Pre- and post-pandemic trade and capital cooperation FIGURE 5 0.601.202022-23 average1.00 0.95 0.90 0.85 0.80 0.650.700.751.051.101.15 2018-19 average0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20 45° line, where 2022-23 average = 2018-19 averageOnly trade concentration and FPI are lower today than pre-pandemic Index averages ODA FDI FPIRemittancesGoods trade Developing share of FDIServices trade Developing share of manufacturingInternational migration Reduction in trade concentrationHigher post-2020 Lower post-2020 Sources: World Bank, UN Trade and Development (UNCTAD), UN Comtrade, International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), International Labour Organization (ILO), McKinsey & Company analysis.While goods trade has retreated, capital flows grew in 2023. Foreign direct investment (FDI) and FPI stocks outgrew GDP (gross domestic product) in 2023, a positive sign for cooperation, though the main beneficiaries were a small set of developed countries. Some of the largest FDI projects announced in 2023 were investments in strategic sectors, such as semiconductors, batteries and renewable energy, that were the focus of industrial policy, mostly in the US and Europe. In fact, as the world fragmented further in 2023, developing economies saw a decline in their share of trade and capital flows. Their share of global manufacturing exports dropped by two percentage points (mostly due to a decrease from China), and their share of FDI inflows dropped by one percentage point. Developing economies also saw a flatlining of development assistance they received as a proportion of their gross national income (GNI). Nonetheless, there were bright spots of increased interconnectedness. In 2023, labour migration increased by 4.1%, and remittances (the money foreign workers send to their home country) increased by 2.5%. Both have now surpassed their pre-2020 levels, indicating that flows of labour and immigration seem to have recovered from the COVID-19 period (in 2020, migration flows fell by 2.5% and remittances dropped by almost 5%). Looking ahead, substantial uncertainty remains about the evolution of trade and capital flows, as economies continue to reconfigure their economic ties. A fragmented global economy risks setting back progress on global priorities such as reducing poverty and inequality and can dampen growth while fuelling inflationary pressures.33 Leaders will need to pursue policies that strengthen trade while also investing in domestic programmes such as training and education to help make trade more inclusive.34 The Global Cooperation Barometer 2025 Second Edition 13