India and China are the largest countries in the world, by population, by some margin. Yet the two countries are on very different foreign direct investment (FDI) trajectories. India has seen a record number of inward greenfield investments in 2022 and ranks as the third-largest recipient globally. On the other hand, China’s inward investment levels fell by 19%. In fact, India now receives three times more FDI projects than China.

Some other FDI heavyweights such as the US are also among the most populous countries in the world.

Although a large population does not strictly mean high levels of inward investment, there is a statistically significant correlation.

Nine of the top ten most populous countries are defined by the International Monetary Fund (IMF) as emerging market and developing economies.

These countries have varying levels of FDI strength and sector specialisations. The largest countries in the world by population are India, China, the US, Indonesia, Pakistan, Nigeria, Brazil, Bangladesh, Russia and Mexico.

Here we profile each of them and look at the FDI sectors in which they excel.

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1. India

Population: 1.42 billion

Population projected for 2050: 1.67 billion

India overtook China to become the largest country in the world in 2022. In 2023, it has around ten million 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. The country is divided into 28 states and eight territories. Uttar Pradesh has the highest number of citizens of any state ­– almost 240 million. In fact, if it were a country, it would rank fifth on this list, ahead of Pakistan. However, in terms of inward investment receipts, Uttar Pradesh is dwarfed by several other Indian states, including Maharashtra and Karnataka.

India has seen its inward receipt of FDI soar in recent years. The south Asian nation is now the third-largest recipient globally by number of projects. It accounts for the highest number of inbound software and IT service projects – double the number into the US. India is also the largest receiver of projects in the automotive, business and professional services, industrial machinery, metals and minerals and consumer goods sectors.

2. China

Population: 1.41 billion

Population projected for 2050: 1.31 billion

Unlike India, China is witnessing falling levels when it comes to both population and FDI. Its population is forecast to be down by 100 million in 2050 when compared with 2023, according to UN projections, while inward investment projects have been declining since 2019.

China’s one child policy (although now scrapped) has tempered population growth. Additionally, rising living costs are placing pressures on people having larger families. China also has the fourth-largest number of emigrants globally.

China is in a period of FDI decline. Inward investment volumes are 19% lower in 2022 compared with 2021. China ranks as the 12th-largest inbound market for greenfield FDI, having been ninth in 2021. Electronics, business and professional services and automotive sectors were the country’s most popular FDI sectors in 2022. However, chemicals and plastics are also important to the country's economy, where China accounts for 5.9% and 7.9% of the global FDI market, respectively.

3. The US

Population: 335 million

Population projected for 2050: 375 million

The US is only developed economy in the top ten listing. 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 are also heavily populated. At the other end of the scale, Wyoming is the smallest US state by population. It is home to only 580,000 people, despite being the tenth-largest state by area.

The US is the world's largest inbound and outbound FDI market. US companies are responsible for 23% of all greenfield investments globally, while 9% of global FDI is destined for the US.

The US receives a mix of inward investment. Service-based investments in the fields of technology and business services are the most frequent investment types. However, the US does receive significant investments in more manufacturing-based sectors such as electronics, industrial machinery and automotive. The US has introduced measures such as the Chips Act and its Inflation Reduction Act to attract more foreign investment in key strategic sectors. These acts also entice US companies to manufacture locally, instead of investing abroad.

Read through Investment Monitor’s 30 largest cities in the US

4. Indonesia

Population: 277 million

Population projected for 2050: 317 million

Indonesia is currently pursuing plans to create a new capital city, Nusantara. It will be located in Borneo, the third-largest island in the world. Jakarta, the country’s current capital city, has become overpopulated and over-polluted. Also, risks of water issues –⁠ through both floods and droughts –⁠ are ever increasing. In moving its capital, officials expect the population in Jakarta to fall (from the current 10.5 million) to ease these pressures.

The new capital city should also be a centrepiece for FDI attraction. Indonesia currently ranks as the 28th-largest recipient of greenfield FDI globally. Although it is underperforming (it ranks as the 17th-largest country by GDP), its number of FDI projects increased by 66% in 2022. Software and IT services and business and professional services are key sectors in terms of both the number of projects and growth in FDI in Indonesia. Renewable energy and electronics are other key growth areas.

5. Pakistan

Population: 231 million

Population projected for 2050: 368 million

Pakistan has a population of 231 million, which is expected to continue to grow rapidly. The World Bank suggests that Pakistan needs fundamental shifts in its development path and policies to alleviate climate-induced disasters. This will require substantial investment.

