The UAE was the world’s best FDI performer relative to the size of its economy in 2023, followed by Montenegro and Costa Rica, after record numbers of companies set up in the wealthy Gulf country.

In the ninth edition of fDi Intelligence’s Greenfield FDI Performance Index, the UAE attracted the most FDI relative to its gross domestic product (GDP) of the 108 countries assessed. Some 84 of these countries recorded an index score above 1.0, meaning their share of global inward greenfield FDI projects was larger than their share of global GDP. The remaining 24 countries had a score below 1.0, meaning they attracted less FDI than their economy’s size would suggest. 

The UAE climbed two positions from last year’s ranking, reflecting that it was the country with the largest increase (+316) in FDI projects in 2023 from a year earlier, according to fDi Markets. This growth in project numbers was most notable in the business services, tech, real estate and industrial equipment sectors. 

The Gulf business hub overtook Costa Rica, which came third in the 2024 index after ranking first for the three previous consecutive years. The Central American country’s lower standing was the result of strong GDP growth of 5.1% in 2023 and a slight year-on-year decline in FDI projects from an all-time high set in 2022.

The small Balkan country of Montenegro was a new entrant in the 2024 index (having surpassed the inclusion threshold of attracting at least 10 FDI projects in a year) and placed second with a score of 11.3. Another new entrant was the microstate of Monaco, which placed fourth after attracting 10 FDI projects with a GDP of $8.95bn in 2023. Every country’s nominal GDP data was sourced from the IMF, apart from Monaco’s figures which came from the World Bank.

Half of the top 10 in the ranking — namely Montenegro, Monaco, Kosovo, North Macedonia and Rwanda — recorded a GDP of less than $20bn in 2023, underlining the ability of smaller and emerging markets to target and attract FDI projects for their development.

Just three countries among the top 20 best FDI performers in 2023 — the Asian city-state Singapore, Latvia in the Baltics and the Iberian country of Portugal — are classified as advanced economies by the IMF. Changes in the relative FDI performance of countries this year were calculated by comparing the new 2023 score, with revised 2022 scores based on the most up-to-date GDP and FDI figures.  

One prominent example is the Asian gambling hub of Macau, which fell the most in the ranking this year, from 29th to 78th. This was because the Chinese special administrative region’s share of global FDI declined, while its economy grew year-on-year by 80.5% in 2023 after the post-Covid return of Chinese tourists.

Some 56 of the 108 countries in the ranking saw their relative FDI performance improve. Uzbekistan’s index score quadrupled from 0.96 in 2022 to 4.68 in 2023, thereby flipping from an FDI underperformer to an overperformer. The number of FDI projects in the Central Asian country grew from 14 to an all-time high of 76 in 2023, notably in renewable energy and logistics, according to fDi Markets. Uzbekistan soared 69 places in the ranking to 13th, marking the biggest climb in this edition.

A total of six countries rose up the ranking by at least 30 places, including Cambodia, which gained 49 places to rank 10th, followed by Zambia, Jordan and Honduras (34 places each), and Mauritius (30 places). Among the 27 countries that improved by at least 10 ranking positions, nine were located in Asia-Pacific, while emerging Europe was home to seven.

Russia was at the bottom of the index for the second consecutive year with a score of 0.07. Inbound FDI project announcements in the country have been virtually non-existent since its full-scale invasion of Ukraine in February 2022. 

China, where FDI has fallen to its lowest level in decades, placed second-last with a score of 0.14. Other countries featuring in the bottom 10 of the ranking were Algeria (0.23), Japan (0.29), Israel (0.40), Argentina (0.41) and Ethiopia (0.42).  

Despite attracting more FDI projects than any other country in 2023, the US placed 100th out of 108 countries, with an FDI performance index score of 0.44. This reflects its position as the world’s largest economy, accounting for 26% of global nominal GDP compared with 11.5% of global FDI projects.

Regional overview

Africa

This year welcomed six new African countries to the ranking, bringing the total to 19 countries across the continent (countries needed to have attracted at least 10 FDI projects to be included in the ranking). This is the largest African representation ever seen in the FDI index, up from 13 last year.

Rwanda was the best-performing country with a score of 5.2, up from 4.6 a year earlier, and the only African country to make it into the top 10 in 2023. One of the new entrants, Mauritius, placed second among African countries ranking 13th overall with an FDI performance score of 4.54. While the majority of African countries recorded an increase in score, five recorded a lower FDI performance score, including Ghana, Senegal and South Africa.

Asia-Pacific

The Asia-Pacific region had 24 countries in the ranking, which collectively attracted 702 more inbound FDI projects last year than in 2022. The greatest jump in projects were recorded in Vietnam, Thailand, Malaysia and Indonesia. Although China had the lowest score in the region, the it attracted 86 more inbound projects in 2023 than a year earlier, reflecting strong appetite among foreign retailers to expand in the world’s second-largest economy.

Emerging Europe

In emerging Europe, countries in the western Balkans were the best performing region for FDI attraction in 2023 relative to the size of their economies. New entrant Montenegro topped the ranking with a score of 11.3, followed by Kosovo (5.9) and Serbia (5.6).

North Macedonia, which ranked second in last year’s ranking, performed worse than some of its peers in 2023, but still was an FDI overperformer with a score of 5.3. EU member state Bulgaria was the only other country in emerging Europe to have attracted more than five times more FDI than would be expected, given its economy’s size.

The region collectively attracted 38 fewer FDI projects in 2023 than a year earlier, led by declines in project numbers in large economies such as Poland and Turkey. Belarus and Russia, which are both under western sanctions due to Russia's military aggression against Ukraine and Belarus’s complicity in it, were the worst performing countries in the region.

Latin America 

Costa Rica maintained its leading position within Latin America with a FDI performance score of 7.9. Its closest rivals, Colombia (2.0) and Uruguay (1.8), still attracted more FDI than their economies would indicate, but lagged behind the Central American country. Among the 13 countries in the region, however, only Panama and Paraguay recorded a higher FDI performance score in 2023 than a year earlier, increasing by 0.6 and 0.7, respectively.

Middle East

The UAE was also the clear leader in the Middle East region with its index score of 14.8. Bahrain came in second with a score of 4.1, followed by Jordan, with a score of 2.5, which attracted 12 more inbound FDI projects in 2023 than a year earlier. After the UAE, Saudi Arabia saw the the biggest jump in FDI projects from 240 to 390, reflecting a surge of investment into the country’s Vision 2030 agenda.

North America

Canada (0.9) outperformed the US (0.4), but both countries were FDI underperformers due to their GDP share outweighing their investment project share. The US still recorded 2157 FDI projects, more than any other country and equivalent to 11.5% of the global total. 

Western Europe

Monaco (6.3) was the leader in Western Europe followed by the Iberian countries of Portugal (4.3) and Spain (2.8). Among the 18 Western European countries in the ranking, there were 426 fewer inbound FDI projects in 2023 compared to 2022. 

While the majority of Western European countries were FDI outperformers with a score of 1 or more, some 13 countries recorded a lower score in 2023 than a year earlier. The three countries that underperformed relative to the size of their economies were Norway (0.65), Italy (0.73) and Switzerland (0.79).

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This article first appeared in the August/September 2024 print edition of fDi Intelligence. Janet Smyth helped with data collection and analysis for this research.