Foreign direct investment (FDI) bounced back strongly in 2022 as multinational corporations announced a flurry of mega projects, in an adjustment to the new geopolitical order left in the wake of the Ukraine war and the Covid-19 pandemic.
International investors announced more than 16,000 greenfield FDI projects in 2022, up 16% from a year earlier, according to the newly released fDi Report 2023 — the annual research on global FDI based on data from fDi Markets, the greenfield investment monitor of the Financial Times.
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Mega projects (projects worth at least $1bn in capital investment) were a key feature of global FDI in 2022 as Western governments put billions of dollars' worth of incentives on the table to lure big manufacturers to reshore or nearshore production capacity from the Far East. Foreign investors announced a total of 159 such projects (including estimates) in 2022, representing the highest level in the past decade.
This mounting wave of mega projects shored up the overall level of committed FDI in 2022, which stood at $1.155tn — up from $710bn in 2021 and the highest figure since 2008, the report shows.
The US was the top destination country of FDI in 2022, with foreign investors announcing projects worth a total of $158.1bn in the country.
Sector-wise, renewable energy once again was the biggest magnet of foreign investment, attracting 527 FDI projects worth a total of $343.6bn in 2022. The coal, oil and gas sector came in second, as the Ukraine war triggered a new wave of investment in hydrocarbons assets worldwide. Overall, the sector racked up FDI worth $104.8bn in 2022 — more than six times that of 2021.
Posco was the top company for capital investment in 2022. The South Korea-based iron and steel company is to invest an estimated $40.1bn overseas, primarily across two mega-projects announced in December to build a green steel production factory and green hydrogen manufacturing facility in Australia by 2040.
Given the continued high demand in the semiconductor industry, three of the top 20 companies by outward capital investment announced major projects in the sector.
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US-based Intel, Taiwan-based Taiwan Semiconductor Manufacturing and UK-based Vedanta Resources announced FDI projects valued at $28bn, $19.9bn and $13.9bn, respectively.