Sunday 27 May 2018

Irish tops world chart for high-value FDI but UK hit by Brexit

Ireland topped the world ranking in the area of attracting high-value projects in 2016. Photo: iStock
Ireland topped the world ranking in the area of attracting high-value projects in 2016. Photo: iStock
Stock image
Ellie Donnelly

Ellie Donnelly

Global Foreign Direct Investment (FDI) levels grew by 10pc in 2016, as measured by the number of jobs created.

The increase was driven by strong inward investment performance among a number of emerging economies, as well as multiple mature markets, according to the IBM Global Locations Trend 2017 Annual Report.

Ireland topped the world ranking in the area of attracting high-value projects in 2016. This is the sixth year in a row that Ireland has ranked highest in this area. Denmark ranked second, while Singapore was third.

This ranking continues to be dominated by mature economies, however the report noted that both Hungary and Costa Rica have now entered the top 10 in this area, with both countries having successfully transitioned towards higher-value investment in recent years.

The top spot for inward FDI investment was taken by India, replacing the United States which has held the top position for the past four years.

While India's growth in previous years was associated with diversification of investments into sectors such as manufacturing, last year's increase was driven primarily by India's strength in core activities including information communication technologies and business services.

Taking third spot behind the US was Mexico, which had a 25pc increase in inward FDI in 2016.

Investment into Mexico continues to be primarily in the automotive sector but the IBM report found that inward investment has also increased in areas such as chemicals, electronics, and industrial machinery and equipment.

Both the US and the UK experienced falls in inward FDI as measured by jobs created, with Brexit beginning to impact investment activity into the UK, in particular in London.

While inward FDI into the UK decreased by just 2pc in 2016 in terms of the number of jobs created, the report found that the number of investment projects in the UK actually decreased by 13pc in 2016.

IBM said that this trend in the UK was continuing to be seen so far in 2017 as uncertainty around Brexit remains.

"Going forward, the outcomes of Brexit negotiations could significantly impact corporate investment activity on the continent, as companies seek to adapt their European models," the report said.

In terms of countries of origin for FDI, as estimated by jobs created, the US and Germany topped the list, highlighting the continued importance of the two countries for global investment activities.

While Japan ranked third as a country of origin for FDI, the report found that Japanese companies have in fact reduced their internationalisation efforts as they continue to lower outward international investment.

China, which came in fourth on the list, and South Korea which ranked seventh on the list as countries of origin for FDI, both saw companies "significantly" increase their FDI activity in 2016.

Outward investment by Chinese companies is now at a record high, being driven by growth across a number of areas including textiles, chemicals, and transport equipment, the report stated.

The IBM Global Locations Trend Report is produced annually and monitors global location trends through FDI.

Irish Independent

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