreement does not specify that this information be centralized, it is most effective when presented on a user-centric website that offers comprehensive, step-by-step guides to trade-related procedures. Building on extensive experience in developing digital solutions for business and investment procedures, UNCTAD has created a model Trade Information Portal. This online tool aims to enhance transparency and assist traders by simplifying the completion of international trade procedures. Launched first in Kenya in 2017, the portal has proven effective. Traders have seen reductions in time and costs to access information about clearance procedures. By 2022, the National Trade Facilitation Committee of Kenya had simplified numerous procedures through the portal, eliminating steps and required documents and moving several processes online. The UNCTAD Trade Information Portal model, which is based on the eRegulations technology, emphasizes presenting information from the user’s perspective and providing step-by-step guidance for all import, export and transit procedures. To date, this approach has been implemented in 28 countries, significantly aiding traders by simplifying and demystifying the required legal and procedural steps. Source: UNCTAD. See also https://digitalgovernment.world/trade-information-portals. Chapter IV Investment facilitation and digital government 133 Digital government solutions can help eliminate redundant bureaucratic steps and streamline the administrative process. The AIFF (2021) offers a regional example in which parties endeavour to establish and maintain single online digital platforms for investor applications. Similarly, at the bilateral level, the Türkiye–United Arab Emirates CEPA contains a commitment to work towards the “the highest possible level of digitalization of procedures related to investments”. Parties also refer to measures that have proven to be effective, such as one-stop shops, single portal submissions or commitments to accept the submission of electronic applications, documents and payments (see the AfCFTA Protocol on Investment and the Angola– European Union SIFA, among others). Used strategically, digitalization can not only improve the overall investment climate but also contribute to operationalizing IIA provisions aimed at facilitating sustainable investment. For example, to render tangible recent IIA commitments to facilitate investment in renewable energy, parties may prioritize the digitalization of licencing processes related to construction of energy installations or laying of cables, disbursement of renewable energy incentives or connections to electricity grids (UNCTAD, 2023c). About 30 per cent of IIAs signed since 2015 include a commitment to offer investors and relevant other stakeholders the opportunity to comment on proposed investment-related measures (see for example the Australia– United Kingdom FTA (2021)). Some 17 per cent also require the creation of focal points for investors, with informational or grievance functions. Examples include the Cooperation and Facilitation Investment Agreements of Brazil, the intra-MERCOSUR Protocol on Investment Facilitation and the Regional Comprehensive Economic Partnership Agreement (2020). Some recent IIAs also encourage the establishment of local supplier databases (see the Angola–European Union SIFA and the IFD agreement, which are by default digital) (box IV.2). The use of digital tools can improve the efficiency of all these commitments, as well as their accessibility, including for underrepresented economic actors and civil society. The work of focal points can be optimized by, for example, a first-response automated chat assistant for simple information requests and a mechanism to direct grievances to relevant officers, which allows an overall higher number of inquiries to be processed. Similarly, maintaining an online portal for investor and civil society comments on proposed investment-related measures can allow a broader range of stakeholders to access it and improve the efficiency of collecting, processing and disaggregating comments. World Investment Report 2024 Investment facilitation and digital government 134 D. The impact of investment facilitation and digital government Digital investment facilitation has positive effects on governance and institutions, business creation and investment attraction. It can support the promotion of sustainable investment, although facilitation measures are difficult to target. Much of the sustainable development impact occurs through business facilitation, which contributes to the formalization of local firms, domestic resource mobilization and higher rates of inclusivity and participation in the MSME sector. Systematic research on the impact of investment facilitation on FDI is both scarce and difficult to conduct because of the limited data available on investment facilitation measures, the interlinked nature of investment facilitation measures with other policies and the interdependencies of effects with other factors that affect FDI flows. The lack of conclusive evidence and of a definitive estimate of impact has not stopped policymakers from pursuing investment facilitation efforts in international initiatives and national policy measures. It is generally accepted that investment facilitation is an important component of a conducive business environment, long identified as one of the three key factors influencing FDI, together with economic and policy determinants (UNCTAD, 1998; Alfaro et al., 2008). Facilitation efforts affect several dimensions of the business environment, including the ease of doing business and the quality of investment institutions, which directly influence the establishment and operations of foreign investors. They further affect institutional factors such as levels of corruption, rule of law and quality of governance, which indirectly contribute to improving the attractiveness of a location for foreign investment. The advantage of investment facilitation is that it often does not require changes in policies or legislation. Most investment facilitation practices, from information provision to transparency and streamlining, are about how rules and regulations are communicated and applied and how easy they are to comply with, rather than their substance. Therefore, unlike other FDI determinants, investment facilitation measures often require less policy space (such as for policy determinants) and do not rely on economic conditions (such as for economic determinants). The relevant literature on FDI determinants substantially supports the attractiveness of investment facilitation measures as policy tools for increasing FDI. Empirical studies have reached broad consensus on the fact that countries with better business environments are more likely to attract higher FDI flows. The impact of investment facilitation measures – as measured through their effect on the business environment – is likely to be economically sizeable. An early simulation by UNCTAD – used to underpin its Global Action Menu for Investment Chapter IV Investment facilitation and digital government 135 Facilitation (UNCTAD, 2016) and based on a World Bank study analysing the relationship between FDI and the number of procedures to start a foreign business – suggests that aligning developing countries to the median level of administrative complexity (i.e. reducing procedural complexity in countries above the median) would be associated with an average increase in aggregate FDI stock of 20 per cent. Older studies corroborate the finding (Jayasuriya, 2011; Anderson and Gonzalez, 2013). Investment facilitation measures can also contribute to inclusive and sustainable development. Because of their relatively low cost (compared with, for example, subsidies, incentives or the construction of SEZs), they are expected to disproportionally benefit smaller and resource-poor economies, and in general those that have few other levers to attract FDI. The positive effect of facilitation practices on governance and institutions would benefit countries with weaknesses in these areas relatively more. Furthermore, investment facilitation measures will support FDI in manufacturing and services more than in extractives (FDI that is mostly resource-seeking and less sensitive to other determinants), thereby contributing to economic diversification. Finally, facilitation measures will have a greater impact on FDI by SMEs, which tend to be disproportionately hindered by administrative hurdles. Promoting sustainable development through investment facilitation is not automatic, despite the prominence of sustainable development objectives in international agreements and instruments, including the recent IFD agreement. Targeting investment in sectors that contribute more to sustainable development, or investors with more sustainable operations, can be done through typical investment promotion measures such as incentives, which can be applied selectively and made conditional on specific criteria. It is more difficult to envisage providing information or transparency selectively. The logic and the economies of scale of typical investment facilitation measures would normally dictate that they are applied across the board. The main lever that governments can use to support sustainable development through investment facilitation is to sequence the implementation of sector-specific streamlining measures, prioritizing relevant sectors (e.g. operating licences in the health sector or planning permits in the renewable energy sector). Digital government solutions for business and investment facilitation, for the most part, just reinforce the effects of such efforts. First and foremost, they tend to focus implementation efforts on the aspects of investment facilitation that are likely to have the greatest direct impact on investment attraction and business creation. Common provisions in investment facilitation policies or treaties include elements such as investor focal points, dispute prevention mechanisms and stakeholder engagement. While these are important benefits for investors and they have the potential to improve governance, institutions and the investment climate in the long run, none are as immediately and continuously relevant to businesses and investors as accurate information, transparency of rules and regulations, and streamlined, efficient and effective administrative procedures – all of which feature prominently in every objective assessment of the relative attractiveness of business and investment climates across countries. Improvements in government digitalization more broadly, including in areas beyond business and investment facilitation, can also positively influence the investment climate in a country (Al-Sadiq, 2021). Research has shown a positive correlation between digital government services and FDI inflows, stemming from streamlined procedures, improved information access, heightened government efficiency, reduced corruption and cost-saving mechanisms made possible through the consolidation of services on a single platform (Opertti and Volpe Martincus, 2023). Countries that rank in the top quartile of the EGDI receive more than 10 times the World Investment Report 2024 Investment facilitation and digital government 136 average inward FDI flows per capita as those in the bottom quartile (UNCTAD, 2024a). The same ratio holds for gross fixed capital formation. This is, of course, largely explained by the fact that the EGDI rankings correlate closely with GDP per capita and the development status of economies, with mainly higher-middle-income developing countries in the top quartile, and LDCs typically in the lower quartiles. Similar but more nuanced results derive from correlating investment, business creation and institutional quality with the UNCTAD GER ratings, which are less obviously aligned with development levels and allow for LDCs to leapfrog higher- income countries in the quality of their information portals and online single windows. On average, GER ratings still fully align with institutional quality (as measured by the World Bank’s Governance Index; figure IV.14), but the differences between the top three quartiles become marginal, with significant variance within the top quartiles. Those quartiles combine more advanced developing economies with some LDCs that have created – often with technical support, including from UNCTAD – high-quality online single windows. The same analysis of business creation rates also shows a positive correlation between the presence and quality of information portals and single windows for business and investment facilitation and the establishment of new firms (figure IV.15). Average rates of business creation in the top three quartiles are again very similar, and the rate in the top quartile is slightly below that in the second quartile, as a result of a combination of lower rates in some LDCs and in several higher-income, already more mature, developing economies. Comparing GER ratings with FDI attraction rates makes the influence of several leapfrogging LDCs in the top quartile even more pronounced than for business creation rates (figure IV.16). The low levels of FDI in these LDCs brings down FDI performance in the group of countries with the best digital government tools for business and investment facilitation by a significant margin. Evidently, high-quality Figure IV.14 Digital investment facilitation is associated with higher institutional quality Institutional quality index by GER quartiles, developing countries, 2022 Sources: UNCTAD, GER.co, and World Bank Governance Indices (2022). Notes: Quartiles were constructed from the average score between information portals and single windows from GER.co data for 2024 (or latest available) in developing countries. The institutional quality index represents the average for indicators of government effectiveness, regulatory quality, rule of law, and control of corruption on a scale from -2 to 2. It assigns higher scores to countries with better institutional quality, according to ratings by non-governmental organizations and international organizations. For better representation, a linear transformation was applied to regulatory quality scores. 