The digital economy is the fastest-growing sector of the global economy, but foreign investment remains highly concentrated.
The share of global foreign investment in the digital economy has climbed from 5.5% to 8.3% over the past decade.
Developing countries attract less than a third of greenfield investment in digital sectors, with 80% of projects in the Global South concentrated in just 10 economies.
Core digital infrastructure and least developed countries remain largely bypassed.
Global foreign direct investment (FDI) in the digital economy is growing fast, averaging $122 billion annually in recent years. Between 2021 and 2023, the sector captured 8.3% of global FDI on average – up from 5.5% a decade earlier – according to the World Investment Report 2025 published by UN Trade and Development (UNCTAD).
For developing economies, annual FDI flows to the digital economy nearly doubled over the same period.
Globally, the growth has been driven by expanding digital services, rising demand for software solutions and emerging tech talent and start-up ecosystems. Investment in the digital economy brings clear benefits: better infrastructure, skilled jobs, technology transfer and more dynamic innovation ecosystems.
But many low-income countries remain locked out. Infrastructure gaps, high investment risks and weak regulatory frameworks continue to deter capital.
Uneven investment in the digital economy will be high on the agenda at the 16th UN Conference on Trade and Development in Geneva from 20 to 23 October, with leaders set to discuss investment and digital development.
10 countries attract most investment in the Global South
Greenfield investment in the digital economy has nearly tripled since 2020 to $360 billion. But over the past five years, developing countries have received just 30% of the global total.
And within the Global South, about 80% of the greenfield projects in digital sectors went to just 10 countries, mostly in Asia.
Core digital infrastructure remains severely underfunded
Greenfield investment in digital services and solutions in developing countries grew more than sixfold to $37 billion between 2020 and 2024. But core digital infrastructure remains severely underfunded.
In 2024, just $9 billion went to ICT infrastructure in developing countries – a fraction of the $62 billion needed globally each year.
Fintech and data centre investment bypasses least developed countries
Fintech is attracting rising investment in Asia and Latin America, and data centres are expanding in middle-income economies. But least developed countries remain on the margins.
In 2024, Africa saw only 18 fintech projects – compared to 206 in developing countries in Asia – and attracted just 3% of total data centre investment.
Market dominance and policy barriers raise concerns
Market dominance by a few firms – mostly headquartered in the US and China – is raising concerns about competition and crowding out local players.
Policy restrictions are also creating barriers. Many developing countries restrict foreign ownership in core infrastructure, while developed economies are tightening FDI screening over national security concerns. Up to 60% of screened projects now target digital sectors.
Digital strategies are in place, but support systems lag
By 2024, most developing countries had national digital strategies – 86% overall and 80% of least developed countries, up from under half in 2017.
But few strategies link to broader industrial, environmental or investment policies. And only 20% mention investment promotion agencies (IPAs), which often lack the tools to target fast-moving digital sectors.
Key regulations also lag. Data governance, intellectual property protection and competition policy – top concerns for investors – remain underdeveloped, especially in least developed countries.
The way forward
To harness international investment’s potential in the digital economy, the report recommends that countries:
- Adopt a long-term vision for investment in the digital economy
- Balance openness to FDI with national security and public interest
- Strengthen regulatory frameworks for international investment in the digital economy
- Enhance the role of IPAs and adopt more targeted and impact-driven promotion in the digital economy
- Build digital skills, including through FDI
- Increase the impact of international investment agreements’ (IIAs) on sustainable investment, including in the digital economy
- Encourage technology transfer on mutually agreed terms in IIAs
- Expand IIAs’ development-oriented provisions related to the digital economy
- Facilitate developing country participation in international rule-making for the digital economy