Closing the $1.5-trillion gap: How FDI can help achieve the SDGs in Asia and the Pacific

OVER THE PAST two decades, foreign direct investment (FDI) has been the single largest and most stable source of external development capital in Asia and the Pacific (see the figure).

- By Heather Lynne Taylor-Strauss and Eiichiro Takinami

In 2022 alone, FDI flows into the region exceeded $300 billion, outpacing official development aid (ODA), remittances and portfolio investment flows. Even in 2023, when global investment slowed under higher interest rates and geopolitical uncertainty, FDI into the region remained close to $290 billion.

For a region facing a $1.5-trillion annual financing gap to achieve the Sustainable Development Goals (SDGs), this is more than a statistic. It is a reminder that the future of development finance and achievement of the 2030 Agenda for Sustainable Development depends on whether countries can effectively attract and channel FDI. From the Addis Ababa Action Agenda (AAAA) in 2015 to the most recent Sevilla Commitment agreed at the International Conference on Financing for Development (FFD4), the global community is aligned to leveraging FDI for sustainable development. In fact, the Sevilla Commitment elevated the role of FDI. While the AAAA positioned FDI as complementary to public finances for sustainable development, the Sevilla Commitment identified FDI as a key source of development capital, devoting an entire subsection to scaling up FDI.