1.35 1.4 1.45 1.5 1.55 1.6 1.65 1.7 Bottom quartile 4 Quartile 3 Quartile 2 Top quartile 1 Chapter IV Investment facilitation and digital government 137 Figure IV.15 Digital investment facilitation is associated with higher rates of business creation New business index by GER quartiles, developing economies, 2016–2022 Sources: UNCTAD (GER.co) for ratings and World Bank (Entrepreneurship Database, 2016–2022) for business creation. Notes: Quartiles were constructed from the average score between information portals and single windows from GER.co data for 2024 (or the latest available) in developing countries. The new business creation index is measured as the number of newly registered companies with limited liability over the total number of companies with limited liability in the same year (average, 2016–2022). In case of missing data for the total number of companies with limited liability, the observation from the year before plus the number of newly registered companies was used. One outlier (Mauritania) was removed from the first quartile. 0.102 0.104 0.106 0.108 0.11 0.112 0.114 0.116 Quartile 3 Quartile 2 Top quartile 1 Bottom quartile 4 Figure IV.16 Digital investment facilitation does not automatically lead to more FDI Inward FDI as a percentage of GDP by GER quartiles, developing countries, average 2021–2023 Sources: UNCTAD for FDI inflows, UNCTADstat for GDP data, and GER.co for ratings. Notes: FDI is the average of FDI flows between 2021 and 2023. GDP is the average between 2021 and 2022 (latest year available). Abbreviations: FDI = foreign direct investment, GDP = gross domestic product. Bottom quartile 4 Quartile 3 Quartile 2 Top quartile 1 0 0.01 0.02 0.03 0.04 0.05 0.06 World Investment Report 2024 Investment facilitation and digital government 138 Box IV.10 Impact assessments of digital government tools for business facilitation Insights from post-implementation reviews of UNCTAD technical assistance programmes in business facilitation underscore that the ability to register a business online represents a critical step for business creation. It eliminates a significant barrier to formalization and alleviates the need for MSMEs to visit central government offices, thereby improving acccess, enhancing consistency in service delivery and reducing corruption risks. Governments also reported the following benefits: • Higher rates of formalization of local businesses, and creation of more businesses (local and foreign) overall • Reduced time, costs, forms and documents required for creating and operating a business • Positive effect on women, young people and rural populations, who previously faced greater obstacles with traditional paper-based and urban-based business registration procedures • Increased tax, social security and other government revenues, with single windows paying for themselves in two to three years from additional fee generation alone • Greater formal sector employment opportunities • Better data on the business sector, enabling more targeted and inclusive policies, particularly if cross-referenced with tax and social security data • A more client-friendly approach in government administration • Enhanced trade and development, through the use of digital information portals for importers and exporters Impact measurements of selected projects after the implementation of online single windows for business and investment facilitation show positive effects on the participation of women and young people in the economy. Impact on women: • In Benin, one third of business owners registering online are women. • In Bhutan, 52 per cent of those applying to register their companies are women. • In El Salvador, 56 per cent of business owners registering online are women. • In Lesotho, before online registration was possible, women held 26 per cent of business permits. Afterward, that figure rose to 34 per cent. Impact on young people: • In Benin, registration by young people (age 18–30) increased 181 per cent in the first two years of operation. • In Mali, registration by young people increased 263 per cent after implementation. Source: UNCTAD. information portals and online single windows in and by themselves do not lead to higher FDI inflows. Improvements in governance and institutions take time to affect investor perceptions, and other fundamental FDI determinants – ranging from macroeconomic and political stability to market size and income levels, labour costs and the quality of physical infrastructure – are ultimately more important. The comparison of the correlations of GER data with business creation rates, on the one hand, and FDI attraction on the other can be considered a confirmation that the benefits of business and investment facilitation are more significant for domestic firms than for international investors (box IV.10). The latter tend to have more resources for engaging local advisers to support compliance with regulatory requirements and to navigate administrative procedures. Domestic MSMEs and informal businesses stand to gain much more from streamlined procedures for business formalization – hence the insistence by UNCTAD on combining, as much as possible, digital government tools for business facilitation and investment facilitation, and synergizing programmes for private sector development and investment attraction. Chapter IV Investment facilitation and digital government 139 The sustainable development impact of business and investment facilitation measures is also often more tangible through their effect on domestic businesses and MSMEs. The effect on formalization rates is significant, which contributes to domestic resource mobilization. There can also be positive effects on participation rates for women and vulnerable groups in the economy, and for rural populations, owing to easier access to information through remote access to government services. Finally, the analysis for this report empirically evaluated the influence of the quality of online business registration portals on FDI inflows in a cross-country data regression model. Each additional point in the GER score is associated with 8 per cent more FDI. The effect is stronger for developing than for developed countries, presumably because of higher marginal gains in governance and institutional quality. These results are corroborated by other studies, which consistently find a positive correlation between a favourable business environment and FDI inflows. For instance, a unit increase in the (now defunct) Doing Business rankings leads to higher FDI inflows, by $300 million (Jayasuriya, 2011); moving 1 percentage point closer to the frontier regulatory environment is associated with an increase in annual FDI of between $250 million and $500 million (Anderson and Gonzalez, 2013). More recent studies suggest that a reduction in procedural complexity in countries leads to higher FDI inflows of about 4 per cent within the first two years following the implementation of digital tools (e.g. World Bank, 2017). These findings highlight the importance of streamlined administrative processes in attracting investment. Empirical analyses specifically focusing on digital government find that accessibility to government information and services online, as measured by the eGovernment Survey Index of UN DESA, is associated with about a 2 per cent increase in FDI per capita inflows, on average (e.g. Al-Sadiq, 2021). The positive relationship between online digital government tools and FDI is attributed to streamlined procedures, enhanced access to information, improved government efficiency, reduced corruption, and cost-saving mechanisms facilitated by service consolidation on unified platforms (Lögün, 2020; Máchová et al., 2018; Al-Sadiq, 2021). Figure IV.17 Higher-quality digital investment facilitation is associated with more investment Impact of gains in GER ratings on inflows, average 2021–2023 (Percentage) Sources: UNCTAD for FDI inflows, UNCTADstat for GDP data and GER.co for ratings. Notes: Depicts the marginal effects (semi-elasticities) of higher quality of information portals and single windows on FDI inflows. Vertical lines represent confidence intervals at the 90 per cent level. Predictions based on an ordinary least squares cross-country model, with robust standard errors. The independent variable is the average rating between information portals and single windows in 2024 (or latest available); controls include population (2021), GDP (2021) and development status. -10 -5 0 5 10 15 20 Developing countries World World Investment Report 2024 Investment facilitation and digital government 140 E. From online business facilitation to digital government The basic architecture of digital government solutions for businesses and investors is fundamentally the same across many types of services. Thus, expanding their scope to cover more services helps capture economies of scale and scope. Effective implementation requires accurate documentation and thorough simplification of procedures, and a focus on putting in place enabling legislation rather than reforming the laws underpinning the procedures. For developing countries, using digital business and investment facilitation to strengthen public administration more broadly is an important opportunity. 1. The basic architecture of digital government services Investment operations encompass a range of administrative requirements, including company registration, obtaining various licences and permits (such as investment, business activity, environmental and building permits), property acquisition registration, compliance with social security, pension schemes and tax obligations at both national and local levels (UNCTAD, 2023e). The administrative processes associated with these obligations all follow a similar pattern. Investors submit the necessary data, documents and payments to one or more administrative bodies. The application file is reviewed by the respective administrations. Upon approval, the data provided is recorded in a registry, and a formal certificate – whether called a licence, permit, registration, declaration or authorization – is issued. The application file consistently comprises three fundamental elements: data (entered on a form), documents (such as proof of registration in other registries, identity cards and authorizations) and payment. The processing involves a varying number of operators within the authorizing entity that assess the file until it is either approved, rejected or returned for correction or requests for additional information. The registry where the information is stored can take various forms, ranging from a physical logbook to a spreadsheet or an online database. Building on this standard administrative pattern, the basic architecture of digital government services mirrors the sequence of steps through a series of online interactions (figure IV.18). An online service is a succession of screens and actions actions through which the applicant can complete a form, upload the necessary documents, make a payment, and submit the application. Subsequently, one or more operators review the application file, deciding to either approve or reject it. Once approved, the applicant’s data are transmitted to an online registry, and a digital registration certificate is issued. Once the application – a platform or interface – has been put in place to manage Chapter IV Investment facilitation and digital government 141 Figure IV.18 Basic architecture of digital government service Source: UNCTAD. Online service (register, modify, cancel, consult) Government portal Registry Access to services Authentication User account Data (form) Control 1 Control n Generate certifcate Documents Payment Create Update Delete Consult interactions with users, the processing components that constitute the actual service have been developed, and a database or registry has been created to manage a particular service such as the registration of a company name, services can be added with essentially the same tools. A single service such as business registration will usually already comprise a “family” of services or multiple versions of itself for different types of legal entities, such as sole traders, limited liability companies, and branches or subsidiaries of foreign firms. But services can equally be extended to other