UAE World’s Best FDI Performer Relative to Its GDP In 2023

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.

The UAE was also the clear leader in the Middle East region with its index score of 14.8 and was followed by Bahrain, which came in second with a score of 4.1, 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 biggest jump in FDI projects from 240 to 390, reflecting a surge of investment into the country’s Vision 2030 agenda, fDi Intelligence, said in its ninth edition of Greenfield FDI Performance Index in the Middle East.

According to the 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, 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, meaning they attracted less FDI than their economy’s size would suggest, the Index said.

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 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.

Montenegro Second

Montenegro is 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 Monaco, which placed fourth after attracting 10 FDI projects with a GDP of $8.95 billion 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 $20 billion 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 —Singapore, Latvia and 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. 

Asian gambling hub of Macau, which fell the most in the ranking this year, from 29^th to 78^th 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.

As many as six countries rose up the ranking by at least 30 places, including Cambodia, which gained 49 places to rank 10^th, followed by Zambia, Jordan and Honduras which jumped 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, fDi index added.

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 100^th out of 108 countries, with an FDI performance index score of 0.44. This reflected its position as the world’s largest economy, accounting for 26% of global nominal GDP compared with 11.5% of global FDI projects.