This policy brief explores the historical evolution and present condition of the global investment climate, showing how the concept of investment has developed from classical economic thought to contemporary approaches centred on innovation, risk, and institutional quality. Drawing on the ideas of Adam Smith, David Ricardo, John Maynard Keynes, Joseph Schumpeter, and Paul Romer, the study places current investment trends within a broader theoretical framework and demonstrates how traditional understandings of capital allocation have been reshaped by the realities of the modern global economy.
A central focus of the brief is the transformation of global foreign direct investment flows in the period from 2019 to 2025. Using UNCTAD data, the author analyses how the COVID-19 pandemic, geopolitical tensions, high interest rates, protectionist trends, and global uncertainty have affected investor behaviour. The brief highlights that although investment flows have shown signs of recovery after the pandemic shock, this recovery remains uneven, fragile, and highly sensitive to political and economic disruptions.
The study also pays particular attention to changing regional and sectoral patterns of investment. It shows that developing economies, especially in Asia, are playing an increasingly important role in attracting global capital, while green energy, digital technologies, ICT, and innovation-driven sectors are becoming more prominent in investment decision-making. In this context, ESG principles are presented not as an auxiliary consideration, but as an increasingly important determinant of long-term investment attractiveness and global competitiveness.
In conclusion, the policy brief argues that improving the global investment climate requires a comprehensive approach based on legal stability, macroeconomic predictability, institutional trust, technological readiness, and sustainable development strategies. It offers practical recommendations for states, international organisations, and investors, emphasising that the future of global investment will depend not only on capital availability, but also on the ability to create reliable, innovative, and resilient economic environments.
* The Institute for Advanced International Studies (IAIS) does not take institutional positions on any issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of the IAIS.