areas, such as construction permits, operating licences or obtaining social security or tax registration numbers. Digital government services are often developed through a series of evolutionary steps. Initially, each government agency tends to develop its own digital services independently, leading to a collection of uncoordinated processes. This fragmentation forces users to interact separately with each agency, inputting the same information multiple times. Such set-ups lead to discrepancies in user data across different registries, as updates in one are not reflected in others. If an agency requires verification of a permit from another, it typically requests a physical copy from the user. 6 See https://e-estonia.com/solutions/x-road-interoperability-services/x-road. To improve efficiency, some systems allow agencies to share applicant data among themselves; an example is X-Road in Estonia.6 While this reduces redundancy – applicants do not need to provide the same information multiple times – it still requires them to initiate applications with each agency separately. This model enhances the user experience and ensures data quality but depends heavily on inter-agency cooperation, which can be a limiting factor. An integrated services approach further consolidates the user experience by enabling applicants to interact simultaneously with multiple agencies through a single service. Applicants fill out one form, upload documents once and make a single payment, even as their applications are processed separately by each relevant agency. In this system, which ensures data consistency, agencies interact seamlessly and offer a unified service to the applicant, but they continue to operate independently. A new approach that holds promise for the future is a fully user-centric model in which the applicant is placed at the centre of public administration (figure IV.19). All personal and official data, such as registrations and permits, are consolidated in an online “safebox” that is accessible to any government agency the user has dealings with. This fundamentally changes how data World Investment Report 2024 Investment facilitation and digital government 142 are managed, by eliminating the need for applicants to submit data or documents multiple times. Instead, applicants simply grant agencies access to their safebox, where all required information is stored and continually updated. Rather than issuing traditional certificates, agencies validate the data directly within the safebox, streamlining processes and ensuring that all information remains accurate and current. Several novel technologies are being developed to bring the user-centric model closer to reality, such as systems that allow users to manage access and usage permissions for their data, and blockchain-enabled verifiable credentials to improve data security. Looking at these advanced models and configurations is especially helpful for countries that are at the early stages of developing digital government, those that have relatively few legacy systems in place with limited sunk costs, and those where basic services in support of business entities of any size can make an immediate and sizeable difference in the quality of public administration and the ease of doing business. 2. Effective implementation Facilitation is fundamentally about simplifying compliance. It ensures that administrative procedures are transparent, clearly understood and designed to require minimal effort from users. The adoption of good business and investment facilitation practices demands a significant shift in mindset within public agencies – from a traditional focus on control and enforcement, which primarily aims to prevent fraud and detect violations, to a supportive role that helps firms meet administrative requirements. The initial step involves first acknowledging that administrative procedures pose challenges for firms – whether foreign or local, large or small – and then conducting an uncompromising analysis of the underlying causes. The root causes of administrative complexity are mostly not in the rules but in the way they are applied. Rules can be interpreted differently by different parts and levels of government. Procedures will vary across different agencies and local authorities. They evolve over time depending on the risk aversity and control mindset of Figure IV.19 Evolution of digital government services Source: UNCTAD. Agency 1 Agency 2 Agency 3 Service 1 Service 2 Service 3 Agency 4 Agency 5 Agency 6 Integrated service (4, 5, 6) Agency 1 Agency 2 Agency 3 Service 1 Service 2 Service 3 Chapter IV Investment facilitation and digital government 143 individual civil servants, or in reaction to occasional instances of malfunction or malfeasance. The design of procedures to implement rules often prioritizes form over substance, causing them, over time, to depart from the original intent of the rule. It is therefore important to differentiate between administrative procedures – which include the interactions, forms, information and payments demanded by administrations to enforce laws – and the actual laws they aim to implement. Typically, administrative procedures are more complex than the laws they are based on, often incorporating unnecessary conditions and delays. Streamlining administrative procedures, in the vast majority of cases, does not necessitate changes to the law. It mostly represents a more efficient and effective application of the law. From a practical perspective, the implementation of digital government services involves three main steps: (1) accurate documentation of the procedure that is to be brought online in its existing form; (2) design of the online service, including, where possible, the streamlining of the procedure; and (3) implementation of the online service. Documentation of the procedure for which the digital government solution is being developed requires the involvement of administrative officers from the entities involved in the relevant registration or authorization processes. It does not require any technical expertise on information technology (IT) or online systems. Instead, it requires detailed knowledge of the step-by-step process that the user of the service needs to follow to obtain the desired certification. The result should be a breakdown of the steps, and for each step a detailed mapping including the entity with which each transaction takes place, the requirements for each transaction (e.g. information to provide, documents to submit, fees to pay), the possible scenarios that follow (e.g. further information or documents needed, referrals to other entities), the results of the transaction (e.g. rejections, certifications), possible complaints or recourse procedures, and the legal basis for each transaction and administrative requirement. The latter element is needed to distinguish between the requirements and controls actually required by the law and those that have been added over time by implementing agencies, as well as to identify discretionary aspects of procedures. The administrative officers responsible for providing the service will be familiar with individual procedures, yet they may be limited in their ability to oversee the complete process from the user’s perspective. Very often, only after a detailed mapping of the process does it become clear that the process has many unnecessary complexities, redundancies and overlaps, such as the need to visit the same entities in different steps or the need to supply the same information or document multiple times. Officers may also not be trained in process documentation techniques; an important part of capacity-building programmes in this area is not about IT, but about process mapping and design. Design of the online service is still not driven primarily by IT, although it is important to involve project managers who are used to translating rules and administrative requirements into “code” – logical instructions that cover every eventuality of the transactions involved (box IV.11). A service is usually not designed to exactly mirror the physical procedure, because the inefficiencies identified during the documentation process can be reduced through a process of streamlining. Simplification means focusing on those requirements and controls that are required by the law, minimizing information and documentation required at each step, and regrouping or resequencing steps. Ultimately, the design of the online service involves creating a database by defining exactly what fields of data are required, designing the user form and document upload page, creating approval roles for administrative officers and integrating World Investment Report 2024 Investment facilitation and digital government 144 online payment (often using a commercial provider of online payment services). Implementation of the online service involves not only the installation of the technical elements of the system – through either physical servers or cloud-based providers – but various other aspects, including the management of the transition process, with each entity responsible for the relevant registrations or authorizations, the training of operators in charge of approvals or controls, and others who will assist the public or staff call centres, the testing of the system using real cases and focus groups, and a communication campaign. Institutional capacity-building, both on the service documentation and design process and, subsequently, on the operation of the system, is crucial to ensure continued service development and the gradual expansion of digital government to cover all services to business. In this process, effective communication on the positive impact of digital investment facilitation is crucial to maximize buy-in from implementing agencies and to overcome resistance. In Benin, the tripling of business creation also tripled fee income, generating more jobs for government workers (box IV.12). In Lesotho, staff using a digital business licensing system reported greater satisfaction as their role shifted from processing forms to advising clients. In Bhutan, government staff involvement in developing new online services expanded their skills and responsibilities, providing additional motivation. Digital tools, by better capturing data on business creation, including user demographics, enable policymakers to understand the impact of investment facilitation, measure effects on communities and ensure inclusivity. Box IV.11 Bhutan: Empowering civil servants to design their own digital services In 2021, the Government of Bhutan introduced a groundbreaking government-to-business digital portal specifically tailored for cottage and small industries, using the customizable digital platform of UNCTAD. This initiative targets firms valued at less than $14,000, which represent 95 per cent of the country’s economy. The process is streamlined and user-friendly: entrepreneurs can complete a simple form on a mobile phones and receive all necessary registration documents instantly and free of charge. The impact was significant: in 2022, about 1 per cent of the population, or 5,500 people, used the service to register a business. This marked a threefold increase in the registration rate, with women making up 52 per cent of the new users. This surge reflected a significant transformation in public administration and set a benchmark for digital government worldwide. The platform empowers civil servants who, after initial training, can independently customize the digital platform to add online services. These services now encompass a wide array that includes bus service permits, drone flying authorizations and industrial park leases. This approach helps civil servants empathize with users, enhancing their understanding of potential bottlenecks and frustrations in the process. The Government plans to expand the platform over the next two years to include all permits, authorizations and procedures. The system could extend to encompass all government departments, allowing civil servants to shift their focus towards more strategic tasks by alleviating administrative burdens. This strategic development has boosted economic diversification and new businesses, tripling formal employment opportunities, demonstrating the impact of digital transformation on economic growth and public administration efficiency. Source: UNCTAD. See also https://unctad.org/news/bhutans-entrepreneurs-can-now-open-business-under-minute. Chapter IV Investment facilitation and digital government 145 Box IV.12 Benin: Using digital government to promote sustainable impact and inclusivity Since 2020, the Investment and Export Promotion Agency of Benin has used the digital government platform of UNCTAD to streamline the registration process for foreign and domestic companies. It allows businesses to handle all registration steps, including for tax and social security, from a mobile phone. Users fill in one form, scan and upload documents, and pay with a credit card or mobile money, reducing the time required from five days to just two hours. The implementation of the digital platform (monentreprise.bj) nearly tripled the number of business registrations. the number of business registrations. Notably, a third of these new business owners