Global capital pledges were strong last year despite higher interest rates, inflation and a challenging geopolitical backdrop. More than $1.33tn-worth of greenfield foreign direct investment (FDI) was announced by companies worldwide in 2023, up by almost 4% on the previous year, according to fDi Markets. 

However, fewer FDI projects in 2023 than a year earlier means that the average capital expenditure (capex) pledged to each FDI project hit its highest level since 2008. In practice, this higher capital intensity has made competition for FDI more fierce than ever. Nonetheless, the recovery of FDI compared with the low levels recorded during the Covid-19 pandemic years of 2020 and 2021 has opened up new opportunities for investment promotion.

An inaugural annual fDi 100 study reveals the cities and regions which saw the highest year-on-year growth rates of FDI in 2023 across the world, and there are some interesting results. 

Methodology note: the study of the 100 fastest-growing subnational locations for greenfield FDI in 2023 includes global top 10 lists for both cities and regions, as well as the top seven cities and top three regions in eight macro-geographies the world over. These lists were based on weighted scores for fDi Markets data. The most weight was assigned to annual growth in FDI project numbers between 2022 and 2023, followed by the growth rate of announced capex and expected jobs created by investments. The study also included retail FDI projects. 

The leading city for FDI growth in 2023 was the university hub of Mannheim in south-west Germany, where a number of existing investors like pharma giant Roche have decided to expand their presence. Craiova, the city home to carmaker Ford in Romania, had the second highest growth of FDI, largely due to a €125m shopping centre built by NEPI Rockcastle, which attracted several foreign-branded retail stores.

Ranked third was Azerbaijan’s capital Baku, which last year recorded its highest number of FDI projects since 2017. Alongside several logistics FDI projects, Hungary-based Hell Group plans to invest $211m into an aluminium beverage can plant in the city’s Alat Free Economic Zone.

The spread of FDI growth was demonstrated by the diverse make-up of the remaining top 10 global cities. A number of other cities saw significant FDI growth in their respective regions, including the US city of Memphis in North America; Costa Rica’s Cartago in Latin America and the Caribbean and Senegal’s capital Dakar in Africa. 

The region with the highest FDI growth in 2023 was Sumatra in Indonesia due to infrastructure development and large Chinese investments into downstream natural resources supply chains.

Calabarzon, the region south of Philippines capital Manila, had the second highest growth due to major offshore wind power project pledges and a $200m investment from US semiconductor firm Analog Devices.

The third-ranked region was Baden-Württemberg, the German federal state home to the fast-growing FDI cities of Mannheim and Stuttgart. The remaining global top 10 regions included Binh Duong in Vietnam, several other German regions including Thüringen, Saxony-Anhalt and Bavaria, and Penang in Malaysia.

A number of other regions stood out in their respective continents including Colorado in North America, the west-central Mexican state of Aguascalientes in Latin America, southern and eastern Serbia in emerging Europe, the capital regions of Riyadh in Saudi Arabia and Lagos in Nigeria, and Japan’s third-largest island Kyushu in Asia-Pacific outside the Asean countries. 

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This article first appeared in the April/May 2024 print edition of fDi Intelligence.