World Economy Growth

Inflation is also down from the 2023 peak, said Shantanu Mukherjee of the UN Department of Economic and Social Affairs (DESA), presenting the report to journalists in New York. “In developed countries, tight labour markets are seeing wage increases for some parts of the population and also drawing people into the labor force, which is important,” he added. However, the outlook is only cautiously optimistic in the face of higher-for-longer interest rates, debt sustainability risks and continuing geopolitical tensions.

Islands at risk

Ever-worsening climate shocks are also a challenge, threatening decades of development gains, especially for the world’s Least Developed Countries (LDCs) and small island developing States (SIDS). Even though prospects for SIDS are being revised upwards to about 3.3 per cent each year, Mr. Mukherjee said this is still below the pre-pandemic average, meaning that “lost ground is still not being made up.” In the case of Africa and LDCs in general, prospects are revised downward to about 3.3 per cent growth in 2024.

Concern for the continent

This is particularly worrying because Africa is home to about 430 million living in extreme poverty and close to 40 per cent share of the global undernourished population,” he explained. Furthermore, two-thirds of the high inflation countries listed in the report are on the continent. “At the same time, cause for concern is that African governments’ room to maneuver is also shrinking,” he continued. “In 2024, over a quarter of public revenues on average in this continent went towards interest payments. That's again about 10 percentage points more than the average over the years immediately preceding the pandemic.” For developing countries, on average, the debt situation is not as dire, but he was concerned that investment growth continues to fall. These “downsides” are further compounded by risks such as inflation, which is both a symptom of the underlying fragility and a concern on its own.

Break the ‘resource curse’

The report also contains a special section on critical minerals such as lithium, nickel, cobalt and copper, that are essential for the transition to clean energy. Countries that possess these resources will, however, need smart policies, as well as effective implementation capacities to reap the benefits. Mineral-sector driven grown has in the past often been associated with environmental damage, stunted development of other sectors, poverty, conflict and other adverse outcomes collectively known as the “resource curse”. “It is imperative for developing countries to design and implement well-targeted and timely economic, social, and environmental policies to optimize the benefits of their critical minerals endowments and avoid another cycle of resource curse,” the report said.

World Investment

2024 World investment report

International investment trends

Global foreign direct investment (FDI) in 2023 decreased marginally, by 2 per cent, to $1.3 trillion. This headline figure was affected by wild swings in financial flowsthrough a small number of European conduit economies; excluding the effect of these conduits, global FDI flows were more than 10 per cent lower than in 2022. The global environment for international investment remains challenging in 2024. Weakening growth prospects, economic fracturing trends, trade and geopolitical tensions, industrial policies and supply chain diversification are reshaping FDI patterns, causing some multinational enterprises (MNEs) to adopt a cautious approach to overseas expansion. However, MNE profit levels remain high, in 2023 will positively affect FDI. Modest growth for the full year appears possible. International project finance and cross-border mergers and acquisitions (M&As) were especially weak in 2023. M&As, which mostly affect FDI in developed countries, fell by 46 per cent in value. Project finance, important for infrastructure investment, was down 26 per cent. Tighter financing conditions, investor uncertainty, volatility in financial markets and – for M&As – tighter regulatory scrutiny were the principal causes of the decline. Greenfield investment project announcements provided a bright spot. Project numbers increased by 2 per cent, with the growth concentrated in manufacturing, interrupting a decade-long trend of gradual decline in the sector. Furthermore, growth was concentrated in developing countries, where the number of projects was up by 15 per cent. In developed countries new project announcements were down 6 per cent. © 2023 Koto Amatsukami/Shutterstock

