Investment concentration could lead to an overdependence on a small number of global enterprises that can erode some of the developmental impact of foreign capital in developing countries. The trend can undermine competition, either through reduced market entry, or through excessive market power that stifles domestic producers. Furthermore, the concentration of foreign capital into fewer MNEs can also reduce the diffusion of critical technologies in developing economies, either through more effective and diverse appropriability strategies that these firms regularly employ (Mezzanotti & Simcoe 2023), or the decrease in labor market dynamism (De Loecker et al. 2020) or weaker incentives for innovation in the rest of the economy (Philippon & Gutierrez 2018).

The remainder of this paper is organized as follows. Section 2 describes the data on FDI projects we use to establish patterns of concentration. Section 3 discusses the measurement and empirical framework. Section 4 presents selected stylized facts about the evolution of investment concentration over time, its main features and associations. Section 5 provides conclusions and policy implications.

# **2 Data**

**Greenfield FDI.** Cross-border “greenfield investment” refers to the construction of new production facilities or expansion of existing ones. It differs from mergers and acquisitions - the other major component of FDI flows - in that it involves the generation of new productive capacity and jobs. These two components account for the bulk of cross-border direct investment globally. Information on greenfield FDI projects is compiled by the _Financial Times_ in real-time into the commercially available _fDi Markets_ database. Observations are recorded at the project level, and include the sector and subsector of investment activity, estimates of capital expenditure invested, as well as expected job creation from this investment. The dataset, which includes an identifier of the parent company, the country of origin and destination, has global coverage: 175 source countries, 200 destination countries, and observations matched with 53 ISIC Rev. 4 industries at the 2-digit level of aggregation. Historical extracts of the database span the years 2003 to 2022.

**Mergers and Acquisitions (M&A).** Mergers and acquisitions (M&A) refers to the consolidation of companies or assets through various types of financial transactions, without the generation of new productive capacity. Cross-border M&A observations - referring to the purchase by a foreign entity of assets that corresponds to more than 10 percent of the total assets of a target company - are sourced from the _Thomson Reuters_ commercially available _Refinitiv_ database. Observations are at the project level, and include, for each investment project, the same information as _fDi Markets_ without the estimation of jobs created. The dataset has global coverage spanning the years 2003 to 2022.

A limitation of both data sets is that observations refer to announcements of future rather than current investment flows, which may take time to materialize. Therefore, they differ from official FDI data in Balance of Payments (IMF) and government records 3