Changing face of foreign direct investment

Although US President Donald Trump's protectionist trade policies dominate news headlines, they are far from the only forces shaping global production.

- Jayati Ghosh

New investment patterns have been reshaping the global economic landscape since well before Mr Trump's tariffs.

Nowhere is this more evident than in flows of foreign direct investment. According to the latest World Investment Report from United Nations Trade and Development, FDI inflows to Europe, South America, and much of Asia declined in 2024. By contrast, FDI flows to Africa surged by 75%, to US$97 billion (3.1 trillion baht), while those to Southeast Asia rose by 10%, to $225 billion.

Behind these trends lies a broader restructuring of multinational supply chains, which are steadily shifting towards Southeast Asia, Eastern Europe, and Central America. Consequently, FDI patterns are also changing: while the US, Japan, and China remain the largest outward investors, the Middle East has emerged as a major source of FDI.

Flush with oil revenue, the Gulf Cooperation Council countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — invested roughly $113 billion in Africa in 2022 and 2023, dramatically expanding their economic footprint on the continent. Most of this capital has gone into logistics and infrastructure projects, as well as oil and gas.