In developed countries, the 2023 trend was strongly affected by MNE financial transactions, partly caused by moves to implement a minimum tax on the largest MNEs. FDI flows in Europe jumped from negative $106 billion in 2022 to positive $16 billion because of volatility in conduit economies. Inflows to the rest of Europe were down 14 per cent. Inflows in other developed countries also stagnated, with a 5 per cent decline in North America and sizeable falls elsewhere. FDI flows to developing countries fell by 7 per cent to $867 billion, mainly due to an 8 per cent decrease in developing Asia. Flows fell by 3 per cent in Africa and by 1 per cent in Latin America and the Caribbean. The number of international project finance deals fell by a quarter. Greenfield project announcements in developing countries increased by more than 1,000, but these projects were highly concentrated; South-East Asia accounted for almost half, West Asia for a quarter and Africa registered a small increase, while Latin America and the Caribbean attracted fewer projects. • FDI inflows to Africa declined by 3 per cent in 2023 to $53 billion. Greenfield announcements included several megaprojects, including the largest announcement worldwide – a green hydrogen project in Mauritania. International project finance fell by a quarter in number of deals and by half in value, negatively affecting prospects for infrastructure investment. FDI in developing Asia fell by 8 per cent to $621 billion. China, the second largest FDI recipient in the world, saw a rare decline in inflows. Sizeable declines were recorded in India and in West and Central Asia. Only South-East Asia held steady. Industrial investment in Asia remains buoyant, as shown by greenfield announcements, but the global downturn in project finance also affected the region. • Flows to Latin America and the Caribbean were down 1 per cent, at $193 billion. The number of international project finance and greenfield investment announcements fell, but the value of the latter increased because of large projects in commodity sectors and critical minerals, as well as in renewable energy, green hydrogen and green ammonia. FDI flows to the structurally weak and vulnerable economies increased. FDI inflows to the least developed countries (LDCs) rose to $31 billion, or 2.4 per cent of global FDI flows. Landlocked developing countries and small island developing States also saw increased FDI. In all three groups, FDI remains concentrated among a few countries. International project finance is relatively more important in the poorest countries, which are therefore disproportionally affected by the global downturn in this form of investment. Industry trends showed lower investment in the infrastructure and digital economy sectors, but strong growth in the global value chain-intensive sectors of manufacturing and critical minerals. Weak project finance markets negatively affected infrastructure investment, and digital economy sectors continued their slowdown after the boom ended in 2022. Global value chain-intensive sectors, including the automotive, electronics and machinery industries, grew strongly, showing the effect of supply chain restructuring pressures. In critical minerals extraction and processing, investment project numbers and values nearly doubled. Global economic fracturing trends are affecting the investment strategies of manufacturing MNEs. The investment behaviour of the top 100 non-financial MNEs shows that, since 2019, the geographical distribution of manufacturing projects, especially in strategic sectors, has shifted towards locations closer to major MNE home markets in Europe and the United States. West Asia, North Africa and Central America are emerging as strategic locations for manufacturing MNEs. International investment in sectors relevant for the Sustainable Development Goals in developing countries declined in 2023. Growth in greenfield project announcements, especially in renewable energy, power and transportation, pushed up the numbers. In value terms, Goals investment in developing countries fell because of the downturn in international project finance, used for larger projects in infrastructure sectors. Project numbers in agrifood systems and in water and sanitation were lower than they were in 2015 when the Goals were adopted. Goals investment is also unequally distributed. The shares of global Goals investment projects attracted by Africa and by Latin America and the Caribbean are smaller than their shares in all projects. Only developing Asia attracts above-average Goals investment.

Investment policy trends

The number of investment policy measures adopted in 2023 was 25 per cent lower than in 2022 but still in line with the five-year average. Most measures, 72 per cent, were favourable to investors. The overall balance between favourable measures (liberalization, promotion, facilitation) and less favourable ones (restrictions on entry and operation) was unchanged. Developing countries mostly aim to promote and facilitate investment, whereas developed countries lean towards more restrictive measures. In developing countries, 86 per cent of measures were favourable to investors. In developed countries, 57 per cent of measures were less favourable to investors. Most of these concerned restrictions to address national security concerns. Investment facilitation and incentives were the main types of measures favourable to investors in both developed and developing countries. Facilitation measuresreached almost 40 per cent of favourable measures and 30 per cent of all measures – a record. For incentives, the services sector and renewable energy were the primary focus in 2023. Heightened caution towards foreign investments in critical sectors persisted in 2023. The introduction or expansion of FDI screening mechanisms accounted for nearly half of the measures less favourable to investors. Four additional countries implemented FDI screening in 2023, with several more expected to follow in 2024. Countries that conduct FDI screening now account for over half of global FDI flows and three quarters of FDI stock. FDI restrictions also increasingly affect outward FDI. Outward FDI policies have evolved over the past decade, reflecting the growing importance of both sustainability and geopolitical considerations in shaping investment policies. 2024 vic josh/Shutterstock