are women, half are under age 30 and half are located in rural areas, indicating broad demographic reach. Interviews with users revealed that the system not only facilitates business creation but also helps in business formalization. Formalized businesses report greater ease in hiring qualified staff, accessing credit, obtaining insurance, receiving formal training and exporting to members of the West African Monetary Union. The revenue generated from the increased number of registrations has provided the Agency with additional funds. These funds have been used to expand staff, enhance outreach to entrepreneurs and invest further in improving the system, fostering a sustainable impact and inclusivity in the country’s business environment. Source: UNCTAD. See also https://www.gouv.bj/article/512/lapiex-lance-monentreprise.bj. 3. Connecting with wider digital government The prevailing guidance on digital government implementation favours a centrally driven approach based on a national digital government strategy and supported by a digital government authority or unit. For example, the Recommendation of the Council on Digital Government Strategies of the OECD (2024) recommends the development of a digital government strategy aligned with other sectoral strategies; government-wide coordination mechanisms; development of digital skills, job profiles, technologies, contracts and inter-agency agreements; and review of legal and regulatory frameworks. A World Bank (2016) report, which notes that 30 per cent of digital government projects fail and that only 20 per cent are considered successful, explains that this imbalance is due not only to technical issues such as inadequate infrastructure, interoperability and cybersecurity risks, but also to policies, legal frameworks and institutional factors. The e-Government Survey of UN DESA (2022) measures factors such as the presence of legal and institutional frameworks as the basis for effective implementation. Technical assistance and capacity-building by development agencies generally provide overarching assessments of digital government readiness and associated policy advice. Several practical experiences illustrate how central steering can be important: • Digital government strategies. Successful digital initiatives are often underpinned by a comprehensive strategy. Bhutan and Uruguay exemplify this approach, with their strategic frameworks for digitalization. Bhutan launched its eGovernment Master Plan in 2014, and Uruguay initiated its digital agenda with an eGovernment section in 2007, culminating in 2021 in the Plan de Gobierno Digital 2025. • Digital government entity. The creation of institutions to manage and coordinate digital strategies can provide valuable steering. In Benin, the consolidation of digital strategy entities into the Agency for Information Systems and Digital in 2022 and in Uruguay the establishment of the Agency for Digital Government, Information Society and Knowledge in 2005 are notable examples. World Investment Report 2024 Investment facilitation and digital government 146 • Legal and regulatory framework. The development of effective digital services can be accelerated by enabling legislation in such areas as personal data protection, digital payments, e-signatures and digital identities. The Digital Code (2018) of Benin and the National Digital Agenda of El Salvador are examples of comprehensive legal frameworks that support digital strategies, cybersecurity and regulatory needs in the digital domain. • Stakeholder engagement and communication. Successful digital government initiatives require effective stakeholder engagement, communication strategies and initiatives to build trust to foster adoption. In Rwanda, the introduction of a law that ensures data protection, coupled with educational and awareness initiatives, has been credited by the Minister of Information and Communications Technology and Innovation for a 30 per cent increase in adoption of the e-Government platform. Central steering and support for the roll- out of digital government are important and help push the necessary enabling legislation, budget support and broad- based stakeholder engagement, yet it can also lead to complex, costly and lengthy implementation programmes. The basic architecture of online services and the tenets of effective implementation suggest that there is a complementary approach that can be used in parallel with or even in anticipation of major centralized efforts. This approach is particularly helpful for developing countries that are still in the early stages of government digitalization and that lack the significant resources required for centralized digitalization projects. A bottom-up approach, starting from basic services for business – usually the first government services to be digitalized – and gradually expanding to adjacent policy areas, has several benefits. It can begin in one or very few public sector entities, does not necessarily depend on major legislative interventions, is relatively low cost and adds immediate value to users and revenue- generating potential for government. Such a bottom-up approach can be an integral part of a wider digital government strategy, as a “sandbox” approach in which new digitalization initiatives are rolled out for a clearly delimited administrative process before expanding to broader applications. It allows agencies or subnational entities with higher levels of capacity or a higher state of readiness to race ahead (box IV.13). Box IV.13 Togo: Digital investment facilitation by subnational authorities: special economic zones In Togo, digital transformation has significantly enhanced FDI attraction efforts. Launched in 2022, the first phase of the country’s investment portal (investirautogo.tg) offers a comprehensive online information service. Managed by the Investment Promotion and Free Zone Agency, the portal provides detailed guidance on administrative procedures to start and operate a business. It covers nearly 40 procedures and outlines more than 150 formalities. It also provides contact points for investors who need assistance. It was used by 13,000 investors in 2023. The portal is part of a collaboration between the United Nations Development Programme and UNCTAD, begun at the Government’s request and coordinated with the Togo Digital Agency. The second phase, planned for launch in 2024, is a digital investment window for the Port of Lomé SEZ. It will facilitate the digitalization of processes such as authorization requests, employee exemption from social charges and vehicle registration. Expansion into the SEZ underscores the comprehensive involvement of national institutions in investment facilitation, extending beyond the traditional scope of IPAs. Source: UNCTAD. See also https://investirautogo.tg. Chapter IV Investment facilitation and digital government 147 Implementing agencies can very often achieve much independently of Government-wide efforts or major legislative reform programmes. A balance must be found between the need for overarching strategies and institutions and practical implementation requirements. As noted earlier, digitizing administrative procedures mostly does not require significant changes in laws. This does not mean that no legislative action is needed to support the development of digital government. However, the emphasis should be on enabling legislation rather than on substantive laws underpinning the administrative procedures. And while comprehensive legal frameworks govern personal data protection, digital payments, e-signatures and digital identities, basic reforms of mundane bureaucratic requirements enabling, for example, the acceptance of electronic copies of documents, are often sufficient to allow agencies to proceed with the implementation of digital services. Similarly, while the whole-of-government approach that is usually advocated should be the ultimate goal for the roll-out of digital government, it has clear drawbacks for the pace of development of individual services. Different institutions tend to operate at different speeds and find themselves at different stages of readiness. Centrally steered programmes that aim to bring along all public institutions and agencies can miss out on opportunities to develop individual services more quickly with a limited number of first-mover entities (ITU and UNDP , 2023). The bottom-up approach defines a limited initial project scope and digitalizes one process at a time without necessarily waiting for lengthy, government-wide reviews of strategy, legality or IT that risk being divorced from the reality faced by front-line agencies and service staff. It helps minimize resistance and builds momentum for broader digital transformation at a relatively low monetary and political cost. It is an approach that learns from the failures of approaches in many countries by encouraging agencies with innovative mindsets to take the first steps, with others joining as the advantages of digitalization become clear. There is significant scope to expand the array of services on digital government platforms once the core business and investment facilitation services (registration, tax, social security and operating licences) are covered. Using the online single window platform developed by UNCTAD, El Salvador has added services for the filing of accounts, to support MSMEs not only in the process of becoming formal but also in the effort to stay formal (which requires filing periodic accounts and paying taxes) (box IV.14). Mali is developing a system to speed up approval processes for new pharmaceutical products to streamline the market for essential medicines (box IV.15). And Colombia is piloting an emissions registry to allow firms to calculate and report emissions in compliance with local legislation developed to meet commitments under the Paris Agreement (box IV.16). Adding services in such specific areas or for sector-specific procedures can thus help strengthen the sustainable development impact of digital business and investment facilitation efforts. Digital government solutions obviously also extend to trade, as observed earlier. The ASYCUDA programme of UNCTAD has a long track record of implementing online single windows for clearance of foreign trade procedures (box IV.17). Similar effects of economies of scale and scope can be observed in trade portals, which aim to incorporate as many relevant procedures as possible. However, compared with business and investment facilitation portals, trade portals are more difficult to envisage as a basis for wider digital government expansion because of the narrower scope of services and institutions they involve. World Investment Report 2024 Investment facilitation and digital government 148 Box IV.15 Mali: Expanding the scope of digital services for business: pharmaceutical approval processes In November 2023, Mali launched a pioneering online pharmaceutical registry, developed in collaboration with UNCTAD, the Ministry of Health of Mali and the country’s National Pharmaceutical Association. This initiative was spurred by the urgent need for pandemic preparedness underscored by the COVID-19 crisis and aims to address major health challenges for the country’s predominantly young population. The digital registry is designed to enhance the efficiency of the marketing authorization process and ensure the safety and quality of medicines. It will improve transparency and traceability, optimize resource use, support the growth of the local pharmaceutical industry and combat counterfeiting. According to the United Nations Office on Drugs and Crime (2023), up to half of the pharmaceuticals in Mali are counterfeit or improperly distributed, emphasizing the need for this system. The online registry will enable pharmaceutical importers, producers and distributors, along with the Government, to address supply chain delays and fraud more effectively. This improvement in transparency and accessibility is expected to streamline the distribution of medicines and vaccinations. Currently, the approval process for importing, distributing or producing medicines is hindered by bureaucratic delays, often taking up to 18 months owing to reliance on paper documentation and the requirement for a salaried representative’s physical presence. The new system will reduce the approval time to three months. At present, the system allows online registration of pharmaceutical stakeholders and helps medical authorities monitor the entry, production and distribution of products. It also aids in the identification of obsolete and unauthorized items and provides data on the locations of products and the needs for them across various medical facilities. Although still in its pilot phase, digitalization of this registry holds promise for replication and scaling in other developing countries, potentially transforming health care delivery and management. Source: UNCTAD. See also https://unctad.org/news/magic-malis-digital-pharmaceutical-registry. Box IV.14 El Salvador: Expanding the scope of digital services for business: supporting MSME formalization In 2018, UNCTAD and the Government of El Salvador launched a digital single window for MSMEs (miempresa.gob. sv), allowing them to register online with simplified procedures. An