Greenfield Investments Valued $1.3 Trillion Announced Globally in 2023

Foreign companies announced more than 16,400 FDI projects in 2023, according to fDi Markets, the greenfield investment monitor of the London-based Financial Times. These projects represent an estimated cumulative value of $1.3 trillion and created 2.8 million jobs worldwide.

The US remained the top source of FDI capital in 2023, but China followed on its heels as Chinese companies went on an international investment spree after Beijing finally lifted COVID-19 restrictions.

The US was also the largest destination for global FDI in 2023 as it continued to lure foreign companies with generous incentives and strong macroeconomic growth. India came in second as the south Asian country posted another record year for foreign investment. The UK followed in third place.

The US was the top overall destination for mega projects, with 20 such investments. Regionally, western Europe attracted the highest number of FDI projects in 2023 with more than 4700 projects, up by 15.6% from a year earlier. However, Asia-Pacific was the leading destination for capital investment with the value increasing from $330 billion in 2022 to $450 billion in 2023.

While the number of FDI projects remained relatively stable between 2022 and 2023, the value of capital investment increased by 4.4% in the period. The value of FDI projects has shown y-o-y growth since 2021, suggesting that the momentum of capital-intensive projects has remained strong for another year.

Once again, mega investments, projects worth at least $1 billion of capital investment, were a key theme in 2023, with 179 such announcements. These projects were spread across many industries, but fell primarily in energy, electronics, metals and automotive areas.

Most Investments in Renewables

The renewable energy sector retained its position as the sector with the highest capital investment for the fourth year in a row, despite a 6.6% decline from $372.5 billion in 2022 to $348 billion in 2023, the report said.

The total investment in 2023 was spread between 856 projects, up 53% from the previous year. The three largest subsectors in terms of capital investment were also tied to the renewable energy industry, with ‘other electric power generation’ having captured $150.3 billion worth of FDI, followed by solar electric power at $95.5 billion and wind electric power at $75.8 billion.

The electronic components sector ranked second by FDI capital investment in 2023 and saw a 24% increase from $92.9 billion in 2022 to $114.8 billion in 2023. This growth was largely driven by significant investments in batteries and all other electrical equipment & components, subsectors, amounting to $69.7 billion and $33.3 billion in 2023 respectively.

The electronic components sector saw a 37% increase in FDI project numbers from 501 to 688 between 2022 and 2023. That same sector overtook the software and IT services sector as the top creator of FDI jobs, jumping from approximately 131,700 in 2022 to 335,000 in 2023, a 154% increase.

The coal, oil and gas sector ranked third for capital investment last year despite a 19% decline from $115.8 billion to $93.9 billion between 2022 and 2023. The sector saw a 13% increase in projects over the period, from 125 to 141, and a 34% fall in job creation from approximately 42,100 to 27,800.

Petroleum refineries and oil and gas extraction were the largest contributors to the sector’s capital investment, seeing investment pledges of $36.6 billion and $22.7 billion respectively.

The semiconductor sector experienced a large decline in capital investment between 2022 and 2023, falling 50% from $109.5 billion to $55.2 billion. In the same period, semiconductor projects fell by only 2.8%, showing that the average capital investment per project has reduced by 48% from an average of $771 million in 2022 to $504.5 million in 2023.

Conversely, the sector saw a 13% increase in job creation from approximately 47,700 in 2022 to 53,800 in 2023, perhaps marking a shift to more labour-intensive projects in countries with cheaper labour costs such as India, Vietnam and Mexico.