India and China have a large population difference. The two countries have very different FDI (foreign direct investment) trajectory. India is the world’s third largest recipient of greenfield investment and has experienced a record-breaking number inflows in 2022. On the other hand, China’s inward investment levels fell by 19%. India receives more than three times as many FDI projects now as China.
Other FDI giants, such as the US, are among the most populous nations in the world.
There is statistically significant correlation between a high population and high inward investment.
The International Monetary Fund defines nine of the ten countries with the highest population as developing and emerging markets.
These countries differ in their FDI strengths and sectors specialisations. India, China the US, Indonesia Pakistan Nigeria Brazil Bangladesh Russia and Mexico are the top countries on the planet by population.
Each of these countries is profiled and the FDI sector in which they excell.
1. India
Population: 1,42 billion
The population projected by 2050 is 1.67 billion
In 2022, India was the biggest country on the planet. By 2023 it will be home to around ten millions more people than China. The growth is set to be sustained – India’s population is forecast to be 18% higher in 2050 than it is in 2022. There are 28 state and 8 territories in India. Uttar Pradesh has the highest number of citizens of any state – almost 240 million. If it was a nation, Uttar Pradesh would be ranked fifth, just ahead of Pakistan. In terms of incoming investment, Uttar Pradesh, along with Maharashtra, and Karnataka, is dwarfed.
India’s FDI inflows have risen dramatically in the last few years. South Asia is the world’s third largest recipient of FDI by projects. It accounts for the highest number of inbound software and IT service projects – double the number into the US. India also receives the most projects from the automobile, business and professional service, industrial machinery and mineral, and consumer goods industries.
2. China
Population: 1.4 billion
Population projection for 2050 : 1,31 billion
China, unlike India is experiencing a decline in both population and foreign direct investment. UN projections predict that China’s population will be 100 million lower in 2050 than it was in 2023. Inward investment projects are also declining.
China’s one child policy (although now scrapped) has tempered population growth. Increasing living costs also put pressure on families to have more children. China has also the largest number of global emigrants.
China has entered a phase of declining FDI. Inward investment volume is down 19% in 2022 as compared to 2021. China is now the 12th largest inbound market in terms of greenfield FDI. It was ninth in 2020. Electronics, business and professional services and automotive sectors were the country’s most popular FDI sectors in 2022. But chemicals and plastics also play a significant role in the economy of China, with China accounting for respectively 5.9% and 7.9% on the global FDI markets.
3. The US
Population: 335 Million
Population projection for 2050: 375 million
Only the US has a developed economy amongst the top 10. Despite accounting for only 4% of the world’s population, it is responsible for one-quarter of the world’s economic output. California is the US state with the highest number of residents – about 39 million people. Texas, Florida, and New York also have a high population. Wyoming has the lowest population of any US state. Despite being the tenth biggest state in terms of area, it is home to just 580,000 people.
US companies are responsible for 23% of all greenfield investments globally, while 9% of global FDI is destined for the US. US companies account for 23 percent of greenfields investments worldwide, while 9 percent of global FDI is directed to the US.
Inward investments are mixed in the US. Most of the inward investment is made up of service-based investments, mainly focused on technology and services for business. The US receives significant investment in manufacturing sectors like electronics, industrial machines and automobile. US measures like the Chips Act, and Inflation Reduction Act have been introduced to encourage more foreign investments in strategic key sectors. The US has introduced measures such as the Chips Act and its Inflation Reduction Act to attract more foreign investment in key strategic sectors.
Read through Investment Monitor’s 30 largest cities in the US https://www.investmentmonitor.ai/cities/largest-cities-us-usa-investment-strengths/
4. Indonesia
Population: 272 million
Population projection for 2050 : 317 millions
Indonesia has plans for a Nusantara, a brand new capital. Borneo will host the new city, making it the third biggest island in the entire world. Jakarta, the country’s current capital city, has become overpopulated and over-polluted. There are risks associated with water problems. – Both floods as well as droughts – These pressures continue to increase. The population of Jakarta is expected to decrease (from its current 10,5 million people) in order to relieve these pressures.
The new city capital is also a key attraction for FDI. Indonesia ranks 28th in terms of global greenfield FDI. Despite its underperformance (it is ranked 17th in the world by GDP), Indonesia’s number of FDI project increased by 66% by 2022. Indonesia has seen a significant increase in FDI projects in the software, IT and business services sectors. Other key areas of growth include renewable energy and electronic devices.
5. Pakistan
Population: 231,1 million
Population forecast for 2050 : 368 Million
Pakistan’s population is 231 millions, and it will continue to increase rapidly. World Bank says that Pakistan must make fundamental changes to its policies and development plan in order to reduce climate-related disasters. The investment required will be substantial.
