A formal regression analysis of FDI concentration on an interaction term between a linear time trend and a binary indicator for developing economies highlights how the trend of investment concentration is more pronounced in the latter. Table 1 shows a consistently positive and statistically significant coefficient estimate on the interaction across all specifications. This result confirms that the concentration ratio in developing countries has been growing 0.37 percentage point per year faster than in high-income economies, conditional on country and region-year trends. Overall, the average concentration ratio of FDI in developing countries has risen by 23 percentage points between 2011 and 2022.The same trend holds for M&A projects in developing countries in the aftermath of the global financial crisis, although concentration has been rising at a slower pace and with larger fluctuations from one year to the next, leading to a less precise trend (Figure A4). Contrary to greenfield FDI, the trend in M&A in developing countries has reversed during the years of the COVID-19 pandemic, likely due to the shock of the increase in company restructurings and so-called ”fire-sale FDI” associated with the recession. Replicating the regression of FDI concentration on an interaction term between a linear time trend and a binary indicator for developing economies confirms the positive trend in the latter, albeit lower than for greenfield FDI, as expected (see Table B2). Excluding the years of the pandemic from the regression, moreover, improves considerably the precision of the medium-term upward drift on concentration.

**A smaller number of MNEs invest in larger investment projects.** FDI concentration has strengthened through the last decade in both developing and highincome economies, while FDI flows in both groups have neither consistently declined nor grown (World Bank Group 2023). One possible explanation is that a smaller number of MNEs have been able to sustain cross-border investment in gradually larger investment projects. This pattern is consistent with heightened uncertainty afflicting the global economy in the aftermath of the 2008-2009 global financial crisis, the US-China trade war, or more recently the COVID-19 pandemic and the Russian Federation’s war on Ukraine, making it harder for firms to sustain operations abroad under greater risk.

To examine this hypothesis, we look into trends in the number of investing MNEs, as well as the distribution of capital expenditure across greenfield FDI projects over time in developing and high-income economies. We find that, after a peak preceding the global financial crisis, the number of MNEs investing in developing countries has gradually decreased (Figure 2). More recently, during the COVID-19 pandemic, the number of investors dropped dramatically both in high-income and developing economies. The distribution of capital expenditures, on the other hand, illustrates a consistent drop over time in median project expenditure; yet at a stable and even increasing average mean after 2011 while concentration has been on the rise. The latter suggests the presence over time of offsetting larger investment projects in developing countries at the top end of the distribution, keeping the mean roughly at the same level.

Overall, the rising FDI concentration in developing countries appears to be more the result of a declining number of investing firms rather than the average capital expenditure per project. The opposite is true for high-income economies where the rising 7