More money, fewer projects: The paradox of global investment

Global investment may be booming, but the boom is benefiting a shrinking circle of economies.

Foreign direct investment (FDI) rose 37% in the first half of 2026, according to UN Trade and Development (UNCTAD), even as announcements of new investment projects continued to decline. The number of planned greenfield projects, in which companies establish new operations rather than acquire existing businesses, fell 15%, while cross-border merger and acquisition deals declined 23%.

The growing disconnect between investment values and actual project activity casts doubt on what rising investment figures deliver. Large acquisitions and multibillion-dollar technology projects can lift global totals without producing a comparable increase in new factories, employment opportunities, or infrastructure across developing economies.

“Several factors contribute to this divergence between overall FDI flows and project trends,” Richard Bolwijn, head of the Investment Research Branch in UNCTAD's Investment and Enterprise Division, told The Beiruter.

One driver is that a lot of investment nowadays is tied up in fewer, very large projects and transactions.

As international capital gravitates toward a handful of industries and destinations, the economies most dependent on foreign investment risk being excluded from the very projects that could accelerate their development.

The concentration of capital

The widening gap between rising global investment values and declining project numbers partly stems from how international investment is counted. FDI includes money transferred between companies that already operate across borders, meaning investment totals can rise without new factories, businesses or facilities being established.

Large corporate transactions are another major contributor to this imbalance. UNCTAD's October 2026 Global Investment Trends Monitor reported that cross-border acquisitions reached $494 billion in the first nine months of 2026, a 57% increase, despite the decline in deal numbers.

The scale of individual investments illustrates how concentrated global capital has become. Among the largest projects announced in 2026 were a $76.5 billion semiconductor investment by Taiwan's TSMC in the United States and a $49 billion data center project by Japan's SoftBank in France. Commitments of this magnitude can substantially increase investment totals even as the number of new projects declines.

According to the organization’s July 2026 World Investment Report, strategic industries, including semiconductors, artificial intelligence infrastructure, critical minerals and clean technologies, accounted for 44% of announced greenfield investment value in 2025, up from 16% in 2020.

“Investment in data centers, hyperscale facilities and major energy projects, including renewables, is becoming more prominent,” Bolwijn said.

These large-scale technology and energy projects are increasing in size and driving greater concentration. Fewer countries get more.

The concentration is particularly consequential for poorer economies. Low-income and lower-middle-income countries attracted only about 10% of strategic-sector investment between 2020 and 2025, compared with more than 20% in other industries.

The competition for investment

As the pool of new investment projects contracts, developing economies are competing more fiercely for the factories, infrastructure, and jobs that foreign capital can bring. Rather than abandoning established industrial centers, companies are directing new facilities toward countries offering skilled workers, reliable infrastructure and access to major markets.

“Countries that successfully attract this investment tend to share three key advantages,” Bolwijn said. 

They have a skilled workforce, the infrastructure to support production and exports, and access to major markets.

Mexico, Costa Rica and the Dominican Republic, Bolwijn explained, benefit from proximity to the United States, while Morocco, Eastern Europe and parts of Southeast Asia offer access to European or Asian supply chains.

Yet opportunities are becoming scarcer. UNCTAD's January 2026 Global Investment Trends Monitor recorded a 25% decline in supply chain-intensive manufacturing project announcements in 2025, leaving more developing economies competing for a shrinking pool of potential investments. 

Governments have responded to the intensifying competition for foreign capital with measures such as tax incentives and special economic zones, although attracting investment requires more than offering companies favorable terms. Industrial capabilities, transport networks, and access to export markets remain decisive, leaving some zones without enough investment to operate effectively.

New investors, uneven opportunities

Emerging investors are challenging Western economies' longstanding dominance as sources of international capital.

“New sources of international investment are gaining prominence among the world's leading outward investors,” Bolwijn said.

India and the Gulf countries, particularly the United Arab Emirates and Saudi Arabia, are becoming important investors abroad.

Gulf investors, backed in part by substantial sovereign wealth funds, have become especially important financiers of international infrastructure and energy projects. According to UNCTAD's October 2026 Gulf Cooperation Council Investment Report, outward FDI from GCC economies reached a record $130 billion in 2025, up 11%. The value of international project finance commitments within the GCC also surged 65% to $114 billion, even as the number of deals declined 16%.

The war involving Iran, however, has disrupted the region's investment momentum. In the second quarter of 2026, GCC outward project finance investment fell by more than half, while domestic project finance investment more than tripled, according to UNCTAD's October investment monitor.

For developing economies dependent on external financing, changes in investor priorities can therefore determine which projects advance and which remain unrealized.

Investment in a divided world

Geopolitical rivalries are becoming an important influence on where companies invest, as governments use trade restrictions and industrial incentives to encourage production at home or in politically aligned economies.

This shift, known as friendshoring, is changing investment decisions without necessarily bringing production closer to home. Rather than concentrating operations within their own regions, companies are seeking alternative markets across the world to reduce their exposure to geopolitical risks.

“Governments are seeking greater control over where their technology and productive capacity are located,” Bolwijn said.

But when international investment is carried out by private companies, exercising full control is extremely difficult.

Governments can influence decisions through incentives and restrictions, but established production networks, sunk investments, and commercial opportunities continue to limit how quickly companies relocate.

For developing economies, the challenge is no longer simply to attract foreign capital, but to compete for investments that create factories, infrastructure and employment. Global investment figures may continue to climb, but as fewer projects account for more money, the distance between the countries attracting capital and those being left behind could grow wider still.