In 2023, countries and regions concluded 29 new international investment agreements (IIAs). Traditional bilateral investment treaties accounted for fewer than half of the new treaties; most were broad economic agreements with investment provisions. Efforts to reform the IIA regime are continuing. New treaties tend to include features aimed at safeguarding the right to regulate and they increasingly cover a broader range of issues, including investment facilitation. The recent finalization of the Investment Facilitation for Development Agreement by participating members of the World Trade Organization may provide further impetus for this trend. Reform of the stock of old-generation IIAs continues to be slow. About half of the global stock of FDI is still covered by IIAs that have not been reformed, which expose countries to higher risk of investor–State dispute settlement cases. This share is about two thirds for developing countries and closer to three quarters for LDCs. Only 16 per cent of global FDI stock is today covered by a new-generation IIA; reform efforts have so far had a limited effect on mitigating the risk of ISDS, especially in the poorest countries. The total ISDS case count reached 1,332, with 60 new arbitrations initiated in 2023. About 70 per cent of new cases were brought against developing countries, including three LDCs. International investors in the construction, manufacturing and extractive sectors accounted for over half of the claims in 2023. UNCTAD continues to play a leading role in facilitating IIA reform. It launched the Multi-Stakeholder Platform for IIA Reform during the UNCTAD World Investment Forum to chart the way forward towards an investment regime that puts sustainable development at its core.

Sustainable finance trends

The sustainable finance market continues to grow, but there are clear signs of a slowdown. In 2023, the value of sustainable investment products, encompassing bonds and funds, increased by 20 per cent to more than $7 trillion. However, much of the increase was driven by cumulative issuance and rising valuations, and some segments of the market struggled. Sustainable bonds showed marginal growth. Issuance climbed 3 per cent to $872 billion, bringing the outstanding value of the market to more than $4 trillion. Green bonds were the main driver of growth, while issuance in other segments, especially social bonds, fell. Sustainable funds experienced strong headwinds. Despite continued growth in the number of funds and asset values, net inflows dropped from $161 billion in 2022 to $63 billion in 2023. In the principal markets, funds in Europe lost growth momentum and those in the United States saw significant net outflows, exceeding those of the broader fund market. Greenwashing poses the most significant challenge to the sustainable fund market. The average net exposure of green funds to climate-positive assets (lowcarbon assets minus fossil fuels) is only about 20 per cent, and fewer than 5 per cent of these funds are free from oil and gas assets. Further systemic efforts are needed to tackle greenwashing, including well-defined product standards, robust sustainability disclosures, external auditing and third-party ratings. Institutional investors made progress on sustainability reporting, but significant gaps remain. In 2023, 58 of the top 100 sovereign wealth and public pension funds monitored by UNCTAD reported on their sustainability performance, up from 55 in 2022. Only a quarter of reporting funds used third-party verification.

Institutional investors are not moving fast enough to reorient portfolios. Most reporting funds have set out strategies to address climate change. However, only one in three have set a target for fossil fuel divestment and investment in renewables. Governments in both developed and developing economies are accelerating sustainable finance policymaking. In 2023, 35 economies tracked by UNCTAD, covering the world’s largest financial markets, introduced 94 new measures and initiatives, up from 63 in 2022. Policy measures mostly concerned disclosure rules, new national strategies, frameworks and guidelines, and (financial) sector- and product-specific requirements. Developing countries are becoming increasingly active in sustainable finance policymaking. They accounted for about 60 per cent of new policy measures in 2023. These measures were mostly concentrated in the largest developing economies or financial centres. Developing countries as a group continue to face challenges in leveraging sustainable finance, as evidenced by the persistently low sustainable investment flows. International standards will have significant spillover effects. The new disclosure standards issued by the International Sustainability Standards Board and the European Union will affect firms based outside the main financial markets for which they were primarily developed. Companies in developing countries that are part of the supply chains of firms in those markets will face greater pressure to meet higher sustainability standards, and compliance may become a prerequisite for market access. A key policy challenge is to avoid widening resistance to sustainable investment strategies in financial markets and – more broadly – to sustainability and disclosure requirements. In the United States, 17 states have passed legislation prohibiting fund managers from considering environmental, social and governance factors in their investment decisions or prohibiting states from contracting with asset managers that exclude certain industries, such as fossil fuels, from their portfolios. For firms worldwide, the complexity and compliance costs associated with sustainability reporting are a growing concern.

