Investment in Eritrea has come primarily from contributions of Eritrean exiles. International aid was restricted by the lack of international recognition of the Eritrean government's sovereignty, a problem resolved in the UN in April 1993. The government issued an investment code in December 1991 to encourage investment in the Eritrean economy. Incentives for investments in certain areas include exemption from customs and duties, exemptions from income tax, and special treatment regarding foreign currency exchange. While foreign direct investment reached $61 million in 1997, it went down to $14 million in 1998.
By 1998, the Eritrean investment center had licensed 661 investment projects worth $562 million, of which $235 million was foreign. Annual foreign direct investment (FDI) flows have remained remarkably steady, ranging from $31.7 million in 1998 to $38.7 million in 1997. In 2001, FDI inflow was $34.2 million. Major investors included the United States, South Korea, Italy, and China.