Foreign investors love Hungary!

FDI inflows in Hungary have increased by 7.96% in the past decade – 5% more than any other country analysed. Lithuania places second, experiencing a 2.51% growth in inflows – where they’re now amassing over a billion dollars in foreign direct investment. In 2022, Chile’s FDI inflows totalled $11.4 billion – 4.41% of their GDP.

Amid reports from the OECD that global foreign direct investment (FDI) increased by 20% from the first half of 2022, City Index were keen to uncover which countries benefited the most from foreign investment. The experts analysed FDI inflow statistics in 36 countries over the last decade, to reveal which countries have seen the largest growth in foreign investment.

Countries with the largest increase in FDI benefit in the past decade

Hungary’s average foreign direct investment (FDI) increased by 7.96% between 2018 and 2022, surpassing any other country analysed by over 5% when compared to figures between 2013 and 2017. This could be attributed to Hungary’s strategic location as the gateway to Central and Southeast Europe. The country’s main investors hail from Canada, the Cayman Islands, the Netherlands, Germany, Luxembourg and Austria. 

Lithuania takes the second spot, experiencing a 2.51% rise in FDI inflows. As a result, the Eastern European country secured the tenth spot among the nations that benefited the most from FDI in 2022, receiving more than $1 billion – 2.57% of its GDP. This remarkable growth could be attributed to the country’s robust international relations that offer investors access to international markets, in addition to its business-friendly tax policies. 

The Eastern European region countries experienced the most significant increase in FDI inflows, with Hungary, Lithuania, and Estonia topping the list. Austria follows in fourth place, with a 1.91% growth in FDI over the last five years, peaking in 2021 with a 1.37% surge. In fifth place is Sweden, with an average growth of 1.33% in FDI over the same period. This could be attributed to Sweden’s stable political and exonomic environment over the last decade, as well as being ranked the 10th best country for ease of doing business by the World Bank in 2020.

Fiona Cincotta, financial market expert at City Index, comments: 

“The growth in foreign investment inflows that’s occurred across Eastern Europe has been substantially greater than anywhere else. One of the major contributing factors to this growth is the surge in tech hubs, which are an attractive prospect to foreign investors as the technology sector is evolving at an astounding pace. Evidence of this shows as Central and Eastern Europe are now home to 34 unicorns.”

Luxembourg receive the largest decrease in FDI benefit

Luxembourg has seen a dramatic decline in FDI benefits in the past five years when compared with the five previous. Between 2013 and 2017, Luxembourg’s inflow of FDI was equivalent to an impressive 296.36% of GDP. In 2014, a reported 74% of all economic activity in this country was dependent on foreign markets, the highest in the OECD. However, between 2018 and 2022, these figures dropped leaving Luxembourg’s FDI inflows at 92.95% of GDP a -362.31% drop from the previous 5 years. 

The countries that benefited most from FDI in 2022 as a % of their GDP

 Chile’s FDI inflows make up over 4% of its GDP 

Chile benefited the most from foreign investment in 2022, amassing $11.4 billion in foreign direct investment  — 4.41% of the country’s GDP. This recent success could be due to the appointment of a new president, Gustavo Petro, who advocates for the development of more sustainable energy. This is a major attraction for any business looking to invest, as in the last seven years alone, Chile brought in $20.8 billion in clean energy investment.

Perhaps even more impressively, Chile grossed $1.6 billion more than South American neighbours Colombia (9th) which generated $9.8 billion in foreign direct investment. This is 2.58% of the country’s GDP.

Fiona Cincotta, financial market expert at City Index, comments:
“In 2021, after the global pandemic had struck, economies were hit tremendously harshly, however, Chile managed to overcome this obstacle and create a thriving economy. This is due to its strong foreign investment in key sectors, such as wholesale trade and the manufacturing industry. This stems from the prospect of new changes brought in by the new president, Gustavo Petro, who is leading the country in the direction of sustainability, by opting to replace environmentally damaging processes that use oil and gas. This is a big  attraction for any country looking to invest overseas.”