Frontier markets' investment growth slumps in 2020s, halved from previous decade: World Bank

Frontier market economies have significantly underperformed in attracting investment over the past decade, with per capita investment growth in the 2020s falling to less than half the rate recorded in the 2010s, the World Bank reported Tuesday. The growth rate of investment per capita in these markets slowed to just 2% in the current decade, reflecting a broader 25-year trend of diminishing capital inflows.

Limited Global Share Despite Resource Potential

These economies, which include many middle-income countries, account for only 3.1% of global capital inflows and less than 5% of worldwide economic output. More than a third of frontier markets are located in Sub-Saharan Africa, a region rich in minerals critical for renewable energy, telecommunications, and electronics manufacturing. Despite this resource potential, most have struggled to translate endowments into sustained investment and development gains.

A "Major Disappointment" in Development

World Bank Chief Economist Indermit Gill described frontier markets as “the biggest disappointment in economic development,” excluding the handful that have achieved investment-grade status over the past 25 years. The report notes that while top performers within the group offer lessons in policy and governance, the broader cluster has seen little progress in improving investment attractiveness since 2000.

Implications for Global Economic Convergence

The prolonged investment slowdown highlights structural barriers such as weak institutions, infrastructure gaps, and political instability that continue to deter long-term capital. Without renewed focus on improving business climates, strengthening fiscal management, and leveraging strategic mineral wealth, frontier economies risk falling further behind in an increasingly competitive global landscape. The World Bank’s analysis calls for targeted reforms to unlock the untapped potential of these markets.