Foreign Investment Trends in Developing Asia for 2024: Insights and Analysis

Foreign investment in Developing Asia presents a complex narrative for 2024, as the region maintains its position as the largest global recipient of foreign direct investment (FDI) despite a slight decline in total investment value. According to the World Investment Report released by the United Nations Conference on Trade and Development (UNCTAD) on June 19, 2025, Developing Asia attracted $605 billion in FDI, a 3% decrease from the previous year. This accounted for 40% of the world's total FDI and 70% of inflows to developing economies, underscoring the region's critical role in the global investment landscape.

The report highlights that while the overall investment figures remain substantial, they reflect broader global economic challenges, including declining infrastructure investment and rising policy uncertainties. Dr. Rebeca Grynspan, UNCTAD Secretary-General, noted, "The mixed performance of foreign investment in Developing Asia mirrors the volatility and fragmentation of global investment trends. Countries in the Global South are particularly vulnerable to these shifts."

Investment patterns vary significantly across different economies within the region. In East Asia, China, which has historically been the largest recipient of FDI, saw a staggering 29% drop in investment flows in 2024, illustrating the shifting dynamics of global capital. Conversely, the Association of Southeast Asian Nations (ASEAN) experienced a robust 10% increase, reaching $225 billion in FDI, driven by strong economic growth in countries such as Indonesia, Malaysia, and Vietnam.

In South Asia, FDI remained stable overall, although India, despite a slight decrease, continues to lead the region with significant foreign investment. Notable increases were observed in Pakistan and Sri Lanka, indicating a potential resurgence in those markets. However, Central Asia faced a sharp decline, particularly in Kazakhstan, which suffered from a downturn in investor confidence.

Moreover, the Gulf Cooperation Council (GCC) showed mixed results. The United Arab Emirates experienced a notable rebound in foreign investment, while other member states like Bahrain and Kuwait reported declines.

The report further delves into the types of foreign investments, revealing that Developing Asia is home to nearly a third of global greenfield projects by number and over a quarter by value. Greenfield investments, which signify the establishment of new operations overseas, rose by 5% in 2024, although their total value dropped by 23% to $363 billion. This decline is attributed to decreases in sectors such as electricity and gas supply, which saw a combined drop of over $70 billion.

Dr. Sarah Johnson, an economist at Harvard University, emphasizes the importance of these trends: "The decline in traditional sectors such as energy shows the need for a shift towards more sustainable investments. As the digital economy expands, we must ensure that our investment strategies adapt accordingly."

International project finance (IPF), crucial for funding infrastructure and public services, fell sharply across the region. The number of IPF deals dropped by 27%, reflecting a broader global trend, while the total value plummeted by 43%, indicating a disproportionate impact on emerging markets due to increased capital costs and heightened risk perceptions.

Furthermore, cross-border mergers and acquisitions in Developing Asia saw a significant decline of 57%, primarily driven by a 49% drop in China and notable divestments in India and the UAE. This trend highlights the shifting landscape of corporate investment strategies in response to changing global conditions.

The UNCTAD report calls for reforms in global financial frameworks and greater utilization of blended finance to redirect capital to regions and sectors that need it most. Dr. Pedro Manuel Moreno, UNCTAD’s Deputy Secretary-General, suggested, "Investment rules must evolve to ensure that all economies can benefit from the transitions to digital and clean technologies, which are essential for sustainable development."

As the landscape of foreign investment in Developing Asia continues to evolve, the implications for economic growth, infrastructure development, and policy formulation remain profound. The challenges posed by global economic trends necessitate a strategic approach to attract and sustain foreign investment in the region, ensuring that developing economies are not left behind in the quest for sustainable growth and development.