Investment in agriculture and agrifood systems, which is critical for combatting hunger and ensuring food security, fell by 11 percent in 2023, totalling $145 billion. This decline raises questions about the world's ability to meet rising food demand in a sustainable manner, according to UNCTAD
Foreign direct investment (FDI), a critical engine for global growth and development, fell 2 percent in 2023 to $1.3 trillion. This is the second consecutive year of contraction, indicating a concerning trend with serious implications for global economies, particularly in sectors critical to achieving the Sustainable Development Goals (SDGs).
The 2 percent drop in global FDI comes after a significant 42 percent drop in 2020 due to the COVID-19 pandemic. While the global economy is showing signs of recovery, investment flows have yet to reach pre-pandemic levels.
Investment in agriculture and agrifood systems, which is critical for combating hunger and ensuring food security, fell by 11 percent in 2023, totaling $145 billion. This decline raises questions about the world's ability to meet rising food demand in a sustainable manner.
The United Nations Conference on Trade and Development (UNCTAD) report attributes the FDI slowdown to a combination of geopolitical tensions, including the ongoing conflict in Ukraine, a slowing global economy, rising interest rates, and increased uncertainty about future economic prospects.
Impact on Sustainable Development:
The decline in FDI, particularly in agriculture, poses a significant threat to meeting the SDGs.
These goals include a variety of objectives, such as eradicating poverty, promoting health and well-being, and ensuring access to clean water and sanitation. Adequate investment is critical to accelerating progress in these areas.
Calls for Action:
UNCTAD Secretary-General Rebeca Grynspan emphasised the importance of reversing the FDI decline and increasing investment in sectors critical to sustainable development. She advocated for policies that strengthen investment promotion agencies, create a more predictable regulatory environment, improve infrastructure, and invest in human capital and skill development.
The report also emphasised the value of public-private partnerships in funding sustainable development projects.
Future Outlook:
While the current FDI landscape is challenging, it also offers opportunities for growth.
As the global economy recovers and countries shift to greener and more sustainable models, investments in renewable energy, climate-smart technologies, and sustainable infrastructure could provide a much-needed boost to FDI flows.
However, the report warns that unless concerted efforts are made to address the root causes of investment barriers, the decline in FDI could have long-term consequences for the global economy and the pursuit of sustainable development.