Pakistan has a poor record of receiving FDI. In terms of FDI inward projects, it ranks 60th in the world. Even though investment rates increased in 2022 they are still relatively low. The country’s leading FDI sectors are technology and business services.
6. Nigeria
Population: 22 million
Population forecast for 2050 : 377 Million
Nigeria is Africa’s most populous country. Nigeria is home to one out of seven Africans. The large population also means Nigeria is Africa’s biggest economy; its GDP is just over $500bn. Nigeria is ranked 21st in Africa for GDP per capita. Nigeria’s GDP is $2,280 per person.
Nigeria’s leading FDI sector is communications and media. The sector is primarily driven by data centres, points of presence/internet interchange points and investments. Another important sector in the country is financial services. It ranks 24th globally for inbound financial services FDI – its highest global ranking across all sectors.
7. Brazil
Population: 215 Million
The population projected by 2050: 231 Million
Brazil is South America’s largest country in terms of both geography (8.5 million square kilometres) and population. São Paulo and Rio de Janeiro are the country’s two largest cities (and states). They account for nearly 9% of Brazil’s total population.
Brazil also receives the most inward investments in South and Central America. FDI accounts for more than half of all projects in the region. Brazil is the recipient of most foreign investment into its media and communications sector. Several US-based companies have invested in 5G network infrastructure and fibre projects since 2020. The renewable energy sector is also a key area for Brazil, with around 4% renewable energy FDI worldwide. In addition to electronics, the sector has been booming. According to data from 2023 (mid-year), its announced electronic FDI had already exceeded previous year’s total.
8. Bangladesh
Population: around 170 millions
The population projected by 2050 is 204 millions
Bangladesh is located in south Asia, and is almost completely surrounded by India. The locally known Radcliffe Line – the Bangladesh-India border that stretches for more than 4,000km – is the fifth-largest land border in the world. Bangladesh exports around 80% its exports in the form of garments. Bangladesh’s main export destinations are the US and the EU.
Bangladesh’s largest FDI sector is textiles. The amount of inward textile investments increased significantly by 2022. In December 2022, China-based Fenix Garment announced it will establish a $40m high-end garments manufacturing plant in Bangladesh’s Export Processing Zone Authority. It could create over 15,000 new jobs. Gava, a Sri Lankan company, announced plans to invest 26 million dollars to build a new factory in the Dhaka Export Processing Zone. It is estimated that the project will provide over 3,000 job opportunities.
9. Russia
Population: about 143 Million
Population for 2050 projected at 133 millions
Since 1990, Russia’s population growth has been somewhat stagnant, occasionally showing a slight decline. In part due to the Russians who fled the country after the 2022 invasion, the population of Russia is predicted to decrease over the coming decades. Although the country is one of the biggest in terms geographically, its population ranks only ninth in the world (and it’s sinking).
Russia’s inward FDI has plummeted since its invasion of Ukraine. Only 39 FDI project announcements were made in 2022. This compares with 333 in 2019 – an 88% decline. Russia has been looking for alternative markets in order to attract more foreign capital into the country. Many Western companies have moved their operations outside the country. Few foreign companies have followed the laws that encourage them to establish a physical presence (not just retail) in Russia. Apple established a Moscow corporate office on February 20, 2022.
10. Mexico
Population: 131 Million
Population for 2050 projected at 144 millions
Mexico is among the countries that are developing the fastest in the World. Demographic changes in Mexico are a good indicator of this. In the 1960s, half of the country’s population resided in rural areas. In the last few decades, however, it has fallen to only 21%.
Mexico City’s metropolitan area is home to over 20 millions people. Mexico City accounts for around 10% of the country’s total population. Tijuana and Puebla are also large cities.
Mexico has become a hub for manufacturing, and manufacturing FDI will account for over one third (36%) in its 2022 total FDI project count. In 2020, the automotive sector saw a sharp decline in FDI projects due to Covid-19. The recovery was slower than anticipated in 2021-2022. The outlook for 2023 is more optimistic, as many Asian and German firms have announced investments. The manufacturing sector also includes electronics and industrial machines. Mexico can also reap the benefits of nearshoring. Mexico will receive more US greenfield investment in 2022 than it received from 2019 (pre Covid).
Software and IT services overtook automotive to become the country’s largest FDI sector (by number of projects) in 2022. Tech investments doubled in the country between 2021-2022. Companies such as HCL Technologies see Mexico as a strong R&D hub. India’s IT and consulting firm announced plans to build its sixth technology center and increase its staff in Guadalajara. It is estimated that the project will create over 1,300 new positions within the next two years.