2014 A.T. Kearney FDI Confidence Index: U.S. Increases its Lead; an Overridingly Positive Outlook Develops for Global Economy

WASHINGTON, June 2, 2014 /PRNewswire/ -- Global management consulting firm A.T. Kearney today released its 2014 Foreign Direct Investment Confidence Index (FDICI), an in-depth view of forward-looking investment sentiment. In this year's ranking, the U.S. not only maintains its first place position from last year, but also increases the lead it had in the 2013 study, which was referenced in the recent White House report, Winning Business Investment in the United States. 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 after the survey.

In January 2014, President Barack Obama referred to the prior FDICI findings in his State of the Union address, saying, "For the first time in over a decade, business leaders have declared that China is no longer the world's number one place to invest; America is." With an unprecedented swing in positive outlook by global executives surveyed in the 2014 FDICI, half of the respondents indicated that they have a more positive outlook on the U.S. than two years ago.  No country has ever recorded a higher positive outlook from investors in the history of the Index.  Driven by overriding factors such as the increasingly strong prospect of U.S. energy independence, leading executives continue to plan increased investments in the U.S. 

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."

Key survey highlights include:  Despite unresolved deficits in the euro zone, 11 European countries still rank in the top 25, some entering the ranking for the first time; Canada moved up to the third spot; 39 percent of respondents voiced a more positive sentiment than last year for second-ranked China; and Russia (last year's #11) fell off the top 25 ranking, despite the fact that the survey was fielded prior to the current political imbroglio in Ukraine.

"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. "The 2014 FDICI is not only an indicator of FDI flows, but an excellent telescope into specific economic stories around the globe. We're pleased that this year's study portrays a more optimistic picture globally."

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 a notch in the ranking.

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 twelfth, 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 #17.

Europe attracts more than a quarter of the world's total FDI inflows, due to its highly qualified labor force, sophisticated, well-heeled consumers, and world-class infrastructure. Northern European nations Sweden and Denmark make it to the top 25 for the first time while Belgium and the Netherlands return to the index after some time off investors' radars. The UK, amid discussions of a potential opt-out from the EU, rose four positions to fourth. France, currently under President Francois Hollande's efforts to increase the country's competitiveness, has reclaimed a place in the top ten.

The 2014 FDI Confidence Index®

About A.T. Kearney
A.T. Kearney is a global team of forward-thinking partners that delivers immediate impact and growing advantage for its clients. We are passionate problem solvers who excel in collaborating across borders to co-create and realize elegantly simple, practical solutions and sustainable results. Since 1926, we have been trusted advisors on the most mission-critical issues to the world's leading organizations across all major industries and service sectors. A.T. Kearney has 59 offices located in major business centers across 40 countries.

To learn more about A.T. Kearney, please visit http://www.atkearney.com.  

About the 2014 Foreign Direct investment Confidence Index
The FDI Confidence Index^® is constructed using primary data from a proprietary survey administered to senior executives of the world's leading corporations. Respondents include C-level executives and regional and business heads. The 300 participating companies represent 26 countries and span all industry sectors. All companies report global revenue of more than $500 million. Companies surveyed are evenly distributed across the globe, with roughly and third headquartered in Europe, a third in Asia-Pacific and a third in the Americas. The survey was conducted in January and February 2014.

While the FDI Confidence Index provides readers with a sense of investor attitudes about the future, it is not designed to reveal specific reasons for the results. This study reflects upon likely causes for upward or downward changes, but the conclusions must be regarded only as considered judgment on the part of A.T. Kearney's Global Business Policy Council.

The index is calculated as a weighted average of the number of high, medium, and low responses to questions about the likelihood of direct investment in a market over the next three years. Index values are based on non-source-country responses. For example, the index value for the United States was calculated without responses from U.S.-based investors. Higher index values indicate more attractive investment targets.

FDI flow figures are the latest statistics available from the United Nations Conference on Trade and Development (UNCTAD). Other secondary sources include investment promotion agencies, central banks, ministries of finance and trade, and major periodicals.

For past editions of the FDICI, please go to www.atkearney.com/gbpc/foreign-direct-investment-confidence-index.

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SOURCE A.T. Kearney

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