“The New Leaders of the Investment
World: Countries, Sectors and Projections”
Ist International Meeting of the Pacific Basin
Cali, Colombia 5th October, 2011
DR HENRY LOEWENDAHL
fDi Intelligence, Financial Times Ltd
CALI 2011
1
About the presentation
• Focus on Greenfield Foreign Direct Investment (GFDI)
• Unique data on GFDI & corporate strategies from fDi Markets
2
New leaders of the investment world
COUNTRY TRENDS AND FORECASTS
3
Global trends
GFDI capital investment ($bn)
Pacific Rim share of global: 38%-43% (2008-11). Share of GFDI outflows 41% to 49%
AsiaPacific share grew 30% to 37% and LAC from 8% to 18% (fastest growth in world)
1600
1400
1200
1000
Global
800
600
PR (out)
400
PR (in)
AP
200
LAC
0
2005
2006
2007
2008
2009
2010
2011*
Source: fDi Markets database, fDi Intelligence. Includes estimates. *Projection for 2011 based on Jan-Sept data
4
MNE strategy for Pacific Rim
How companies segment the market
No. FDI projects investing in Pacific Rim by export market served
GFDI in Pacific LAC
GFDI in Pacific AsiaPac
Latin America
Asia-Pacific
Domestic Only
Domestic Only
North America
Global
United States
South-east Asia
Europe
Greater China
Global
Europe
Asia-Pacific
United States
Americas
ASEAN
Southern Europe
East Asia
Greater China
Middle East
0
200
400
600
0
1000 2000 3000 4000
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Includes
export markets for all activities (services, manufacturing, raw materials)
5
LAC country performance
Share of GFDI in LAC (Jan-Sep 2011)
Small countries outperforming larger ones. Pacific Rim countries performing strongly
45%
40%
% FDI projects
% FDI jobs
% GDP 2011 forecast
35%
30%
25%
20%
15%
10%
5%
0%
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
6
AsiaPac country performance
Share of GFDI in AsiaPac (Jan-Sep ‘11)
Vietnam, Singapore, Malaysia, and Thailand best performing
35%
% FDI projects
% FDI jobs
% GDP 2011 forecast
30%
25%
20%
15%
10%
5%
0%
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
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Where FDI is coming from
Source of GFDI jobs worldwide
Europe in crisis. AP+LAC booming. North America flat. Middle East in decline
45%
40%
41%
38%
Share of global
35%
35%
30%
2007
2011 (Jan-July)
34%
29%
28%
25%
20%
2009
21% 21%
19%
15%
10%
5%
6% 5%
3% 4% 3% 3%
1%2%
3%
1% 1% 1%
0%
8
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd
Why invest in the Pacific Rim?
Location determinants for GFDI projects
No. of MNES citing factor for their GFDI projects in Pacific Rim
Domestic Market Growth Potential
Proximity to markets or customers
Skilled workforce availability
Regulations or business climate
Industry Cluster / Critical Mass
Infrastructure and logistics
Lower Costs
IPA or Govt support
Finance Incentives or Taxes or Funding
Attractiveness / Quality of Life
Natural Resources
Presence of Suppliers or JV Partners
Technology or Innovation
Universities or researchers
Facilities Site or Real Estate
Language Skills
ICT Infrastructure
0
500
1000 1500 2000 2500 3000 3500 4000 4500
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Includes only GFDI projects in the Pacific Rim
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Pacific Rim best performers
GFDI forecasts for 2011
Rank in growth of GFDI projects
Rank in growth of GFDI new jobs
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
New Zealand
Panama
(Argentina, Brazil)
Mexico
Taiwan
Canada
Indonesia
USA
Singapore
China
Colombia
Hong Kong
Costa Rica
South Korea
Chile
Nicaragua
Papua New Guinea
Chile
(Argentina)
Indonesia
Taiwan
Panama
South Korea
Mexico
(Brazil)
Colombia
Singapore
Vietnam
New Zealand
El Salvador
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Projection for 2011
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Investment leaders in 2015
Inward & outward GFDI job forecasts
Top 5 countries in 2015: Half of inward and outward FDI job creation globally
600,000
Inward FDI
Outward FDI
500,000
2005
400,000
300,000
2010
2015 (forecast)
200,000
100,000
0
Source: fDi Intelligence FDI Forecasting Model
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New leaders of the investment world
SECTOR TRENDS AND FORECASTS
12
FDI by business activity
GFDI jobs worldwide by activity
Major growth in manufacturing following the recession. Growth in R&D,
front/back office and ICT infrastructure. Huge decline in construction.
