Canada ranks third globally in Foreign Direct Investment Confidence Index

Monday June 02, 2014
Written by Manufacturing AUTOMATION
Global management consulting firm A.T. Kearney has released its 2014 Foreign Direct Investment Confidence Index (FDICI), an in-depth view of forward-looking investment sentiment. In this year’s ranking, Canada moves up to the third spot from the fourth position last year. This is the highest ranking Canada has achieved since the FDICI was inaugurated in 1998.

In addition to its number three ranking in the 2014 FDICI, Canada also has the third-strongest investor outlook among the 25 countries ranked. Canada also ranked high for planned foreign investments in heavy industry, light industry and non-financial services. Recent R&D centre investments in Canada by Samsung, Cisco and GE Aviation support this trend of services and manufacturing foreign direct investments.

South of the border, the U.S. not only maintains its first place position from last year, but also increases the lead it had in the 2013 study. The findings bode well not only for the U.S., 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 10 most attractive FDI destinations receiving a majority share of global FDI inflows roughly one year following the survey.

Paul A. Laudicina, founder of the FDI Confidence Index and A.T. Kearney chairman emeritus, notes, “Despite 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.”

Key survey highlights include: despite unresolved deficits in the Eurozone, 11 European countries still rank in the top 25, some entering the ranking for the first time; 39 per cent of respondents voiced a more positive sentiment than last year for second-ranked China; and Russia, which ranked 11th last year, fell off the top 25 ranking, despite the fact that the survey was fielded prior to the current political situation in Ukraine.

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. Asia, which attracts roughly a third of all foreign direct investment, has shown particular resilience, with China at the top of the investment ladder as it attracts higher-end manufacturing from overseas. Australia and India both experienced a cooling off among investors. Conversely, Singapore, with its famously predictable regulations and low corporate tax rate, moved up in the ranking - from 10th place to ninth.

In the Americas, Brazil ranked among the top five most preferred FDI destinations for the fourth consecutive year, incentivized by new industrial policy measures. Mexico, ranked 12th, is a quiet beneficiary of the wave of U.S. reshoring, due to its integration with U.S. supply chains. Chile’s stable economy and investment climate translated to a five-notch climb in the Index, to number 17.

To read the full A.T. Kearney 2014 Foreign Direct Investment Confidence Index report, visit www.atkearney.com.

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