Investment facilitation and digital government

Investment facilitation has emerged as a top priority for investment policymakers worldwide. Since the publication of the UNCTAD Global Action Menu on Investment Facilitation in 2016, an international agreement on investment facilitation for development has been negotiated, facilitation has become a mainstay in regional and bilateral trade and investment agreements, and national implementation efforts have proliferated. Business and investment facilitation have become central to both private sector development and FDI attraction in developing countries. Making it easier to establish and operate a business not only attracts foreign investors but also improves the business environment for local firms, supporting the formalization and growth of micro, small and medium-sized enterprises. At the core of facilitation efforts are information provision, transparent rules and regulations, and streamlined administrative procedures. Because these elements revolve around information and procedures, digitalization is central to their effective implementation. Business and investment facilitation have thus led to a wave of digital government initiatives, including information portals and online single windows. Such initiatives now make up a significant share of national investment policy measures monitored by UNCTAD; modern IIAs also increasingly encourage digitalization to implement commitments.

The number of digital facilitation tools has grown significantly in recent years, and their quality has improved. UNCTAD data show that the number of national government information portals for business and investor registration in developing countries increased from 82 in 2016 to 124; in developed countries, it increased from 43 to 48. In developing countries, the number of online single windows – which allow for multiple procedures to be carried out online – increased from 13 to 67 in the same period; in developed countries it increased from 12 to 28. The quality of portals has also improved, with some in LDCs rivaling those in developed countries, showing that leapfrogging opportunities exist. Challenges remain in building, maintaining and enhancing digital platforms. Despite progress, issues such as outdated information, portal closures and “single window dressing” persist. Continuous updates, clear ownership and adequate resources are essential for the long-term success of digital facilitation platforms. Technical support for developing countries is important; the highest-rated portals in LDCs often were created through development assistance. Digital government tools can have a positive impact on FDI attraction. On average, for each additional point in the quality of digital business and investment facilitation portals (in the rating methodology of the UNCTAD Global Enterprise Registration initiative), developing countries gain about 8 per cent more FDI. This effect is not automatic; it is part of the impact of broader investment climate improvements. Digital business and investment facilitation also boosts formalization and inclusivity. Countries that implement digital single windows see substantial increases in small business registrations. Many new businesses are established by women, young entrepreneurs and populations outside urban centres, indicating that platforms improve access to services, even in countries with a significant digital divide. Governments should adopt a comprehensive approach to digital investment facilitation, avoiding dedicated processes for investment procedures. Progressively incorporating all mandatory procedures for business establishment, such as business registration, tax and social security, and operating licenses, helps capture economies of scale and scope and ensures that benefits extend to all firms, foreign and domestic, large and small. Digital business and investment facilitation can be a stepping stone for wider implementation of digital government. Because the basic architecture of digital government solutions is fundamentally the same across many types of services, platforms can gradually extend beyond the core mandatory procedures for investor entry and business establishment. Other administrative procedures affecting business operations may be sector specific or cover policy areas ranging from the environment to health and safety, labour and social issues. Business and investment facilitation provides a bottom-up avenue to digital government development. Such an approach, starting from basic services for business – usually the first government services to be digitized – and gradually expanding to adjacent policy areas can begin in one or a very few public sector entities, does not necessarily depend on major legislative interventions, is relatively low cost, and adds immediate value to users and revenue-generating potential for government. Such a bottom-up approach provides a valuable complementary route for developing countries. The prevailing guidance on digital government implementation favours a top-down approach based on a national strategy and supported by a digital government authority. Although central steering is necessary to push enabling legislation, budget support and stakeholder engagement, it can lead to lengthy and complex programmes that are often too costly for developing countries to pursue. Online single windows for businesses and investors can add value quickly and cheaply, and gradually expand coverage of services and institutions. Wider implementation of digital government is a natural complement to investment policy. Online information and streamlined processes alone cannot bring the sea change in investment potential that is needed in many developing countries. Surveys of investors and investment promotion agencies consistently show that weaknesses in governance and institutions are among the most important challenges in attracting foreign investment. Digital government, by increasing transparency, improving efficiency and reducing corruption, helps address those weaknesses and support investment for sustainable development objectives. The digital tools for business and investment facilitation included in the UNCTAD Digital Government Platform are operational in more than 60 countries. Looking ahead, UNCTAD will continue to support developing countries and – in collaboration with other international organizations – look for opportunities to maximize the benefits of digital government for the promotion of investment in sustainable and inclusive development.