Yet Pakistan is a relatively poor recipient of FDI. It ranks 60th globally in terms of inward FDI projects. Although investment levels did pick up in 2022, they remain relatively low. The country’s leading FDI sectors are technology and business services.

6. Nigeria

Population: 222 million

Population projected for 2050: 377 million

Nigeria is Africa’s most populous country. In fact, one in seven Africans reside in Nigeria. The large population also means Nigeria is Africa’s biggest economy; its GDP is just over $500bn. However, in terms of GDP per capita, Nigeria only ranks 21st within Africa. Its GDP per head is just $2,280.

Nigeria’s leading FDI sector is communications and media. This is driven by investments in data centres and points of presence/internet exchange points. Financial services is another key sector for the country. It ranks 24th globally for inbound financial services FDI – its highest global ranking across all sectors.

7. Brazil

Population: 215 million

Population projected for 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). Combined they account for almost 9% of the total Brazilian population.

Brazil is also the largest recipient of inward investment in South and Central America. In fact, it accounts for almost half of all FDI projects into the region. Brazil receives the most inward investment in its communications and media sector. Several large US companies have launched 5G and fibre network infrastructure projects in Brazil since 2020, while renewable energy is another key sector for the country, which accounts for around 4% of renewable energy FDI projects worldwide. Electronics is another current booming sector, with mid-year 2023 data suggesting its number of announced electronic FDI projects have already surpassed its previous annual total.

8. Bangladesh

Population: 170 million

Population projected for 2050: 204 million

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 is known for its garment exports, which account for around 80% of its total exports. Its primary export markets are the US, the EU and UK.

Bangladesh’s largest FDI sector is textiles. Inward investments in textiles ramped up significantly in 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. The facility could generate more than 15,000 jobs. Meanwhile, Sri Lanka-based Gava revealed plans to invest $26m to open a new garment factory at the Dhaka Export Processing Zone. The project is expected to provide more than 3,000 employment opportunities.

9. Russia

Population: 143 million

Population projected for 2050: 133 million

Since 1990, Russia’s population growth has been somewhat stagnant, occasionally showing a slight decline. Due in part to its invasion of Ukraine in 2022, which saw many Russians fleeing the country, its population is expected to decline over the next few decades. Although it is the largest country in the world geographically, it ranks as only the ninth largest in terms of population (and sinking).

Russia’s inward FDI has plummeted since its invasion of Ukraine. In 2022, only 39 FDI projects were announced in the country. This compares with 333 in 2019 – an 88% decline. With many Western companies moving operations out of the country, Russia is on a drive to seek alternative markets to increase foreign capital coming into the country. Although it passed laws to encourage foreign companies to have a physical (non-retail only) presence in the country, few have complied. However, in February 2022, Apple was one of the largest tech companies to establish a corporate office in Moscow.

10. Mexico

Population: 131 million

Population projected for 2050: 144 million

Mexico is one of the fastest-developing countries in the world. This is evidenced by its changing demographics. In the 1960s, half of the country’s population resided in rural areas. However, this has now fallen to 21%.

Its capital city, Mexico City, is now home to more than 12 million people, with its metropolitan area totalling over 20 million. Mexico City accounts for around 10% of the country’s total population. Other large cities include Tijuana, Leon and Puebla.

Mexico is a manufacturing hub, with manufacturing FDI accounting for more than one-third (36%) of its total number of FDI projects in 2022. Its key sector, automotive, had seen a steep decline in inward investment projects in 2020, due to Covid-19. Although it recovered in 2021 and 2022, growth was perhaps slower than expected. However, the outlook for 2023 looks more positive, with numerous investment announcements from Asian and German companies. Other key manufacturing sectors include electronics and industrial machinery. Mexico is also well positioned to benefit from the nearshoring trend. In 2022, Mexico received more greenfield investments from the US than it did in 2019 (pre-Covid).

Software and IT services overtook automotive to become the country’s largest FDI sector (by number of projects) in 2022. The number of tech investments into the country doubled between 2021 and 2022. Companies such as HCL Technologies see Mexico as a strong R&D hub. The India-based IT services and consulting company announced plans to open its sixth technology centre and expand its workforce in Guadalajara, and the company is expected to create 1,300 new jobs over two years through the project.