important objective was to reduce informality. Entrepreneurs can register simultaneously with the ministries of finance, labour and commerce, and the municipality. This automates what were previously 12 separate registrations. The system also integrates an online accounting tool that supports the filing of annual accounts and can generate six-month tax and social security filings as well as 11 annual filings. The purpose of these supporting tools is to help businesses become formal and remain formal – which requires periodic filings. Many MSMEs are subsistence enterprises or sole traders, in the informal sector. Registrations at the National Commission for Micro and Small Businesses increased significantly in 2020 and afterward, especially in the most fragile categories. This translated to a steep rise in the numbers of entrepreneurs (+74 per cent) and MSMEs (+63 per cent) registered for social security in 2021. More than half of these companies were women owned. Their access to enterprise loans and safety nets critically contributed to the resilience of the private sector in the pandemic. Source: UNCTAD. See also https://miempresa.gob.sv. Chapter IV Investment facilitation and digital government 149 Box IV.16 Colombia: Expanding the scope of digital services for business: reporting carbon emissions In 2023, the Colombian Ministry of Environment, in collaboration with UNCTAD, initiated the development of a digital platform that will allow businesses to report their carbon emissions annually and obtain necessary certifications, supporting the country’s commitment to the Paris Agreement objectives. The registry is set to launch in the latter half of 2024, after final adjustments to the prototype, which was presented at the World Investment Forum of UNCTAD in October 2023. It integrates a user-friendly emissions calculator and complies with the standards of the Intergovernmental Panel on Climate Change, ensuring that it is both comprehensive and accessible for companies that are required to report their emissions. It is designed to prepare Colombia for upcoming global carbon pricing and tax measures, including the Carbon Border Adjustment Mechanism of the European Union. The platform will be expanded with online services for environmental impact assessment certificates, in an aim to streamline the application and review process, which is often criticized for its inefficiency and lack of transparency. These assessments are crucial for many sectors in Colombia, in particular construction. In addition, a digital registry for green business certificates is being considered. This system would enable companies to evaluate their environmental practices against regional standards and qualify for “green business” status, which provides benefit from various incentives. These digital innovations not only position Colombia as a leader in environmental digitalization but also serve as potential models for other countries with similar environmental and climate legislation. Source: UNCTAD. See also https://unctad.org/news/un-digital-government-awards-celebrate-excellence- online-public-services. Box IV.17 ASYCUDA: Online single windows for trade Since 2012, the ASYCUDA (Automated System for Customs Data) Programme of UNCTAD has partnered with governments and international organizations to design, develop and implement an integrated platform for international trade. It allows all stakeholders to process clearance of trade procedures, including by submitting permit and licence applications online, while also improving information sharing between partner government agencies and traders – aligning with Recommendation 33 of the United Nations Economic Commission for Europe on single windows and trade facilitation. Electronic single windows for trade are one of the most effective measures to enhance trade facilitation in a country, underscored by their inclusion in the WTO Trade Facilitation Agreement. By digitally connecting partner government agencies, an ASYCUDA single window simplifies trade, reduces clearance times and trade costs, ensures transparent and uniform application of duties and taxes, maximizes government revenue, helps combat corruption and ensures compliance with standards for public health and safety. ASYCUDA-based electronic single windows are active or being implemented in 13 countries (Barbados, Burundi, the Comoros, Jamaica, Kazakhstan, Rwanda, Saint Vincent and the Grenadines, Sao Tome and Principe, Timor- Leste, Turkmenistan, Uganda, Vanuatu and Zimbabwe). In 2023 UNCTAD published Roadmap for Building a Trade Single Window, which shares experience, expertise and recommendations in a blueprint for designing and implementing tailored, single windows that comply with national, regional and international requirements. It is being used as a source by the World Customs Organization as it updates its Single Window Compendium. Sources: UNCTAD and UNCTAD (2023b). See also https://asycuda.org/en/# and https://unece.org/sites/default/ files/2023-10/Rec33_ECE-TRADE-352-Rev1E.pdf. World Investment Report 2024 Investment facilitation and digital government 150 F. Conclusions and policy implications Governance and institutional weaknesses have consistently featured in research and investor surveys as key challenges to the attraction of investment in sustainable development. Digital government contributes to good governance and stronger institutions. Online tools for business and investment facilitation have proven to be a good starting point for the broader implementation of digital government. Digital facilitation of business and investment is thus a key step in developing broader digital government services and, indirectly, a key pillar of the promotion of investment in sustainable development. Investment facilitation is top of mind for policymakers worldwide. Investment policy measures of national governments aimed at facilitating the establishment and operations of foreign investors have rapidly increased in number since the launch of the UNCTAD Action Menu in 2016 – they now make up 40 per cent of measures favourable to investors. Recent agreements at the bilateral, regional and international levels more often include provisions on facilitation, and the recently finalized IFD agreement may provide further impetus for action by national policymakers and treaty negotiators. As discussed in this chapter, international agreements can be catalysts not only for investment facilitation but also for digital tools for that purpose. In its support to discussions on international policy instruments, UNCTAD has consistently emphasized the need to focus the implementation of investment facilitation in developing countries on measures with the highest rate of return. While investment facilitation provisions can cover many issues, including dispute prevention, focal points and collaborative initiatives, the most cost-effective and impactful ones revolve around information provision, transparency of rules and regulations, and streamlining of administrative procedures through digital government tools. That is because they are important all the time (not just on an occasional or project basis), they benefit all firms (large and small, foreign and local) and they can cover all necessary processes for business establishment and operation (not just procedures specific to foreign investment). Developing countries can be at an advantage in establishing digital government tools for business and investment facilitation. They have fewer legacy systems to integrate and can adopt the latest solutions. A smaller number of institutions and decision-makers can also support faster implementation. The evidence in this chapter confirms that there is a leapfrogging opportunity; some of the lowest-income countries have created online facilitation platforms that can compete with the best. However, the development of most of these platforms has required technical assistance and support. Importantly, the IFD agreement and other international cooperation agreements on investment aim to accelerate support to developing countries for the implementation of investment facilitation mechanisms. Such Digital investment facilitation measures are valuable all the time, for all firms, in all processes Chapter IV Investment facilitation and digital government 151 support should focus in large part on the development of digital government solutions. Governments should adopt a comprehensive approach to digital investment facilitation, avoiding dedicated processes solely for investment authorization. Investors are not helped by smooth investment approval processes if subsequent procedures to establish their business operations remain inefficient. Governments should progressively incorporate all or most procedures and services required by both foreign and local businesses, such as business registration, tax and social security registration, licensing and other essential services. This approach enables Governments to harness the full potential of digitalization and to capture economies of scale and scope from the implementation of digital platforms. But there is no reason to stop at the core mandatory procedures for business establishment. Countless other administrative procedures affecting business operations may be sector specific or motivated by policy concerns ranging from the environment, to health and safety, to labour and social issues. The digital government tools that are central to effective and efficient implementation of business and investment facilitation initiatives can serve as a foundation for broader digital government adoption, making them a significant step towards modernizing governance and administrative processes. As noted in this chapter, digital investment tools strengthen governance, enhance transparency and lead to more efficient administration. Their application more generally across government can further improve the attractiveness of countries to both foreign and local investors. The return on investment to governments from setting up a digital platform for investment facilitation is maximized when more procedures are covered. Once a digital business registry is established and firms have a verifiable online identity, governments can relatively easily extend online services to licences (sectoral, import-export), permits (construction, environmental), taxes (registration, filing, payment), social security (employer-employee registration, filing and payment), land transactions, health and safety certifications, sector- specific procedures such as pharmaceutical approval processes, and carbon registries. In that way, digital business and investment facilitation becomes a stepping stone to wider digital government. The digital government platform of UNCTAD includes a suite of tools and technical assistance products aimed at supporting developing countries in meeting their investment facilitation commitments. They include information portals, online single windows and regional investment facilitation monitors specifically tailored for business and investment facilitation. Acknowledged by the Donor Committee for Enterprise Development as exemplars of good practice, these tools have garnered widespread attention, being accessed 6.2 million times in 2023. The digital single windows developed by UNCTAD can also be extended to other areas of government. From a technical point of view, their cloud-based approach means there is no need for systems integration: new databases can be designed within the same system and application programming interfaces can connect to existing registries. New online services can be created, with civil servants progressively training their colleagues in other agencies to use the system or accessing training at the Digital Government Academy of UNCTAD and the United Nations Institute for Training and Research. At the request of various Governments, UNCTAD has already started developing digital single windows that go beyond business creation to support business operations, with a specific focus on the Sustainable Development Goals. This effort includes tools to facilitate the licensing of the import, distribution and local production of pharmaceuticals (using Digital business and investment facilitation tools are a stepping stone to wider digital government World Investment Report 2024 Investment facilitation and digital government 152 standards of the World Health Organization), the registration and calculation of carbon emissions to assess nationally determined contributions and to certify carbon credits and debits (following the methodology of the Intergovernmental Panel on Climate Change), tax and social security filings, and the digitalization of extended producer responsibility. This focus on processes relevant for the Sustainable Development Goals shows how digital business and investment facilitation can be deployed specifically to support sustainable development. Cases discussed in this chapter provide ample evidence of the impact of digital business and investment facilitation on sustainable development and inclusiveness, in particular through rates of participation in the economy of women, youth and rural communities. Even in countries with a significant digital divide, solutions have been found to ensure