60%
60%
50%
46%
2007
Share of global
42%
2009
2011 (Jan-July)
40%
30%
28%
24%
20%
11%
10%
4%
6%
5% 6% 5%
4% 4%5%4% 3%4% 3%
3%
2% 3% 2% 2%3% 3% 2% 2%2%
1%2%
0%
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Source: fDi Markets database, fDi Intelligence, Financial Times Ltd
FDI by industry sector
GFDI jobs worldwide by top 10 sectors
Top 10 sectors account for over 60% of global GFDI job creation
25%
25%
2007
20%
2009
2011 (Jan-July)
Share of global
20%
15%
10%
7%
7%
5%
5%
10%
10%
8%
9%
8%
6% 7%
5%
4%
2%
4%4%
5%
5%
3%
2%
3%
3%
5%
4%
4%
3%
4% 4%
2%
0%
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd
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Sub-sector forecasts 2015
High growth sub-sectors (#projects)
Cloud computing forecast to be fastest growing FDI sub-sector worldwide over
next five years. Rapid growth forecast in renewable energy segments
300
269
250
2010
225
2015
195
200
165
162
143
150
133
105
100
50
81
67
68
73
91
98
61
38
0
Source: fDi Intelligence FDI Forecasting Model
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New leaders of the investment world
SUMMARY
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Summary – country trends
• Financial crisis signalled major change in global FDI
• Pacific Rim = over 40% of inward GFDI and 50% of outward
• LAC and AsiaPac fastest growing locations for GFDI worldwide
• AsiaPac has reached Western Europe levels of outward GFDI
• Shift in global value chains to accelerate in next 5 years
• 26 of 30 fastest growing FDI locations in 2011 are emerging markets
• Top 4 leading locations in 2015 all forecast to be emerging markets
• Outward GFDI from China forecast to nearly triple in next 5 years
• MNEs see Pacific Rim in terms of AsiaPac, LAC, & North America
• Integration across the Pacific Rim driven by GFDI in LAC serving
North America and to a lesser extent AsiaPac
• The Pacific Rim will become the major destination and source of
GFDI in next 5 years
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Summary – sector trends & competitiveness
• Export orientated activities rebound in 2011
• Fastest FDI growth in manufacturing, R&D, and export services
• Strong growth in FDI across many sectors in 2011
• Retail sectors, software, telecom, renewables, minerals, metals, food
& drink, industrial machinery, auto components
• Fastest growth forecast in emerging technology areas
• Cloud computing, renewable energy segments, social media,
semiconductors, ITO, KBO, education & training
• Pacific Rim countries competitive position
• Very strong for market-seeking FDI (national/regional)
• Overall attractiveness depends on skills, business climate, clusters
and infrastructure more than government incentives
• Attractiveness for technology-based FDI requires sustained
investment in education and R&D to match developed country levels18
“In economics, things take longer to
happen than you think they will, and
then they happen faster than you
thought they would”
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CONTACTS
Dr Henry Loewendahl
Senior Advisor, Representing fDi Intelligence, Financial Times Ltd
Managing Director, WAVTEQ Ltd
Co-founder, Loco Software Ltd and ICA Incentives Ltd
E-mail: henry.loewendahl@wavteq.com
Skype/MSN: hloewendahl
Linkedin: Henry Loewendahl
M: +44(0) 792 474 6365
W: www.fdiintelligence.com
W: www.wavteq.com; www.locosoftware.ie; www.icaincentives.com
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