The World of Finance

You may have heard the phrase, “A dollar today is worth more than a dollar in the future” but what does that really mean? This phrase derives from the time value theory of money. Money is essential for the world of finance. Finance comprises of multiple facets including banking, credit, debt, financial markets, investing, asset management, and much more. The world of finance revolves around managing money and how to use that money to fund projects and companies. This world can be broken down into three main categories: personal finance, corporate finance, and public finance

Personal Finance

Personal finance involves the financial planning of managing your money and saving and investing. This includes banking, budgeting, debt, mortgages, insurance, retirement planning, and tax planning. Personal finance is about meeting certain financial goals for individuals whether it be short-term or long-term financial goals and can be done with a financial planner or by yourself.
These goals depend on your income, expenses, living requirements, and needs that vary from person to person and by utilizing personal finance correctly, you can achieve the financial goals specific to you. To become financially free, the first step is to start financial planning. Here are five personal finance tips to follow to reach your financial goals:

1. Use The 50/30/20 Rule

This budgeting method is widely popularized for its simplicity and offers a great framework for reaching your financial goals. The breakdown for this method is:

• 50% of your net income goes towards needs such as rent/mortgage, utilities, transportation, and groceries. The essentials to live.
• 30% of your net income goes towards wants such as going out to eat, shopping for clothes, purchasing technology.
• 20% of your net income goes towards savings or expenses such as student debt or credit card bills.

2. Create an Emergency Fund

Most Americans don’t think about creating and emergency fund because they don’t think anything bad could happen to them in their life.
This is where they’re wrong.
For example, say the company you work for had to let you go. Instead of scrambling around looking for another job and seeming hopeless, a six month emergency fund to cover living and expenses would be able to save you in your time of need and give you time to find the right job for you.

3. Maximize Tax Breaks

The IRS is notorious for having complex rules and regulations that leave many individuals paying higher taxes without maximizing on the tax deductions available to them. Learn the tax deductions and you can maximize the deductions when doing your annual taxes.

4. Pay Off Student Loans

Depending on your interest rate, student loan debt may be present well into your mid-life years leaving you to pay interest on top of your principal years or decades after graduating from college. Paying off these loans will alleviate a large sum of your debt and give you more freedom to use your income in other ways.

5. Use Credit Cards Wisely

Credit card usage directly affects your credit score, so by utilizing credit cards wisely, you can increase your credit score rather than decrease it. A good rule to follow with credit cards is to always make on-time payments every month in full or at least above the minimum amount. This will create a good credit history and improve your credit score as you utilize credit.
Corporate finance involves financing, corporate structuring, and investment decisions related to corporations and projects within these corporations.
Corporate finance looks at the investment decisions necessary to achieve short-term and long-term financial goals within a corporation. Investment bankers and financial analysts work in this sector of finance.
In addition to these crucial decisions for a corporation, corporate finance also entails sourcing capital through initial public offerings and bonds. Forecasting the industry and determining whether to pursue a project are also financial activities in corporate finance.

Public Finance

Public or government finance is the process of spending, budgeting, and debt issuance policies that determine how the government pays for the services provided to the public. The government uses public finance to prevent market failure, stabilize cities and economies, and distribute money to citizens entitled through retirement, welfare, and social security. The government sources funding through taxation, other countries, and banks that attributes to establishing security in the United States’ financial institutions.

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