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The rising concentration of Foreign Direct Investment
1 : International Finance Corporation (IFC), World Bank Group
1818 H Street, NW Washington, DC 20433 USA -
United States
2 : Department of Geography & Environment - London School of Economics and Political Science
(LSE)
London School of Economics and Political Science Department of Geography and EnvironmentHoughton Street London WC2A 2AE UK -
United Kingdom
3 : Centre d'Etudes Prospectives et d'Informations Internationales
(CEPII)
Centre d'analyse stratégique
Using two decades of granular data on foreign direct investments (FDI)
globally, this study shows a consistent global rise in concentration of crossborder
investment in fewer multinational firms and larger projects. Concentration
is most prominent in developing economies, reaching record highs
in recent years, and more pronounced in countries grappling with economic
uncertainty. The implications are significant, as increased concentration
can hinder the developmental impact of FDI. Importantly, these stylized
facts challenge existing analytical and policy frameworks, by highlighting
the growing importance of firm-level shocks as a driver of variation in aggregate
FDI flows.
