Global foreign direct investment is expanding again. But these are no longer the investment flows the world became accustomed to over the past few decades. On paper, global FDI rose 6% in 2025 to $1.6 trillion, recovering after two years of decline. In reality, capital is becoming increasingly selective. It is flowing into a much smaller group of countries, large-scale projects and technology-intensive industries. That structural shift, rather than the headline growth, is the central message of the UNCTAD World Investment Report 2026. The report suggests the global economy is entering a new investment era, where countries are no longer competing on a level playing field. The list of winners is shrinking, while the cost of falling behind is rising.
At first glance, the numbers appear encouraging. Yet UNCTAD urges readers to look beyond the headline figures. Excluding conduit flows through major European financial centres and investment hubs, global FDI grew by only 4%. In other words, much of the improvement reflects the mechanics of cross-border financial transactions rather than an expansion of productive investment.
The longer-term picture is even more revealing. Between 2010 and 2025, the global economy and international trade continued to grow steadily, while foreign direct investment lagged behind and became increasingly dependent on a relatively small number of mega-deals, corporate restructurings and intra-company financing by multinational firms. The traditional relationship between global economic growth and international investment is gradually breaking down. Capital has not disappeared. The rules governing where it flows have changed.
The defining feature of this new cycle is concentration. Capital is no longer spreading evenly across the world. Instead, it is gravitating toward economies capable of offering large-scale investment opportunities, advanced technologies and a predictable business environment.
That explains why global investment growth has become so uneven. FDI inflows into developed economies climbed 11%, reaching $723 billion. Developing economies recorded growth of just 2%, attracting roughly $901 billion. While developing countries still receive the larger share of investment in absolute terms, it was the developed world that accounted for most of the increase in global FDI during 2025.
The same pattern becomes even clearer when countries are grouped by income. Nearly all additional investment went to high-income economies, where inflows increased from around $1.03 trillion to $1.12 trillion. Upper-middle-income economies were broadly unchanged. Lower-middle-income countries saw investment decline by about 5%. Even though low-income economies posted growth of nearly 10%, their overall volumes remain too small to materially change the global picture.
Global capital is no longer expanding its reach. It is becoming more concentrated.
That trend is equally visible in the ranking of the world’s largest investment destinations. Today, more than 80% of global FDI flows are concentrated in just twenty economies. The United States remained the largest recipient, attracting around $277 billion, followed by Singapore, Hong Kong, China and Brazil. The United Kingdom climbed sharply thanks to stronger investment activity, while Germany also improved its position. By contrast, Chinaattracted less investment than a year earlier, and several other major economies also recorded declines.
The ranking itself, however, is only part of the story. UNCTAD notes that changes in national performance are increasingly being driven by a handful of very large projects and financial transactions rather than broad-based growth in productive investment. That is yet another sign of a more selective investment landscape.
Sectoral patterns are changing just as rapidly. In the past, international capital was spread more evenly across manufacturing, infrastructure and services. Today, investment is becoming increasingly concentrated in a narrow group of industries.
Almost all of the increase in announced project values came from digital infrastructure, data centres, semiconductors, oil and gas, and selected energy projects. These sectors attracted the overwhelming share of new investment commitments. Many traditional industries, meanwhile, recorded flat or declining investment activity, including parts of renewable energy, infrastructure and export-oriented manufacturing linked to global value chains.
This does not necessarily signal a loss of confidence in those industries. Rather, investors have become far more disciplined, backing only projects that offer the strongest combination of scale, resilience and expected returns.
That caution is also reflected in the structure of international transactions. The value of cross-border mergers and acquisitions fell by around 7%, even as domestic corporate dealmaking recovered. Higher financing costs, tighter regulatory scrutiny and persistent uncertainty continue to discourage large international acquisitions.
Greenfield investment, which reflects companies’ willingness to build new facilities, remained close to last year’s level. Yet even here, growth was driven primarily by capital-intensive technology and digital projects.
Project finance paints an even more challenging picture. After three consecutive years of decline, the market has only begun to stabilise. The total value of projects increased by just 3%, while the number of individual projects continued to fall. Infrastructure and energy remain particularly exposed, as high interest rates and long development timelines significantly increase investment risk.
Another trend runs quietly through the report, although it could prove one of its most important messages. Investment is becoming more concentrated. So are profits. The world’s largest multinational corporations increased their combined earnings once again, bringing them close to the highest levels of the past decade. These firms continue to hold substantial financial resources, allowing them to pursue major investment programmes despite heightened uncertainty.
At the same time, average returns on foreign direct investment are declining. In 2022 and 2023, returns on inward FDI exceeded 10%. By 2025, they had fallen to around 7%. A similar trend is evident for outward investment.
The result is a striking paradox. Global capital continues to grow, but generating returns has become more difficult. Investors are therefore concentrating their resources in the largest, most resilient and technologically advanced companies and economies.
The geography of global investors is also evolving. The United States remained the world’s largest source of outward foreign direct investment, with overseas investment reaching around $263 billion. Japan and China followed closely behind. Luxembourg, Singapore, Germany and the United Kingdom all strengthened their positions among the world’s leading capital exporters.
Asian economies and the Gulf states are playing an increasingly important role. China, Hong Kong, Singaporeand the United Arab Emirates are now firmly established among the world’s largest outward investors. Europe remains a major source of capital as well, although investment flows there continue to be far more volatile because of corporate restructuring and intra-company financing.
The outlook for 2026 offers little reason to expect a rapid return to the previous era of globalisation. UNCTADforecasts global economic growth slowing from 3.4% to 3.1%, alongside weaker trade expansion and continued geopolitical uncertainty. The geopolitical risk index continues to rise, while conflict in the Middle East is adding further pressure to the investment climate.
Higher logistics costs, insurance premiums, energy prices and financing costs are creating additional obstacles, particularly for capital-intensive projects in infrastructure, energy and manufacturing. There are, however, some encouraging signals. Analysts expect international deal activity to recover gradually as financial conditions ease. Even so, the report’s authors believe investment decisions will remain highly selective.
The central message of the World Investment Report 2026is therefore not that global foreign direct investment is growing again. The real story is that the global investment map is rapidly shrinking.
International capital has become more expensive, more cautious and far more concentrated. Instead of being distributed across dozens of countries, it is increasingly flowing toward a relatively small group of economies, industries and companies capable of delivering scale, technological leadership and resilience in an increasingly uncertain world.
The era of mass investment is gradually coming to an end. It is being replaced by an era of selective capital, where competitive advantage is no longer defined by the ability to attract foreign investment, but by the ability to remain among the few destinations global investors choose again and again.
Sultan Valikhanov, expert of the EconomyKZ.org portal
