Jessa A.

Galo BSBA OM 3-1A

Case: You are working for a company that is considering investing in a foreign country.
Investing in countries with different traditions is an important element of your company’s
long-term strategic goals. As such, return of Foreign Direct Investment (FDI).
Accordingly, the ranking of the top 25 countries in terms of FDI attractiveness is a
crucial ingredient for your report. A colleague mentioned a potentially useful tool called
the FDI Confidence Index, which is a regular survey of global executives conducted by
A.T. Kearney.

Instruction: Find this index a provide additional information regarding how the index is
constructed.

Provide insights from the FDI Confidence Index. As a manager of an international

business, how can you utilize this information?

Foreign Direct Investment

Foreign direct investment (FDI) is an investment from a party in one country into
a business or corporation in another country with the intention of establishing a lasting
interest. Lasting interest differentiates FDI from foreign portfolio investments, where
investors passively hold securities from a foreign country.

The Foreign Direct Investment Confidence (FDI) Index prepared by A.T. Kearney
is an annual survey which tracks the impact of likely political, economic, and regulatory
changes on the foreign direct investment intentions and preferences of CEOs, CFOs,
and other top executives of Global 1000 companies. The report includes detailed
commentary on the markets and the impact a variety of global trade issues have on
their FDI attractiveness, as well as a ranking of the top 25 countries.

Developed markets dominate the Index

This year marks the second time in the 22-year history of the Index—and the
second consecutive year— in which developed markets hold all of the top five spots.
The United States tops the 2020 Index for the eighth year in a row (see figure 1). This
stretch, dating back to 2013, represents the longest run for the United States in the top
position on the Index. Canada retakes the number two position, and Germany falls to
third. Japan replaces the United Kingdom as fourth, and France maintains its fifth place.
The top 10 countries on the Index remain unchanged from 2019, save for Switzerland
joining the top group, and Singapore falling to 12th. European and Asia Pacific countries
—including Italy, China, and Australia— dominate the rest of the top 10. China, Brazil,
and the United Arab Emirates are the only emerging markets on the Index.
Jessa A. Galo BSBA OM 3-1A

Why does United states always remain rank 1 in FDI?

The United States remain its spot because of strong and robust consumer
market is a key reason the U.S. ranks top in the world for FDI. The U.S. hosts the most
developed, flexible and efficient financial markets in the world. A wide range of funding
sources enable innovation and expansion, giving companies in the U.S. a competitive
advantage. The United States has been an attractive target for FDI partly because of its:
stable and dynamic economy. Mergers and acquisitions differ from greenfield
investments in that: the percentage of mergers and acquisitions is lower than greenfield
investments in developing nations.

Open for Business

 
“The pro-growth agenda in the U.S. —fewer regulations, lower corporate tax rate and
focus on infrastructure redevelopment—keeps the U.S. ahead of the rest of the world as
a business destination,”

Workforce
 
The U.S. workforce is one of the most diverse, skilled and productive workforces in the
world. Government, industry and academia collaborate to provide workers will the skills
to excel in an increasingly technical global economy.
 
Innovation
 
More international patents are filed in the U.S. than any other country, according to
Selects, U.S. intellectual property laws protect ownership and help combat
counterfeiting and cyber theft.
Jessa A. Galo BSBA OM 3-1A

How does the FDI Confidence Index is constructed?