News

By Rachid Bouhia, Economist, UNCTAD, and Emily Wilkinson, Researcher, ODI

UNCTAD says uncertainty about the COVID-19 pandemic’s evolution and the global investment policy environment will continue to affect FDI flows in 2021. For developing countries, the prospects for 2021 are a major concern.

A special issue of UNCTAD's Investment Policy Monitor presents the latest developments in national and international investment policies in response to the coronavirus pandemic.

The coronavirus pandemic hits developing countries at a time when they have already been struggling with unsustainable debt burdens for many years, as well as with rising health needs. UNCTAD calls for $1 trillion in debt relief.

Foreign direct investment fell slightly from US$1.41 trillion in 2018 to $1.39 trillion in 2019. Flows to developed countries decreased by 6%, while those to developing economies were unchanged.

Distinct FDI screening procedures for national security purposes have become an important investment policy tool in recent years, particularly in developed and emerging economies, reflecting rising political concerns in this area.

More than 1,000 zones were created in the last five years, and at least 500 more are in the pipeline for the coming years.

Continent-wide trade agreement bodes well for future investment in Africa and burgeoning special economic zones further buttress prospects.

Least developed countries recover, led by Asia, while small island developing states contract again as flows to Caribbean and African islands flounder.

Region receives 39% of global investment flows - the largest share. It also hosts more than 4,000 special economic zones - three quarters of world total.