The uneven recovery of foreign direct investment after the COVID-19 pandemic: a comparative analysis between developed and developing countries
The COVID-19 pandemic has had a significant impact on the global economy, including on foreign direct investment (FDI). The World Investment Report 2022, published by UNCTAD, highlights the uneven recovery of FDI between developed and developing countries. This article examines the differences between these two groups of countries and the factors that contribute to this inequality.
The recovery of FDI has been faster in developed countries, mainly due to their ability to implement economic stimulus measures and accelerate the distribution of vaccines. Companies in developed countries have also benefited from easier access to finance, allowing them to quickly resume their investment activities abroad.
In contrast, developing countries have experienced a slower and less uniform recovery. This is due to several factors, including limited availability of vaccines, smaller economic stimulus packages and weaker institutional capacity. In addition, international investors tend to view developing countries as riskier due to political and economic uncertainty, which hampers the recovery of investment.
The uneven recovery in FDI between developed and developing countries raises concerns about reducing global inequality and achieving the Sustainable Development Goals (SDGs).
To close this gap, developing country governments must implement reforms to improve the investment climate, build institutional capacity and attract sustainable and responsible investment. Developed countries also have a role to play in supporting developing countries through international cooperation and sharing of technology and knowledge.