VALPOP researcher Harald Puhr from the University of Innsbruck, together with Axèle Giroud and Jonas Puck, has published a review of UNCTAD’s World Investment Report 2025. The publication distils the report’s key messages and identifies priority questions for research and policy at a moment when the digital economy is accelerating, but the conditions for inclusive and sustainable outcomes remain uneven.

Digital economy trends and policy environment

The World Investment Report is one of the most widely used reference points for understanding global foreign direct investment (FDI) trends and the policy environment shaping them. The 2025 edition places the digital economy at the centre of that analysis, linking investment patterns to competitiveness, technology diffusion, infrastructure needs, and development outcomes. The review highlights why this matters for firms, policymakers, and researchers, and why it is highly relevant to VALPOP’s focus on institutions, governance, and the political economy of public value.

Mix of investment modes

A central message is that today’s investment landscape is not simply “up” or “down.” UNCTAD reports that the value of global FDI declined by 11 percent between 2023 and 2024, yet the headline figure conceals diverging trajectories across investment modes. In some areas, cross-border mergers and acquisitions are recovering, while other forms of investment that often underpin longer-term capacity building (e.g., greenfield projects and project finance) remain under pressure. This matters because the mix of investment shapes whether capital supports durable productive capacity, essential infrastructure, and innovation ecosystems, or instead reinforces short-term restructuring and concentration.

Policy and geopolitical mediation

The review also underscores that investment decisions are increasingly mediated by policy and geopolitics. UNCTAD documents a shift toward more assertive regulation of cross-border investment, including the continued expansion of screening mechanisms, frequently framed around national and economic security, sensitive technologies, data governance, and supply chain resilience. For firms, this raises the strategic premium on regulatory foresight and institutional navigation. For governments, it creates a dual challenge: protecting legitimate public interests while avoiding excessive fragmentation that undermines investment, competition, and diffusion of beneficial technologies.

Barriers to universal digital connectivity    

The digital economy is expected to remain a major engine of global growth, with UNCTAD citing expected annual growth of 10–12 percent. However, the review emphasises that “more digital” does not automatically mean “more inclusive.” The report highlights substantial financing gaps to achieve universal digital connectivity by 2030 (estimated at $1.6 trillion) and identifies structural barriers that may impede digital transformation. Market concentration is one such barrier: digital sectors often display winner-takes-most dynamics, with dominant firms shaping platforms, standards, and data ecosystems in ways that can entrench asymmetries. Regulatory capacity is another: the ability to design, implement, and enforce coherent frameworks around competition, data, consumer protection, and emerging technologies varies widely across jurisdictions.

Digital divide

A further concern raised in the report is the geographic concentration of investment in the digital economy. UNCTAD notes that, despite much larger investment gaps, developing countries attracted only $36 billion of greenfield investment in ICT and telecommunications infrastructure between 2020 and 2024, compared to $39 billion in developed countries. The implication is not simply a funding shortfall; it is a risk of reinforcing a “digital divide” where the places that most need investment struggle to attract it at scale, while the benefits of digital transformation accrue disproportionately to already-advantaged markets and firms.

Sustainable finance and credibility

The report’s discussion of sustainable finance adds a complementary dimension. UNCTAD observes that aggregate growth can mask divergence across instruments and regions; it estimates that publicly traded sustainable finance products exceeded $8.2 trillion in 2024, up 17 percent from 2023, yet they also face headwinds and investor caution. For the digital economy, where infrastructure, energy use, and data centres are increasingly salient, this raises practical questions about how capital is allocated, what standards govern sustainability claims, and whether financing supports credible transitions rather than superficial relabelling.

Digital investment is also a governance story

These themes speak directly to VALPOP’s objectives. VALPOP examines how institutional strength, governance capacity, and networked power shape socio-economic outcomes and the provision of public goods. Digital investment is not only an economic story; it is a governance story. Regulatory quality influences where firms invest and how they structure cross-border operations. Institutional capacity shapes whether investment contributes to broad-based connectivity and capability-building, or concentrates rents and deepens disparities. And geopolitical dynamics increasingly condition both the feasibility and the direction of international investment, particularly in sectors tied to data, security, and technological advantage.

Connecting macro-level shifts to corporate strategy and adaptation

By translating the World Investment Report’s evidence into a concise analytic narrative, our publication supports VALPOP’s broader ambition to connect macro-level shifts like political shocks, institutional arrangements, and policy choices to firm strategies and distributional outcomes. It also points to a practical research agenda at the intersection of international business, political economy, and institutional analysis: how firms adapt to fragmented regulatory regimes; how investment screening affects innovation and value chains; what governance designs can reduce connectivity gaps; and how accountability mechanisms can ensure that digital transformation delivers public value.