For decades, foreign direct investment (FDI) was seen as the primary engine of development finance. But that’s changing, as FDI flows fall off and remittances surge worldwide.
According to the latest World Development Indicators (WDI) data, FDI has been in a long structural decline, while personal remittances, which include both employee compensation and personal transfers, have grown, quietly reshaping how money flows globally.
A recent World Bank report confirmed that FDI flows to developing economies have fallen to levels not seen since 2005. WDI shows that, after peaking worldwide in 2007 above $3 trillion in aggregate flows, FDI has trended downward since. In 2024, aggregate flows were just about $1 trillion, approximately the 2005 level. Meanwhile, between 2005 and 2024, global remittance inflows grew by 240 percent and outflows by 227 percent, reflecting decades of rising global labor mobility. The slight divergence between inflow and outflow aggregates is a known statistical artifact due to differences in national reporting methodologies, timing, and the distorting effect of investment routed through offshore financial centers.
The geography of FDI and remittances tells a compelling story. The world’s wealthiest economies remain the top FDI recipients. The United States, Singapore, Canada, and Germany have been consistent leaders throughout the time series. Among emerging economies, China’s trajectory stands out: its FDI inflows grew dramatically relative to peers like Brazil and India and reached historic high in 2021 at $344 billion. It fell sharply in 2024 and returned to around $43 billion—roughly the same level as in 2001. On the outflow side, China has moved in the opposite direction, with outflows rising steadily, placing it alongside the US as one of the primary sources of global FDI.
Global FDI flows saw dramatic surge in the early 2000s and peaked in 2007.
From that 2007 peak to 2024, both FDI inflows and outflows trended downward, with the post-recession low hit in 2018 when outflows dropped to roughly $920 billion.
The United States, Singapore, Canada, and Germany have remained leading FDI destinations, while China emerged as a major recipient.
FDI inflows to IDA-eligible economies have grown substantially since 1990, but they still account for only a small share of global FDI.
The geography of FDI and remittances tells a compelling story. The world’s wealthiest economies remain the top FDI recipients. The United States, Singapore, Canada, and Germany have been consistent leaders throughout the time series. Among emerging economies, China’s trajectory stands out: its FDI inflows grew dramatically relative to peers like Brazil and India and reached historic high in 2021 at $344 billion. It fell sharply in 2024 and returned to around $43 billion—roughly the same level as in 2001. On the outflow side, China has moved in the opposite direction, with outflows rising steadily, placing it alongside the US as one of the primary sources of global FDI.
For the world’s poorest countries, such as IDA-eligible economies, FDI inflows rose sharply in recent decades, from just $1.9 billion in 1990 to $66.3 billion in 2024, with a notable surge between 2003 and 2008. Despite gains in absolute terms, however, in relative terms these countries remain at the margins of global investment: IDA countries collectively received only 4.22 percent of total global FDI inflows in 2024. This matters because FDI does more than bring capital—it can create jobs, transfer technology, and build the productive capacity that sustains long-term growth. The gap between absolute gains and relative standing reflects a real constraint on development for IDA borrowers.
The largest recipients are major developing economies: India, Mexico, the Philippines, and China
The countries sending the most remittances are those that have long absorbed migrant labor, such as the US, UAE, Saudi Arabia, Switzerland, Germany, and France.
Conversely, personal remittances received by IDA countries increased from about $40 billion in 2005 to $189 billion in 2024. Unlike FDI, remittances flow directly to households, supporting consumption, reducing poverty, and providing a steady income for developing economies’ foreign exchange reserves. Though IDA countries have seen strong growth in remittance inflows, major developing countries such as India, Mexico, the Philippines, and China each receive more than the world’s poorest countries combined. India’s remittance inflows alone grew from $22 billion in 2005 to $138 billion in 2024. Mexico’s rose from a similar starting point to $68 billion over the same period.
The countries from which most remittances originate have long absorbed migrant labor, including the US, the United Arab Emirates, Saudi Arabia, Switzerland, Germany, and France. The US remained the largest single source of remittance outflows in 2024, at $103 billion. The UAE, with data now available for 2023 and 2024, recorded $54 and $58 billion for those years, respectively, ranking second globally. Notably, nations that are large remittance recipients are also becoming senders: India’s remittance outflows grew from $1.3 billion in 2005 to $12 billion in 2024, comparable to the UK’s $12.3 billion.
Taken together, the latest WDI data highlight a shift in cross-border financial flows. While foreign direct investment has become more subdued and concentrated, remittances have continued to grow, becoming an increasingly important source of external finance for many low- and middle-income economies. By presenting these trends within a comparable framework, WDI helps users examine how changing patterns of cross-border financial flows are shaping development opportunities worldwide.
Source : World Bank
