Artificial intelligence (AI) is emerging as the top technology driving global foreign direct investment (FDI) growth, according to newly released data. At the World Free Zones Organization’s 10th Annual World Congress in Dubai, Henry Loewendahl, founder and CEO of Wavteq Group Limited and consultant with fDi Intelligence, highlighted the transformative role AI is playing in attracting FDI globally.
Between 2023 and July 2024, AI has been at the forefront, leading the way with nearly 1,000 greenfield FDI projects worldwide. Loewendahl noted the scale and impact of AI investments, particularly as free zones around the globe position themselves to attract cutting-edge high-tech ventures. This trend points to significant opportunities for regions looking to become AI investment hubs.
“The ability to track emerging technologies is revolutionizing the way we assess FDI opportunities,” said Loewendahl. “AI alone has generated almost 1,000 greenfield projects in the past year and seven months, offering massive potential for investment.”
One of the standout regions for AI investment is the United States, where the monthly expenditure on AI projects, including data centers, reaches an estimated $30 billion. This massive growth is driving worldwide FDI opportunities, particularly in free zones.
Other Emerging Technologies in FDI
While AI holds the lead, other emerging sectors are also attracting global FDI. These include cloud computing, fintech, electric vehicles, and cybersecurity. As these technologies continue to grow, they create additional investment avenues for nations and free zones.
UAE and KSA: Leading the Middle East in FDI
The Middle East has been a key region in this FDI surge, with the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) leading the charge. Between 2023 and July 2024, the UAE and KSA contributed 1.6% and 1.3% of global greenfield FDI projects, respectively. However, the job creation from these projects paints a different picture, with China leading the pack by creating 34.1% of all new FDI-related jobs.
Dubai: A Global FDI Powerhouse
One of the standout performers globally has been Dubai. For three consecutive years, Dubai has held the title of the top city for FDI projects, largely driven by the success of its free zones. In fact, nearly 60% of all FDI projects in the Middle East during this period were concentrated in free zones, with Dubai at the forefront.
“Dubai’s success with free zones has kept it at the top of global rankings for FDI projects,” Loewendahl noted. “However, the entire GCC region is becoming increasingly attractive to investors, with other countries also showing strong growth in their free zones.”
While Dubai leads in project numbers, other regions like the Asia-Pacific are seeing larger, more labor-intensive manufacturing investments, showcasing the different regional strengths within the FDI landscape.
Resilient FDI Amidst Global Challenges
Despite challenges like the global pandemic, global FDI flows have remained resilient, with investments reaching $1 trillion in 2023. Loewendahl emphasized that while there was a decline in FDI inflows, it was not a collapse, demonstrating the strength and adaptability of global investment, with reinvestments from existing companies accounting for 50% of all FDI.
As AI continues to drive FDI growth, regions like Dubai are positioning themselves as key players in the global landscape. With AI and other emerging technologies at the helm, the future of FDI looks set to break new ground.