that population groups with limited access to the Internet or lacking digital skills have reaped the benefits of digitalization, e.g. through terminals in business registries and municipalities and through dedicated support. Building on digital business facilitation towards wider implementation of digital government will have an even bigger impact on sustainable development and on investment in the Sustainable Development Goals. There is strong evidence that good governance, transparent rules and regulations, and efficient administrative procedures have a positive impact on FDI. Surveys of investors and IPAs consistently show that governance and institutional weaknesses are at the heart of challenges in attracting investment for sustainable development. By supporting the development of wider digital government applications, technical assistance for business and investment facilitation, including capacity-building initiatives based on international investment policy instruments, has the potential to tackle some of the root causes of the gap in investment for the Sustainable Development Goals. UNCTAD has acted as a catalyst for progress on investment facilitation at the national and international levels. It has actively supported individual countries, regional groups and the international community through policy advice, policy guidance and knowledge resources. An important focus of the organization is now on implementation – through technical assistance to Member States on digital investment facilitation. The digital tools for business and investment facilitation included in the UNCTAD digital government platform are operational in more than 60 countries (and the same tools are used for trade information portals). Looking ahead, UNCTAD will continue to support developing countries and – in collaboration with other international organizations – look for opportunities to maximize the development benefits of digital government solutions by widening their scope of application. * * * Digital business and investment facilitation can support inclusive and sustainable development World Investment Report 2024 153 References Alfaro L, Kalemli-Ozcan S and Volosovych V (2008). Why doesn’t capital flow from rich to poor countries? An empirical investigation. The Review of Economics and Statistics. 90(2):347–368. Anderson J and Gonzalez A (2013). Does Doing Business matter for foreign direct investment? Doing Business Case Study 47/80647. World Bank. ASEAN Secretariat and UNCTAD (2022). 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Restricted document (INF/IFD/RD/137). 156 FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Worlda 1 376 139 1 729 239 984 578 1 621 808 1 355 749 1 331 813 1 010 629 1 444 809 779 507 1 881 922 1 574 724 1 550 584 Developed economies 674 750 1 024 750 337 595 731 843 426 198 464 397 633 813 1 045 960 396 035 1 376 095 1 023 157 1 059 323 Europe 320 294 660 687 158 933 178 748 -105 878 16 493 535 714 648 344 -17 470 705 714 216 770 327 855 European Union 305 556 627 336 154 889 266 502 -84 831 58 645 340 138 644 799 102 670 619 677 169 790 182 746 Austria 5 390 4 905 -9 983 17 092 9 326 4 466 5 612 12 486 7 284 25 243 7 523 9 594 Belgium 27 137 11 861 3 133 9 905 11 551 23 019 43 581 6 111 5 420 30 095 20 311 12 072 Bulgaria 1 143 1 835 3 397 1 794 2 771 3 913 249 449 246 318 561 598 Croatia 1 199 402 146 4 486 3 590 2 749 206 -118 35 926 -254 1 178 Cyprus -413 52 330 -24 451 7 388 5 732 3 447 -6 941 51 415 -32 965 3 278 -905 -1 833 Czechia 11 010 10 108 9 411 9 051 9 248 7 785 8 663 4 128 2 990 7 734 5 675 7 052 Denmark -2 497 27 029 1 372 7 095 7 750 8 760 -3 971 36 425 9 660 26 138 5 868 15 129 Estonia 1 426 3 053 3 541 105 1 009 4 577 -46 1 868 292 -770 842 1 506 Finland -2 172 13 456 -1 579 13 290 5 795 -1 676b 11 455 4 865 5 856 9 156 13 275 1 372b France 34 671 20 426 13 174 34 109 75 979 42 032 95 621 51 459 23 676 55 087 52 776 72 356 Germany 72 022 52 684 69 954 51 218 27 411 36 698 97 117 151 078 38 700 147 604 145 528 101 254 Greece 3 973 5 019 3 213 6 328 8 451 5 430 477 642 549 1 109 3 198 3 952 Hungary 6 460 4 143 6 842 8 041 9 320 6 016 3 364 3 155 4 436 4 141 4 123 3 299 Ireland -12 017 149 433 102 519 -3 933 -25 058 -9 165 5 154 32 083 -11 400 56 146 9 395 -6 595 Italy 37 682 22 720 -18 576 -2 952 32 177 18 219 31 542 24 362 2 929 26 415 16 543 13 014 Latvia 960 926 1 004 3 303 1 404 1 212 207 -104 255 2 324 115 582 Lithuania 972 1 441 416 2 860 2 214 1 868 699 382 -46 1 323 367 758 Luxembourg -83 336 163 718 9 839 25 123 -359 331 -62 808 21 857 176 767 148 012 52 174 -294 199 -23 679 Malta 4 024 3 778 3 921 28 662 19 916 20 900c 7 401 6 960 7 235 24 676 24 625 20 860c Netherlands 102 134 15 940 -81 651 -70 238 -80 438 -168 450 -44 152 31 023 -173 903 92 375 38 227 -142 185 Poland 15 996 13 510 15 195 29 235 31 470 28 685 891 1 854 851 3 168 6 325 10 403 Portugal 7 181 12 251 7 683 9 615 9 778 7 220 1 375 4 010 2 526 1 468 2 686 3 556 Romania 6 219 5 791 3 432 10 574 10 572 7 130 379 363 53 141 1 297 40 Slovakia 1 675 2 511 -2 404 1 821 2 902 180 322 43 348 297 433 89 Slovenia 1 384 1 463 220 1 846 2 039 1 103 281 610 519 1 356 683 540 Spain 58 063 17 842 14 239 38 318 44 885 35 914 37 944 26 196 33 539 17 260 42 900 30 335 Sweden 5 269 8 761 20 880 22 364 44 706 29 418 20 852 16 286 25 576 30 494 61 873 47 498 Other Europe 14 738 33 352 4 044 -87 754 -21 047 -42 152 195 576 3 545 -120 141 86 037 46 980 145 109 Albania 1 290 1 288 1 108 1 234 1 434 1 630 83 128 88 63 181 265 Belarus 1 421 1 293 1 398 1 238 1 603 2 060 50 16 88 -71 173 23 Bosnia and Herzegovina 581 458 480 683 775 946 2 35 73 46 50 48 Iceland -381 -225 -928 518 859 977 76 479 -427 3 -118 -181 Republic of Moldova 313 523 150 404 591 428 38 43 -2 33 50 12 Montenegro 490 416 532 699 877 526 109 75 -5 11 53 63 North Macedonia 725 446 230 556 785 667 12 40 53 98 96 101 Norway 1 044 17 023 -7 990 3 825 9 644 7 960 11 181 14 436 9 930 12 842 13 085 8 153 Russian Federation 13 228 32 076 10 410 38 639 -15 205 8 364 35 820 22 024 6 778 64 072 11 510 29 110 Serbia 4 091 4 270 3 469 4 590 4 598 4 870 363 294 112 264 41 308 Switzerland -100 954 -84 436 -49 570 -76 785 -43 248 13 507 64 955 -46 659 -41 041 -76 161 -74 020 104 954 Ukraine 4 732 6 017 -36 7 320 557 4 247 -127 842 22 -198 344 42 United Kingdom 87 837 53 918 44 397 -71 174 14 912 -89 247 82 961 11 717 -95 877 84 918 95 352 2 007 North America 240 896 280 474 118 890 449 818 378 527 361 271 -99 358 112 548 268 132 383 404 449 398 493 899 Canada 37 662 50 544 25 594 60 382 46 175 50 324 58 049 77 492 43 667 104 878 83 012 89 583 United States 203 234 229 930 93 296 389 436 332 352 310 947 -157 407 35 056 224 465 278 526 366 386 404 316 Other developed economies 113 561 83 589 59 773 103 277 153 549 86 632 197 456 285 068 145 374 286 977 356 989 237 568 Australia 67 569 38 536 14 162 23 855 63 366 29 874 7 825 8 719 5 607 3 100 118 050 9 822 Israel 21 515 17 363 20 969 18 950 23 031 16 422 6 087 8 690 4 579 10 369 10 246 9 970 Japan 9 963 13 755 11 768 34 294 34 194 21 433 144 982 232 627 99 708 208 985 162 126 184 022 Republic of Korea 12 183 9 634 8 765 22 060 25 045 15 178 38 220 35 239 34 832 66 001 65 799 34 541 New Zealand 2 236 4 296 3 997 4 117 7 903 3 568 377 -169 658 -1 451 746 -808 Bermuda 95 5 112 2 10 156c -35 -38 -11 -27 21 21c Developing economiesa 701 389 704 489 646 983 889 965 929 551 867 417 376 816 398 849 383 471 505 827 551 567 491 261 Africa 43 772 46 975 41 048 82 196 54 465 52 633 7 899 5 122 2 465 5 144 9 232 61 North Africa 15 407 13 550 9 797 9 509 15 323 13 461 2 269 1 727 356 994 1 171 1 185 Algeria 1 475 1 382 1 140 870 255 1 216 854 31 15 -52 85 84 Egypt 8 141 9 010 5 852 5 122 11 400 9 841 324 405 327 367 342 390 Libya .. .. .. .. .. .. 276 377 -487 -55c 50c -164c Morocco 3 559 1 720 1 419 2 266 2 260 1 095 782 893 458 644 641 836 South Sudan 60 -232 18c 68c 122c -6c .. .. .. .. .. .. Sudan 1 136 825 717 523 574 548c .. .. .. .. .. .. Tunisia 1 036 845 652 660 714 768 34 22 43 35 53 40 Annex table 1 FDI flows, by region and economy, 2018–2023 (Millions of dollars) 157 Annex table 1 FDI flows, by region and economy, 2018–2023 (Continued) FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Other Africa 28 366 33 425 31 251 72 687 39 142 39 171 5 629 3 395 2 109 4 150 8 061 -1 124 West Africa 8 126 11 976 10 023 13 626 13 065 12 962 1 105 1 269 2 116 2 469 3 249 755 Benin 194 218 174 346 376 434 10 27 22 43 47 49 Burkina Faso 268 163 -102 -80 670 85 68 16 -7 -43 24 5 Cabo Verde 103 123 68 91 93 118 -9 -16 -4 1 -3 -7 Côte d’Ivoire 620 936 713 1 377 1 599 1 753 145 120 1 285 168 215 Gambia 52 71 190 249 236 208 0.5 -2 -3 -3 2 -1c Ghana 2 989 3 880 1 876 2 613 1 511 1 354 81 588 542 199 38 56 Guinea 353 43 174 201 650 893c -0.3 1 2 -3 0.1c 0.1c Guinea-Bissau 21 72 21 19 33 24 -0.4 0.4 0.3 1 1 0.3 Liberia 129 87 738 536 960 745c 84c 102c 80c 91c 91c 87c Mali 467 721 537 640 716 698 0.3 1 1 56 44 23 Mauritania 773 887 931 1 064 1 419 873c .. .. 6c 5c 3c 0.1c Niger 466 717 361 595 966 966 39 32 15 39 9 40 Nigeria 775 2 305 2 385 3 313 895 1 873 566 285 1 473 1 818 2 811 256 Senegal 848 1 065 1 846 2 588 2 929 2 641 53 71 99 52 70 91 Sierra Leone 250 342 173 212 186 263c .. .. .. .. .. .. Togo -183 346 -59 -136 -173 34 70 43 -112 -71 -54 -60 Central Africa 8 822 9 254 8 917 6 607 7 083 5 875 79 422 279 498 490 151 Burundi 7 30 21 22 25 29c .. 1 1 1 2 2c Cameroon 765 1 025 675 964 926 799c 108 126 84 55 27 -109c Central African Republic 18c 26c 2c 5c 24c 39c .. .. .. .. .. .. Chad 461c 567c 558c 705c 614c 913c .. .. .. .. .. .. Congo 4 315c 3 366c 4 016c 532c 532c 626b 14c 23c 27c 25c 25c 26c Democratic Republic of the Congo 1 617 1 488 1 647 1 870 1 846 1 635c 209 134 149 192 436 235c Equatorial Guinea -144 821 -9 562 1 388 142c .. .. .. .. .. .. Gabon 1 379c 1 553c 1 717c 1 529c 1 105c 1 151c -63c -34c .. .. .. .. Rwanda 382 354 260 399 496 523 18 5 .. .. .. .. Sao Tome and Principe 23 24 32 19 127 18 2 1 1 -0.04 0.2 -4 East Africa 7 918 7 681 7 439 10 082 11 543 11 226 248 174 1 508 2 082 1 709 721 Comoros 6 4 4 4 4 5c .. .. .. .. .. .. Djibouti 170 175 158 168 191 137 .. .. .. .. .. .. Eritrea 61c -61c -30c -31c -32c 2c .. .. .. .. .. .. Ethiopia 3 360 2 549 2 381 4 260 3 670 3 263 .. .. .. .. .. .. Kenya 1 139 1 098 1 510 1 406 1 597 1 504c 11 11 1 297 1 840 1 502 588c Madagascar 353 474 358 358 468 415c 118 102 119 114 142 119c Mauritius 461 444 225 253 580 760 98 58 16 86 37 16 Seychelles -66 30 165 225 212 238 20 4 75 42 28 -2 Somalia 408 447 534 601 636 677 .. .. .. .. .. .. Uganda 1 055 1 303 1 191 1 648 2 953 2 886 0.3 0.3 0.3 0.3 0.4 0.4 United Republic of Tanzania 972 1 217 944 1 190 1 265 1 339c .. .. .. .. .. .. Southern Africa 3 499 4 514 4 871 42 373 7 450 9 109 4 196 1 529 -1 793 -899 2 614 -2 751 Angola -6 456 -4 098 -1 866 -4 355 -6 599 -2 086 6 -2 349 91 -1 057 41 33 Botswana 286 94 32 -319 708 198c 82 -20 -68 -33 10 -38c Eswatini 36 130 36 117 15 29 -11 22 -13 60 -17 -22 Lesotho 41 35 28 -12 -8 -26 .. .. .. .. .. .. Malawi 77 55 252 129 243 208c -102 23 -154 28 37 32c Mozambique 2 703 2 212 3 035 5 102 2 458 2 509 -25 -31 153 194 564 174 Namibia 209 -179 -146 851 1 072 2 345 98 9 52 18 12 -310 South Africa 5 450b 5 125b 3 062b 40 215b 9 231b 5 233b 4 076b 3 147b -1 951b 139b 2 162b -2 811b Zambia 408 860 245 394 -65 108 45 696 64 -280 -253 160 Zimbabwe 745 280 194 250 395 588 27 32 33 32 58 31 Asia 501 858 497 788 513 069 666 542 677 829 621 144 359 770 346 416 382 427 457 597 470 637 440 419 East and South-East Asia 400 933 397 183 404 822 542 477 538 249 512 531 300 620 292 723 335 063 380 875 369 413 367 047 East Asia 254 455 232 335 285 512 334 030 315 115 286 214 243 603 203 040 267 099 289 912 286 073 278 533 China 138 306 141 225 149 342 180 957 189 132 163 253 143 037 136 908 153 710 178 819 163 120 147 850 Democratic People’s Republic of Korea 2c 30c 6c 18c 10c 13c .. .. .. .. .. .. Mongolia 2 174 2 443 1 719 2 173 2 504 2 248 37 127 26 113 76 76 Hong Kong, China 104 246 73 714 134 710 140 186 109 685 112 676 82 201 53 202 100 715 96 428 106 226 104 286 Macao, China 2 613 6 683 -6 319 5 280 3 625 2 324c 270 1 041 1 148 3 211 1 062 1 607c Taiwan Province of China 7 114b 8 240b 6 053b 5 416b 10 158b 5 700b 18 058b 11 763b 11 500b 11 341b 15 589b 24 714b South-East Asia 146 479 164 848 119 310 208 447 223 134 226 317 57 017 89 683 67 964 90 962 83 339 88 514 Brunei Darussalam 517 375 577 205 -292 -51 .. .. .. .. .. .. 158 Annex table 1 FDI flows, by region and economy, 2018–2023 (Continued) FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Cambodia 3 213 3 663 3 625 3 483 3 579 3 959 124 102 127 92 151 151 Indonesia 20 563 23 883 18 591 21 131 25 390 21 628 8 053 3 352 4 448 3 845 7 323 7 070 Lao People’s Democratic Republic 1 358 756 968 1 072 636 1 668c .. .. .. .. 0.01 .. Malaysia 7 618 7 813 3 160 12 173 16 940 8 653 5 114 6 231 2 419 4 676 13 322 7 643 Myanmar 2 892 2 509 1 907 2 067 1 239 1 520 .. .. .. .. .. .. Philippines 9 949b 8 671b 6 822b 11 983b 5 939d 6 210d 4 116b 3 351b 3 562b 2 251b 308d 1 251d Singapore 73 115 97 533 74 857 126 674 141 118 159 670 23 926b 67 776b 39 793b 61 368b 52 230b 62 997b Thailand 11 705 3 765 -6 284 14 417 11 082 4 548 15 085 8 410 17 260 18 398 7 365 10 369 Timor-Leste 48 -239 -713 -419 -395 13 .. -3c -26c -26c -34c -17c Viet Nam 15 500 16 120 15 800b 15 660b 17 900b 18 500b 598 465 380b 358b 2 674b -950b South Asia 52 262 59 090 71 050 52 683 57 519 35 974 11 630 13 275 11 206 17 716 15 942 13 524 Afghanistan 119b 23b 13b 21b .. .. 