KfW Study Finds Development Projects Can Create Investment Opportunities for German and European Companies

KfW Study Finds Development Projects Can Create Investment Opportunities for German and European Companies

(IN BRIEF) A new study by KfW and the University of Göttingen finds that KfW development projects are associated with a higher probability of later private foreign direct investment from Germany and the EU. The analysis shows that the probability of direct investment in locations where a KfW-financed project had previously been launched rises by around two thirds, from 3.2 percent to 5.3 percent, in subsequent years. The study examined around 2,000 project locations in 71 emerging and developing countries, using data from 2003 to 2018. The connection was particularly strong for infrastructure projects and for projects that received positive ratings in independent evaluations. KfW said development projects can increase the visibility of investment opportunities, improve local conditions and give companies greater confidence in potential markets.

(PRESS RELEASE) FRANKFURT, 23-Jul-2026 — /EuropaWire/ — KfW development projects can help create new opportunities for German and European companies by increasing the likelihood of later private foreign direct investment in the same locations, according to a new study by KfW and the University of Göttingen.

The study finds that the probability of direct investment from Germany and the EU in locations where a KfW-financed project had previously been launched rises by around two thirds in subsequent years.

According to the analysis, the probability increases from 3.2 percent to 5.3 percent after a KfW development project is implemented.

The study is based on an analysis of around 2,000 project locations across 71 emerging and developing countries.

The correlation is especially strong for infrastructure projects and for initiatives that received positive ratings in independent evaluations.

KfW said the findings show that development projects can create more visible and attractive investment environments for companies from Germany and Europe.

Projects that are assessed positively after evaluation are more frequently associated with later investments by companies from Germany and the EU.

Christiane Laibach, Member of the KfW Group Executive Board, said successful development projects help make investment opportunities more visible.

“Successful development projects help to increase the visibility of investment opportunities,” said Laibach.

She added that companies from Germany and Europe are particularly likely to invest in areas where development cooperation creates economic prospects and strengthens confidence in local conditions.

The study’s authors identify several possible explanations for the link between development projects and later private investment.

Development projects can provide potential investors with signals about a location’s economic potential, including the ability to cooperate successfully with local institutions.

Projects in areas such as infrastructure and education can also improve the broader conditions needed for private investment.

Foreign direct investment is considered an important source of capital, technology and expertise for developing and emerging economies.

It can support economic development while also giving companies access to new markets and local partnerships.

The study, titled “Linking KfW-financed Aid Projects and FDI: Global Evidence at the Sub-national Level,” examines for the first time at sub-national level whether KfW-financed projects are followed by foreign direct investment in the same location.

The analysis links data on KfW project locations with foreign direct investment data covering the period from 2003 to 2018.

KfW said the findings underline the potential role of development cooperation in strengthening local economic conditions and helping mobilise private investment.

The study also highlights how well-designed and positively evaluated development projects can support both host-country development and international business opportunities.

The full study is available to download via this link:

Linking KfW-financed Aid Projects and FDI: Global Evidence at the Sub-national Level

Further information on the work of the KfW Development Bank Evaluation Department is available via the following link:

KfW Development Bank Evaluation Department

Media Contact:

Dr Charis Pöthig
+49 69 74 31 46 83
Charis.Poethig@kfw.de

SOURCE: KfW