Kearney's Global Business Policy Council today released its 2023 Foreign Direct Investment Confidence Index (FDICI), a survey of investor sentiment regarding future FDI flows that is celebrating its 25th anniversary this year. The results reflect cautious investor optimism about the global economy. Indeed, more than three-quarters (82 percent) said they are planning to increase their FDI in the next three years and 87 percent cited FDI as more important for their corporate profitability and competitiveness in the next three years. Yet this positive sentiment is tempered by concern about downside risk.
The United States takes the top ranking for the 11th consecutive year. Canada reclaims the second position after falling to third in 2022, and Japan jumps to third place from a rank of fourth last year. Germany drops two spots to fourth, the United Kingdom maintains the fifth position, and France follows closely behind. China jumps from 10th position to 7th, perhaps attributable to Beijing's reversal of zero-COVID policies in the fourth quarter of 2022. Overall, this year's survey once again demonstrated investor preference for developed markets, which accounted for 19 out of 25 of the countries on the Index.
For the first time in the 25-year history of the FDI Confidence Index®, this year's report features an exclusive ranking for emerging markets. This list is intended to give business leaders insight into which emerging markets are most appealing to investors. China, India, the United Arab Emirates, Qatar, Thailand, and Saudi Arabia hold the top six positions; they are also the only emerging markets included in the world rankings. Beyond these top six, Latin America makes a strong showing, with Brazil, Mexico, and Argentina taking the 7th, 8th, and 9th positions, respectively. Southeast Asia also performs strongly, with Malaysia, Indonesia, the Philippines, and Vietnam taking the 10th through 13th positions, respectively.
"We believe that the inclusion of the emerging market rankings in our FDI Confidence Index will provide business leaders with additional insights into which emerging markets are most appealing to investors," Peterson notes, "The strength of key regions, including Southeast Asia and leading economies in Latin America is evident in these results."
The 2023 Index also finds that business leaders believe globalization is and will remain the central force in foreign direct investment. A distinct majority of respondents (66 percent) anticipate an increase in globalization in the next three years, while only 23 percent expect a decrease. Those anticipating an expansion of globalization cite a combination of connected digital infrastructure alongside growing trade opportunities and limited trade barriers as the primary driving forces. But investors also acknowledge that globalization is changing.
"While our findings show investors believe in the benefits of globalization and expect it to strengthen, they also anticipate more regionalization over the next three years and that national governments will pursue strategies to increase self-sufficiency," says report co-author Terry Toland, manager at the Global Business Policy Council. "These results suggest an awareness that while globalization will continue, its nature may be shifting—and business leaders will need to prepare accordingly."