39b 26b 37b 31b .. .. Bangladesh 3 613 2 874 2 564 2 896 3 480 3 004 23 28 12 92 53 30 Bhutan 6 3 1 1 15 18 .. .. .. .. .. .. India 42 156 50 558 64 072 44 763 49 380 28 163 11 447 13 144 11 109 17 253 14 618 13 341 Iran (Islamic Republic of) 2 373 1 508 1 342 1 425 1 500c 1 422c 75 85c 78c 82c 100c 87c Maldives 576b 961b 441b 643b 732b 762b .. .. .. .. .. .. Nepal 67 185 126 196 65 74 .. .. .. .. .. .. Pakistan 1 737 2 234 2 057 2 147 1 462 1 818 -21 -85 -45 242 1 157 32 Sri Lanka 1 614b 743b 434b 592b 884b 712b 68b 77b 15b 17b 15b 34b West Asia 42 030 33 293 30 659 64 156 71 857 65 220 48 431 42 944 38 280 57 503 87 255 58 883 Armenia 267 100 59 366 998 443 7 -133 -27 25 50 54 Azerbaijan 1 403 1 504 507 -1 708 -4 474 253 1 761 2 432 825 77 172 1 875 Bahrain 1 654 1 548 1 021 1 779 2 760 6 840 111 -197 -205 64 1 948 1 113 Georgia 1 352 1 354 595 1 253 2 098 1 595 340 282 23 322 332 53 Iraq -4 885 -3 508 -2 859 -2 637 -2 088 -5 273c 188 194 147 135 238 279c Jordan 955 730 760 622 1 251 843 -8 43 26 16 -16 64 Kuwait 204 351 240 567 758 2 113 3 715 -2 696 7 932 4 666 24 613 11 189 Lebanon 2 658 1 905 1 607 600 527 655 631 345 29 -1 339 66 73 Oman 5 602 1 938 1 914 8 793 5 480 4 745c 130 -588 -840 1 178 944 165c Qatar -2 186 -2 813 -2 434 -1 093 76 -474 3 523 4 450 2 730 160 2 384 -191 Saudi Arabia 12 141b 3 079b 1 621b 23 112b 28 055b 12 319b 19 252 14 553 5 411 24 674 26 962 16 071 Syrian Arab Republic .. .. .. .. .. .. .. .. .. .. .. .. Türkiye 12 511 9 469 7 663 11 481 13 447 10 439 3 666 2 973 3 233 5 037 4 716 5 774 United Arab Emirates 10 385 17 875 19 884 20 667 22 737 30 688 15 079 21 226 18 937 22 546 24 833 22 328 Yemen -282c -371c .. .. .. .. 4c 3c .. .. .. .. State of Palestine 252 132 80 353 233 35c 31 56 59 -58 13 36c Central Asia 6 633 8 223 6 539 7 226 10 205 7 420 -911 -2 526 -2 122 1 504 -1 974 966 Kazakhstan 3 898 3 284 3 670 3 353 6 541 3 223 -1 095 -2 620 -2 206 1 452 -1 535 913 Kyrgyzstan 144 404 -402 226 55 490 100 67 2 2 -455 2 Tajikistan 360b 364b 107b 84b 174b 141b 82b 23b 70b 48b 12b 40b Turkmenistan 1 607c 1 854c 1 436c 1 287c 936c 1 378c .. .. .. .. .. .. Uzbekistan 625b 2 316b 1 728b 2 275b 2 498b 2 187b 2b 3b 11b 3b 4b 12b Latin America and the Caribbeana 154 458 158 201 91 844 139 948 195 859 193 179 9 584 48 449 -504 41 313 69 131 50 077 South America 106 680 110 224 55 592 94 677 145 965 142 769 232 36 372 -2 703 41 362 52 109 40 789 Argentina 11 717 6 649 4 884 6 903 15 408 22 911 1 726 1 523 1 177 1 537 2 076 2 403 Bolivia (Plurinational State of) 302 -217 -1 129 584 6 294 -84 48 -111 91 -81 257 Brazil 59 824 65 386 28 322 50 651 73 352 65 897 -16 336 19 031 -13 415 20 450 32 100 29 920 Chile 13 031 14 403 11 292 12 627 16 882 21 027 6 934 11 169 6 242 12 024 11 852 5 567 Colombia 11 299b 13 989b 7 459b 9 561b 17 183b 17 446b 5 126b 3 153b 1 733b 3 181b 3 383b 1 211b Ecuador 1 389 979 1 095 648 879 372 .. .. .. .. .. .. Guyana 1 231 1 695 2 086 4 468 4 393 7 198 .. 17 14 15 5 7 Paraguay 175 334 149 185 725 241 .. .. .. .. .. .. Peru 6 761 6 362 -825 6 272 12 026 3 331 98 1 087 392 1 098 237 889 Suriname 119 -8 0.3 -124 3 -65 .. .. .. .. .. .. Uruguay -11 2 018 756 1 937 3 456 3 429 718 627 -263 430 500 -812 Venezuela (Bolivarian Republic of) 844 -1 367 1 504 964 1 651 688c 2 051 -159 1 488 2 319 2 089 1 434c Central America 45 062 44 032 32 346 42 638 46 350 46 662 9 065 11 709 2 193 -1 025 15 626 7 926 Belize 118 94 76 125 141 50 1 2 4 2 1 2 Costa Rica 2 487 2 812 1 763 3 231 3 164 3 921 53 117 118 85 104 88 El Salvador 826 636 24 386 171 760 -0.04 0.4 22 12 29 29 Guatemala 981 976 935 3 462 1 442 1 552 201 180 149 476 723 665 Honduras 961 498 419 739 920 1 076 66 3 46 226 183 208 159 Annex table 1 FDI flows, by region and economy, 2018–2023 (Concluded) FDI inflows FDI outflows Region/economy 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Mexico 34 101 34 617 28 211 31 829 36 312 36 058 8 489 10 755 1 720 -2 125 14 532 6 429 Nicaragua 838 503 747 1 220 1 294 1 230 75 59 40 15 19 31 Panama 4 751 3 895 172 1 646 2 906 2 015 180 592 94 285 34 474 Caribbeana 2 715 3 945 3 906 2 634 3 544 3 748 287 368 6 977 1 397 1 363 Antigua and Barbuda 193b 118b 62b 296b 326b 327b -2b -15b 1b -36b 14b 15b Barbados 242 215 262 239c 200c 225 9 28 8 18c 15c 8c Dominica 97b 76b 5b 28b 12b 14b 0.1b 0.1b -0.4b 2b -1b -1b Dominican Republic 2 535 3 021 2 560 3 197 4 099 4 390 209 -192 -99 153 -49 360 Grenada 226b 263b 160b 189b 172b 181b 36b 49b -45b -19b 19b 21b Haiti 105 75 25 51 39 32c .. .. .. .. .. .. Jamaica 775 665 265 321 319 431c 13 446 7 56 60 -6c Saint Kitts and Nevis 46b 44b -0.5b 25b 47b 36b 56b 23b 8b -3b -3b -3b Saint Lucia 58b 94b 97b 141b 78b 186b -19b 64b -35b -34b -29b 3b Saint Vincent and the Grenadines 28b 58b 57b 169b 68b 79b 15b 10b 3b -1b -3b -3b Trinidad and Tobago -700 184 1 056 -935 -913 -1 105c 65 114 98 768 1 385 1 008c Anguilla 216b 163b 69b 87b 102b 147b 43b 14b 2b -74b 3b 5b Aruba 110 -136 137 143 261 -178c 5 -1 1 4 97 91c Bahamas (the) 947 611 897 1 052 1 255 1 459 117 148 157 66 226 419 British Virgin Islands 34 390c 39 103c 39 620c 39 361c 38 119c 39 889c 41 587c 44 154c 42 280c 43 217c 42 809c 44 158c Cayman Islands 20 681c 28 165c 23 621c 25 893c 24 590c 28 134c 8 261c 31 630c 10 835c 21 232c 17 990c 20 422c Curaçao .. 203 156 146 164 155c .. -11 7 3 11 10c Montserrat 3b 1b 3b 2b 5b 7b .. .. .. .. .. .. Sint Maarten -48 74 22 27 17 37c 4 1 1 6 2 2c Oceania 1 301 1 525 1 021 1 279 1 398 461 -437 -1 138 -917 1 772 2 568 703 Cook Islands (the) 12b 9b 5b -2b 4b 6c 0.3b 0.3b 0.3b 0.3b 0.3b 0.3c Fiji 471 321 241 407 104 91 -4 -36 14 32 16 29 Kiribati -1 -1 3 1 3 2c 0.1 0.1 0.1 0.1 0.1 0.1c Marshall Islands (the) 10 4 3 0.5 3 2 .. .. .. .. .. .. Palau 51 45 43 31 72 48c .. .. .. .. .. .. Papua New Guinea 306b 335b 112b -11b 458b -425c -578b -1 211b -990b 1 691b 2 484b 596c Samoa 17 -4 4 9 5 -3 0.04 4 2 1 -0.1 .. Solomon Islands 25 33 9 28 44 25c 9 4 3 5 2 8c Tonga 23 -6 4 4 7 24c 1 1 1 -0.1 0.4 0.3c Tuvalu 0.3c 0.3c 0.1c 0.2c 0.2c 0.2c .. .. .. .. .. .. Vanuatu 37 53 41 43 11 9c 1 1 1 0.2 1 4c French Polynesia 6 13 -16 -26 -9c -6c 38 21 -3 13 6c 15c New Caledonia 345 723 572 794 696c 687c 96 76 55 30 57c 51c Memorandum Least developed countries (LDCs)e 21 656 22 494 23 996 28 694 26 668 31 299 793 -966 681 -393 1 377 1 160 Landlocked developing countries (LLDCs)f 21 681 21 975 15 344 19 899 23 599 24 255 1 062 742 -1 408 2 049 -1 750 3 488 Small island developing States (SIDS)g 6 228 7 143 5 990 6 061 7 263 8 337 619 696 186 1 111 1 684 1 849 Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). a Excluding the financial centres in the Caribbean and special-purpose entities in reported countries. b Asset/liability basis. c Estimates. d Directional basis calculated from asset/liability basis. e Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Yemen and Zambia. f Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, the Plurinational State of Bolivia, Botswana, Burkina Faso, Burundi, the Central African Republic, Chad, Eswatini, Ethiopia, Kazakhstan, Kyrgyzstan, the Lao People’s Democratic Republic, Lesotho, Malawi, Mali, Mongolia, Nepal, the Niger, North Macedonia, Paraguay, the Republic of Moldova, Rwanda, South Sudan, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and Zimbabwe. g Small island developing States include Antigua and Barbuda, Barbados, the Bahamas, Cabo Verde, the Comoros, Dominica, the Dominican Republic, Fiji, Grenada, Jamaica, Kiribati, Maldives, the Marshall Islands, Mauritius, the Federated States of Micronesia, Nauru, Palau, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Sao Tome and Príncipe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and Vanuatu. 160 Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Millions of dollars) FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Worlda 7 377 201 19 842 937 44 375 102 49 130 846 7 408 709 20 440 527 40 569 644 44 380 560 Developed economies 5 860 038 13 778 925 29 591 913 33 434 653 6 740 421 17 537 053 31 177 995 34 404 485 Europe 2 491 244 8 371 974 16 110 676 17 266 928 3 193 644 10 218 616 17 537 359 18 572 060 European Union 1 882 785 5 902 599 11 672 194 12 453 733 1 967 112 6 952 372 13 530 528 14 499 617 Austria 31 165 160 615 206 490 226 276 24 821 181 638 253 986 273 210 Belgium .. 473 358 531 007 577 961 .. 431 613 685 498 770 505 Bulgaria 2 704 44 970 57 475 61 945 67 2 583 3 590 4 317 Croatia 2 785 32 925 38 365 42 909 952 4 969 8 045 8 143 Cyprus 2 846 260 132 63 537 90 804 557 242 556 28 078 48 338 Czechia 21 644 128 504 206 338 216 595 738 14 923 60 806 69 222 Denmark 73 574 96 136 116 291 125 051c 73 100 163 133 221 838 236 967c Estonia 2 645 15 551 34 289 40 490 259 5 545 12 289 14 204 Finland 24 273 86 698 82 980 149 649b 52 109 137 663 139 076 210 121b France 184 215 630 710 947 200 1 012 705 365 871 1 172 994 1 544 549 1 635 680 Germany 470 938 955 881 1 091 561 1 128 259c 483 946 1 364 565 2 077 987 2 179 240c Greece 14 113 35 026 50 578 61 593 6 094 42 623 16 698 21 324 Hungary 22 870 91 015 107 551 118 983 1 280 23 612 40 043 46 097 Ireland 127 089 285 575 1 369 156 1 410 084 27 925 340 114 1 200 117 1 336 414 Italy 122 533 328 058 458 915 493 530 169 957 491 208 558 626 584 031 Latvia 1 691 10 869 24 067 26 595 19 931 5 730 6 304 Lithuania 2 334 15 455 27 686 31 564 29 2 647 6 757 9 736 Luxembourg .. 172 257 1 155 656 1 183 734 .. 187 027 1 594 807 1 679 068 Malta 2 263 129 770 491 467 725 715 193 60 596 477 251 695 859 Netherlands 243 733 588 077 2 775 591 2 678 218 305 461 968 105 3 395 399 3 386 269 Poland 33 477 187 602 268 019 335 540 268 16 407 29 658 38 212 Portugal 34 224 90 900 177 165 195 340 19 417 52 497 62 900 69 041 Romania 6 953 68 699 115 133 125 555 136 2 327 4 718 4 902 Slovakia 6 970 50 328 57 372 60 532 555 3 457 5 428 5 062 Slovenia 2 389 10 667 21 545 23 702 772 8 147 9 161 9 983 Spain 156 348 628 341 812 740 897 268 129 194 653 236 567 881 630 189 Sweden 93 791 324 478 384 021 413 135 123 618 377 258 519 611 527 177 Other Europe 608 459 2 469 375 4 438 482 4 813 195 1 226 532 3 266 244 4 006 832 4 072 444 Albania 247 3 255 11 104 13 985 .. 154 995 1 389 Belarus 1 306 9 904 15 440 15 822 24 205 1 496 1 470 Bosnia and Herzegovina 450 6 709 9 515 10 667 .. 211 736 814 Iceland 497 11 784 9 070 9 384 663 11 466 4 797 5 023 Republic of Moldova 449 2 897 4 933 5 531 23 90 425 448 Montenegro .. 4 231 5 494 6 066 .. .. 190 271 North Macedonia 540 4 351 7 480 8 421 16 100 166 210 Norway 30 265 167 932 148 338 157 160 34 026 179 568 209 589 202 275 Russian Federation 29 738 464 228 359 982 278 812 19 211 336 355 299 131 258 240 Serbia .. 22 299 53 499 60 459 .. 1 960 4 511 4 999 Switzerland 101 635 648 092 1 038 034 1 136 788 232 202 1 043 199 1 316 327 1 472 959 Ukraine 3 875 52 872 50 987 54 261 170 6 548 -867 -885 United Kingdom 439 458 1 068 187 2 718 892 3 048 932 940 197 1 686 260 2 168 530 2 124 191 North America 3 108 255 4 406 182 11 879 938 14 482 837 3 136 637 5 808 053 10 270 591 12 180 818 Canada 325 020 983 889 1 495 991 1 665 774 442 623 998 466 2 287 758 2 746 892 United States 2 783 235 3 422 293 10 383 947 12 817 063 2 694 014 4 809 587 7 982 833 9 433 926 Other developed economies 260 539 1 000 769 1 601 299 1 684 888 410 140 1 510 383 3 370 045 3 651 606 Australia 121 686 527 728 776 764 807 427 92 508 449 740 655 344 710 639 Israel 20 426 60 086 229 880 244 472 9 091 67 893 99 842 108 680 Japan 50 323 214 880 225 367 246 801c 278 445 831 076 1 948 555 2 132 578c Korea, Republic of 43 738 135 500 272 328 284 146 21 497 144 032 647 568 682 023 New Zealand 24 101 59 738 94 319 99 128 8 491 16 717 18 608 17 536 Bermuda 265c 2 837 2 642c 2 915c 108c 925 129c 151c Developing economiesa 1 517 163 6 064 012 14 783 189 15 696 192 668 288 2 903 474 9 391 648 9 976 074 Africa 153 062 620 046 1 045 624 1 036 252 39 815 137 363 296 153 248 821 North Africa 45 590 201 109 336 039 354 974 3 199 25 770 40 219 42 324 Algeria 3 379c 19 545 35 643 36 860 205c 1 505 2 810 2 894 Egypt 19 955 73 095 148 888 158 689 655 5 448 9 190 9 580 Libya 471c 16 334 18 462c 18 462c 1 903c 16 615 20 450c 20 286c Morocco 8 842c 45 082 63 278 69 297 402c 1 914 7 066 8 076 Sudan 1 398 15 690 30 301c 30 849c .. .. .. .. Tunisia 11 545 31 364 39 467 40 817c 33 287 703 1 488c Other Africa 107 472 418 937 709 585 681 279 36 616 111 594 255 934 206 496 West Africa 33 010 106 590 210 529 210 814 6 381 18 090 31 165 31 268 161 Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Continued) FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Benin 213 604 3 154 3 711 11 21 376 440 Burkina Faso 28 354 2 998 3 193 0.4 8 377 396 Cabo Verde 192c 1 367 2 346 2 572 .. 2 94 106 Côte d’Ivoire 2 483 6 978 13 691 15 974 9 94 1 404 1 674 Gambia 216 323 1 176c 1 384c .. .. .. .. Ghana 1 554c 10 080 46 006 47 360 .. 83 1 830 1 886c Guinea 263c 486 5 252c 6 145c 12c 144 97c 97c Guinea-Bissau 38 63 326 362 .. 