According to global management consulting firm A.T. Kearney's 2014 Foreign Direct Investment Confidence Index (FDICI), the findings bode well not only for the US, but for the global economy - nearly four out of five respondents are more optimistic about the global economy than they were a year ago.
Since its inception, the study has consistently pointed toward top global choices for foreign direct investment, with the top ten most attractive FDI destinations receiving a majority share of global FDI inflows roughly one year after the survey.
Paul A. Laudicina, founder of the FDI Confidence Index and A.T. Kearney chairman emeritus, notes, "Despite racking volatility and economic uncertainty on a global scale, the findings from the 2014 FDICI suggest that a corner is being turned. Corporations sitting on massive cash reserves are increasingly confident that they can parlay these into productive investments with attractive returns."
Each region has an interesting unfolding story seen through the lens of the FDI Confidence Index, with many of the winners riding on stability after the ongoing post-recession economic turbulence. Key international survey highlights include:
Africa managed to increase FDI flows by 12% to $47.6bn. Its growth was driven partly by investment in extractive industries, but manufacturing and services are also seeing increased interest. South Africa received $4.5bn FDI in 2012 after a bounce of $5.8bn in 2011.
"We expect to continue to see increased FDI flows to Africa overall. Energy related companies, retail companies and infrastructure and transport providers for example are all committed to invest in the continent. The Renewable Energy Independent Power Provider Programme in South Africa has played a major role in driving investment. While each deal in itself may not be particularly large, these moves are all positive signs of the increased confidence of the global investor community," commented Wim Plaizier, managing partner at A.T. Kearney Africa.
"It is critical for governments and investors alike, to respond to this increased investor confidence by putting in place the right levers to capitalise on the many opportunities and drive further job creation and social and economic development."
The 2014 FDICI is not only an indicator of FDI flows, but an excellent telescope into specific economic stories around the globe. The A.T. Kearney report concludes that opportunities abound for investors who know where to look, aided by strategic foresighting and scenario-based planning to understand where the potential lies and who are prepared to react to different eventualities.
"We feel confident that despite a slow and uneven economic recovery, executives who make FDI decisions are regaining a sense of measured confidence," said Erik Peterson, A.T. Kearney partner and a co-author of the study. "We're pleased that this year's study portrays a more optimistic picture globally."
