It’s been a pivotal year for foreign direct investment (FDI), packed with elections, new green transition risks, mega-project delays and more policymakers waking up to the threat of deindustrialisation. 

Our readers have experienced this first hand. During a Live Q&A on December 12, fDi’s editors answered your questions — which came from all corners of the world — about the state of FDI today and what to expect in the years ahead. 

Highlights are below. And if you missed it, check out the full Q&A here. Thanks everyone for your thought-provoking questions.  

Europe

Guy Douetil: “In his European Competitiveness report, Mario Draghi stated the EU is clearly lagging behind the US and needs to spend €800bn annually across sectors just to catch up. Is there a realistic chance of the EU being able to deliver significant investments?” 

Jacopo Dettoni: The list of pending issues the region is facing is long and growing: budget, debt, energy, immigration, ESG red tape, deindustrialisation… Investing €800bn per year in this context may seem out of reach. But is it really? I believe the Draghi report falls short in outlining the role FDI can play in bridging that investment gap.

A couple of top-line figures from Unctad: FDI in the EU27 peaked at $668bn in 2007; even taking the exchange rate into account, that’s about two-thirds of the €800bn in extra investment per year in FDI alone! Net FDI inflows in 2023 stood at $58.6bn. Bringing FDI back to its pre-Covid good years would already provide a meaningful contribution to reaching the €800bn goal.

Argentina

Ramiro Alem: “How do you see Argentina on its new structural-reforms mode attracting crucial investments on its core capabilities: energy + agro + knowledge & tourism?”

Alex Irwin-Hunt: Early signs are that Javier Milei’s “shock therapy” is working after more than a decade of stagnation. Forecasts for the years ahead are strong, with BBVA Research expecting a 6% GDP rebound in 2025. Annual inflation fell from 211% in December 2023 to 193% — which is still very high, internationally.

A new investment promotion scheme, called RIGI, lays the foundation to attract larger investments in strategic areas. Several multinationals have set out major FDI plans already. Rio Tinto just pledged to invest $2.5bn to expand its Rincon lithium capacity, but capital controls continue to dissuade many foreign investors. 

Global

David Daepp: “Are there examples of lower to middle income countries which have succeeded in improving or developing the regulatory frameworks and improving the investment environment with a mix of quick wins and longer-term policy-making and legislation?” 

Danielle Myles: India has complemented its economic and demographic strengths with policies over the past decade focused on liberalising FDI — ie lifting FDI caps and cutting corporate taxes — and streamlining bureaucracy. Egypt, despite financial pressures, has made some sound policy choices to attract FDI: its huge infrastructure plan and using SEZs to attract massive renewable power projects (although the extent that capital has been committed isn’t clear). This was supported by leveraging its hosting of COP in 2022. Investing in physical assets provide longer-lasting changes, but is more feasible and powerful when there is a a certain level of political stability. 

Saudi Arabia

Zoë Harries: “From an FDI attraction perspective, and within the context of Saudi Arabia’s push to establish and scale its SEZs, which sectors should Saudi Arabia prioritise in 2025 to align with global trends, Vision 2030 and leverage SEZ incentives? Which international markets should we focus on to attract investors?

JD: The country’s main assets to leverage are: abundant, cheap energy when many countries are struggling with high energy prices; a middle-power mindset when it comes to foreign policy; and its deep pockets to fund investment.

As regards SEZs, I wonder whether the proposed 5% of CIT risks keeping investors from countries that signed up to the global minimum tax at bay. Regarding international markets, I expect Trump to visit the country very early in his presidency and champion an Israel–Saudi rapprochement as he applies maximum pressure on Iran. US investors will keep an eye on that, and so will their peers from Asia.

Africa

Ramona Irina Tarta: “Africa attracted less than 4% of total FDI last year. What are the key elements to unlocking Africa as a worthy recipient, given that many countries have tremendous potential long-term? What are the top three hurdles cited by investors” 

DM: “Big inhibitors include weak infrastructure (including reliable electricity access) rules that limit repatriation of profits, and political instability and poor governance. Most African governments can’t offer the subsidies needed to compete against the West for big FDI projects.

There’s no quick fix, but encouraging policy improvements include some bigger countries privatising their inefficient SOEs, some investment promotion agencies tapping into their diaspora and local SWFs — particularly Senegal’s Fonsis — are investing alongside foreign investors to derisk inbound deals.

Check out all answers we provided during the Live Q&A here.