5 11 12 Liberia 3 247c 10 206 10 889c 11 633c 2 188 4 714 5 010c 5 097c Mali 132 1 964 6 742 7 697 1 18 317 352 Mauritania 146c 2 372c 5 825c 6 702c 4c 28c 3c 3c Niger 45 2 251 8 628 9 926 1 9 391 446 Nigeria 23 786 66 797 86 239 73 375 4 144 12 576 18 297 17 663 Senegal 295 1 699 13 184 16 358 22 263 991 1 120 Sierra Leone 284c 482 2 688c 2 951c .. .. .. .. Togo 87 565 1 385 1 469 -10 126 1 966 1 975 Central Africa 5 053 39 227 120 236 126 047 1 651 2 217 4 733 4 884 Burundi 47c 13 255c 283c 2c 2 8c 9c Cameroon 917c 3 099c 6 484 7 283c 1 252c 971c 734 625c Central African Republic 104 511 715c 754c 43 .. .. .. Chad 576c 3 594c 8 372c 9 285c .. .. .. .. Congo 1 893c 9 261c 34 026c 34 653c 40c 34c 157c 183c Democratic Republic of the Congo 617 9 368 30 995 32 629c 34 229 3 677 3 913c Equatorial Guinea 1 060c 9 413c 19 069c 19 211c .. .. .. .. Gabon -227c 3 287c 16 591c 17 742c 280c 946c 79c 79c Rwanda 55 422 3 237 3 697 .. 13 74 74 Sao Tome and Principe 11c 260c 493 511c .. 21c 5c 1c East Africa 7 202 37 754 99 466 110 318 387 1 474 3 261 3 993 Comoros 21c 60c 145c 150c .. .. .. .. Djibouti 40 .. .. .. .. .. .. .. Eritrea 337c 666c 1 029c 1 031c .. .. .. .. Ethiopia 941c 4 206 35 281 38 544c .. .. .. .. Kenya 932c 4 967 9 692 11 196c 115c 62 2 668 3 256c Madagascar 141 4 383 4 120 4 535c 9c 193 838 957c Mauritius 683 4 658 5 894c 6 418c 132 864 743c 773c Seychelles 515 2 960 3 117 3 354 130 290 -1 162 -1 167 Somalia 4c 566 4 923 5 600 .. .. .. .. Uganda 807 5 575 16 631 19 517 .. 66 174 175 United Republic of Tanzania 2 781 9 712 18 634c 19 973c .. .. .. .. Southern Africa 62 208 235 365 279 354 234 100 28 198 89 813 216 775 166 352 Angola 7 977 32 458 14 262 12 177 -8 1 870 5 259 5 292 Botswana 1 827 3 351 5 194 5 410c 517 1 007 1 039 916c Eswatini 536 927 966 896 87 91 162 133 Lesotho 330 929 958 851 .. .. .. .. Malawi 358 963 1 484 1 692c -5 45 243 276c Mozambique 1 249 4 331 54 597 57 281 1 3 7 7 Namibia 1 276 3 595 7 747 9 136 45 722 1 034 697 South Africa 43 451 179 565b 172 210b 124 025b 27 328 83 249b 207 954b 157 764b Zambia 3 966c 7 433 15 384 15 492c .. 2 531 311 471c Zimbabwe 1 238 1 815 6 553 7 141 234 297 766 796 Asia 1 023 690 3 878 998 11 052 894 11 674 477 575 247 2 348 138 8 269 297 8 793 808 East and South-East Asia 908 302 2 888 852 9 210 207 9 845 585 557 764 2 059 331 7 365 627 7 823 232 East Asia 650 700 1 738 193 5 704 180 5 976 425 473 708 1 455 117 5 239 530 5 503 294 China 193 348c 586 882c 3 496 380 3 659 633c 27 768c 317 211 2 754 810 2 939 100c Democratic People’s Republic of Korea 77c 236c 949c 963c .. .. .. .. Mongolia 182 8 445 28 521 30 697 .. 2 616 907 1 024 Macao, China 2 801c 13 603 45 737 47 955c .. 550 13 278 14 856c Hong Kong, China 435 417 1 067 520 2 008 153 2 107 038 379 285 943 938 1 975 466 2 028 532 Taiwan Province of China 18 875 61 508b 124 440b 130 140c 66 655 190 803b 495 068b 519 782c South-East Asia 257 603 1 150 659 3 506 027 3 869 160 84 056 604 214 2 126 097 2 319 939 Brunei Darussalam 3 868c 4 140 6 798 6 753 .. .. .. .. Cambodia 1 580 9 026 44 537 48 420 193 331 1 321 1 473 Indonesia 25 060 160 735 264 034 285 690c 6 940 6 672 104 886 111 954c Lao People’s Democratic Republic 588c 1 888c 12 736c 14 404c 26c 68c 95c 95c Malaysia 52 747 101 620 199 206 201 736 15 878 96 964 137 655 144 361 Myanmar 3 752c 14 507 38 427 39 948 .. .. .. .. 162 FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Philippines 13 762c 25 896b 109 622d 118 985d 1 032c 6 710b 63 560d 68 272d Singapore 110 570 633 354b 2 326 998b 2 632 364b 56 755 466 723b 1 638 614b 1 792 289b Thailand 30 944 142 334 292 205 290 870 3 232 24 418 165 398 187 893 Timor-Leste .. 155 993 1 018 .. 94 24 7 Viet Nam 14 730c 57 004c 210 471c 228 971c .. 2 234c 14 545c 13 595c South Asia 30 743 269 143 643 371 675 576 2 761 100 441 231 859 245 241 Afghanistan 17c 963 1 613c 1 613c .. 16 165c 165c Bangladesh 2 162 6 072 20 755 20 549 68 98 400 385 Bhutan 4c 204 419c 438c .. .. .. .. India 16 339 205 580 510 703 536 930 1 733 96 901 222 628 235 956 Iran (Islamic Republic of) 2 597c 28 953 61 636c 63 058c 411c 1 713c 4 239c 4 325c Maldives 128c 1 114c 6 718c 7 479c .. .. .. .. Nepal 72c 239 2 187 2 067 .. .. .. .. Pakistan 6 919 19 828 25 292 28 610 489 1 362 2 894 2 850 Sri Lanka 2 505 6 190 14 047 14 831 60 351 1 534 1 560 West Asia 72 352 619 425 982 875 931 257 14 672 172 001 654 509 707 394 Armenia 513 4 405 7 124 7 499 .. 150 571 618 Azerbaijan 1 791 14 253 32 503 32 745 1 5 790 26 981 28 717 Bahrain 5 906 15 154 36 245 43 084 1 752 7 883 20 955 22 068 Georgia 762 8 518 22 329 24 354 118 848 3 249 3 529 Iraq -48 7 965 .. .. .. 632 3 389 3 598c Jordan 3 135 21 899 38 496 39 534 44 473 681 745 Kuwait 608 11 884 15 091 16 648 1 428 28 189 45 818 50 246 Lebanon 14 233 44 285 70 604 71 260 352 6 831 14 729 14 802 Oman 2 577c 14 987 51 324c 56 069c .. 2 796 6 057c 6 222c Qatar 1 912 30 549 27 610 27 136c 74 12 995 50 054 49 862c Saudi Arabia 17 577b 176 378b 268 947b 215 524b 5 285c 26 528 187 068 203 768 Syrian Arab Republic 1 244 9 939c 10 743c 10 743c .. 5 5c 5c Türkiye 18 812 188 308 202 503 156 537 3 668 22 509 54 082 60 041 United Arab Emirates 1 069c 63 869 194 300 224 987 1 938c 55 560 239 880 262 208 Yemen 843c 4 858c 1 942c 1 942c 13c 571c 672c 672c State of Palestine 1 418c 2 176 3 116 3 195c .. 241 318 292c Central Asia 12 293 101 577 216 441 222 059 49 16 365 17 303 17 941 Kazakhstan 10 078 82 648 154 419 157 198 16 16 212 16 792 17 381 Kyrgyzstan 432 1 698 3 506 3 810 33 2 26 27 Tajikistan 136 1 226 3 329 3 333 .. .. 283 323 Turkmenistan 949c 13 442c 41 537c 42 915c .. .. .. .. Uzbekistan 698c 2 564 13 649 14 804 .. 152 202 210 Latin America and the Caribbeana 338 557 1 550 274 2 653 078 2 953 403 53 170 417 359 820 142 928 378 South America 186 425 1 085 464 1 727 712 1 898 677 43 634 288 295 604 267 677 146 Argentina 67 601 85 591 116 698 128 855 21 141 30 328 45 781 48 299 Bolivia (Plurinational State of) 5 188 6 890 9 839 9 633 29 8 854 1 167 Brazil .. 640 330 878 144 997 570 .. 149 333 299 369 365 813 Chile 45 753 160 904 250 062 267 132 11 154 61 126 134 744 137 182 Colombia 11 157 82 991b 234 231b 254 329b 2 989 23 717b 73 295b 73 295b Ecuador 6 337 11 858 22 292 22 664 .. .. .. .. Guyana 756 1 784 17 074 10 279 1 2 78 47 Paraguay 1 003 3 555 7 666 8 906 .. .. .. .. Peru 11 062 42 976 129 221 132 546 505 4 265 10 124 10 885 Suriname .. .. 1 936 1 853 .. .. 202 213 Uruguay 2 088 12 479 34 653 38 326 138 345 6 898 6 091 Venezuela (Bolivarian Republic of) 35 480 36 107 25 897 26 585c 7 676 19 171 30 735 32 169c Central America 139 768 417 113 843 099 968 310 8 534 126 025 208 553 242 658 Belize 294 1 454 2 679 2 812 42 49 76 78 Costa Rica 2 809 15 936 52 474 55 165c 22 1 135 3 758 3 769c El Salvador 1 973 7 284 10 100 10 841 104 1 1 689 1 720 Guatemala 3 420 4 554 22 409 24 080 93 452 2 936 3 618 Honduras 1 392 6 951 18 557 19 633 .. 867 2 877 3 132 Mexico 121 691 355 512 662 718 778 371 8 273 119 967 190 122 222 742 Nicaragua 1 414 4 681 12 500 13 730 .. 181 818 849 Panama 6 775 20 742 61 662 63 676 .. 3 374 6 277 6 751 Caribbeana 12 365 47 697 82 267 86 417 1 002 3 039 7 322 8 574 Antigua and Barbuda .. .. 2 090b 2 390b .. .. 91b 99b Barbados 308 4 970 8 544c 8 769c 41 4 058 3 858c 3 866c Dominica .. .. 517b 537b .. .. 3b 2b Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Continued) 163 Annex table 2 FDI stock, by region and economy, 2000, 2010, 2022 and 2023 (Concluded) Source: UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics). a Excluding the financial centres in the Caribbean and special-purpose entities in reporting countries. b Asset/liability basis. c Estimates. d Directional basis calculated from asset/liability basis. e Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Yemen and Zambia. f Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, the Plurinational State of Bolivia, Botswana, Burkina Faso, Burundi, the Central African Republic, Chad, Eswatini, Ethiopia, Kazakhstan, Kyrgyzstan, the Lao People’s Democratic Republic, Lesotho, Malawi, Mali, Mongolia, Nepal, the Niger, North Macedonia, Paraguay, the Republic of Moldova, Rwanda, South Sudan, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and Zimbabwe. g Small island developing States include Antigua and Barbuda, the Bahamas, Barbados, Cabo Verde, the Comoros, Dominica, the Dominican Republic, Fiji, Grenada, Jamaica, Kiribati, Maldives, the Marshall Islands, Mauritius, the Federated States of Micronesia, Nauru, Palau, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Sao Tome and Príncipe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and Vanuatu. FDI inward stock FDI outward stock Region/economy 2000 2010 2022 2023 2000 2010 2022 2023 Dominican Republic 1 673 18 793 51 982 56 372 .. 743 917 1 277 Grenada .. .. 1 990b 2 153b .. .. 99b 112b Haiti 95 625 2 031 2 063c .. .. .. .. Jamaica 3 317 10 855 18 332 18 763c 709 176 1 136 1 131c Saint Kitts and Nevis .. .. 1 676b 1 709b .. .. 102b 100b Saint Lucia .. .. 1 865b 2 004b .. .. 638b 635b Saint Vincent and the Grenadines .. .. 1 601b 1 683b .. .. 93b 91b Trinidad and Tobago 7 280c 17 424 9 922 9 218c 293c 2 119 5 269 6 167c Anguilla .. .. 1 382b 1 528b .. .. 94b 96b Aruba 1 161 4 567 4 686 4 508c 675 682 760 852c Bahamas (the) 3 865c 13 160 28 512 29 904 547c 2 538 7 572 7 991 British Virgin Islands 30 289c 265 783c 1 028 356c 1 068 246c 69 041c 376 866c 128 306c 172 465c Cayman Islands 27 316c 161 916c 572 927c 601 061c 21 643c 89 316c 362 435c 382 857c Curaçao .. 527 1 081c 1 236c .. 32 1 002c 1 012c Montserrat .. .. 42b 49b .. .. .. .. Sint Maarten .. 256 190c 224c .. 10 107c 111c Oceania 1 854 14 694 31 593 32 060 56 614 6 055 5 067 Cook Islands (the) .. .. 181c 187c .. .. 14c 14c Fiji 356 2 963 5 755 5 855 39 47 125 163 Kiribati .. 5 11 13c .. 2 1 1c Marshall Islands (the) 20 120 170 164 .. .. .. .. Palau 173 232 858 905c .. .. .. .. Papua New Guinea 935 3 748 4 878c 4 454c 1c -5c 4 168c 3 078c Samoa 77 220 318 315 .. 14 51 51 Solomon Islands 106c 552 652 681c .. 27 77 77c Tonga 19c 220c 108c 132c 14c 58c 50c 50c Tuvalu .. 5 9c 9c .. .. .. .. Vanuatu 61c 454 636 647c .. 23 29 28c French Polynesia 146c 442c 1 110c 1 104c .. 144c 354c 368c New Caledonia -41c 5 726c 16 908c 17 595c 2c 304c 1 187c 1 237c Memorandum Least developed countries (LDCs)d 35 969 161 402 429 955 459 109 2 604 11 515 22 890 23 988 Landlocked developing countries (LLDCs)f 33 630 183 972 444 859 468 390 1 025 29 288 53 514 56 413 Small island developing States (SIDS)g 18 806 80 554 155 252 163 726 1 906 11 076 19 815 21 560 World Investment Report 2024 164 WIR past issues WIR 2023: Investing in Sustainable Energy for All WIR 2022: International Tax Reforms and Sustainable Investment WIR 2021: Investing in Sustainable Recovery WIR 2020: International Production Beyond the Pandemic WIR 2019: Special Economic Zones WIR 2018: Investment and New Industrial Policies WIR 2017: Investment and the Digital Economy WIR 2016: Investor Nationality: Policy Challenges WIR 2015: Reforming International Investment Governance WIR 2014: Investing in the SDGs: An Action Plan WIR 2013: Global Value Chains: Investment and Trade for Development WIR 2012: Towards a New Generation of Investment Policies WIR 2011: Non-Equity Modes of International Production and Development WIR 2010: Investing in a Low-Carbon Economy WIR 2009: Transnational Corporations, Agricultural Production and Development WIR 2008: Transnational Corporations and the Infrastructure Challenge WIR 2007: Transnational Corporations, Extractive Industries and Development WIR 2006: FDI from Developing and Transition Economies: Implications for Development WIR 2005: Transnational Corporations and the Internationalization of R&D WIR 2004: The Shift Towards Services WIR 2003: FDI Policies for Development: National and International Perspectives WIR 2002: Transnational Corporations and Export Competitiveness WIR 2001: Promoting Linkages WIR 2000: Cross-border Mergers and Acquisitions and Development WIR 1999: Foreign Direct Investment and the Challenge of Development WIR 1998: Trends and Determinants WIR 1997: Transnational Corporations, Market Structure and Competition Policy WIR 1996: Investment, Trade and International Policy Arrangements WIR 1995: Transnational Corporations and Competitiveness WIR 1994: Transnational Corporations, Employment and the Workplace WIR 1993: Transnational Corporations and Integrated International Production WIR 1992: Transnational Corporations as Engines of Growth WIR 1991: The Triad in Foreign Direct Investment
choice A
The simultaneous rise in interest rates across multiple major economies, leading to capital flight from developing markets while inflating costs for sustainable projects due to increased financing conditions.
choice B
The proliferation of international investment agreements (IIAs) that prioritize investor rights over regulatory sovereignty, potentially leading to a race to the bottom in environmental and social standards among developing nations.
choice C
The integration of digital governance mechanisms that, while enhancing transparency, inadvertently expose developing economies to increased volatility from global financial markets and speculative investments.
choice D
The shift in global supply chains due to heightened geopolitical tensions, resulting in the reallocation of FDI away from developing countries toward more stable and developed economies, thereby diminishing local capacities to meet SDGs.
difficulty
hard
domain
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length
medium
sub domain
Financial
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