FDI performance and potential rankings. Astrit Sulstarova Division on Investment and Enterprise UNCTAD

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1 FDI performance and potential rankings Astrit Sulstarova Division on Investment and Enterprise UNCTAD

2 FDI perfomance index The Inward FDI Performance Index ranks countries by the FDI they receive relative to their economic size. It is the ratio of a country s share in global FDI flows to its share in global GDP. Ind i FDI GDP i i / FDI / GDP w w

3 Top 20 rankings by FDI Performance Index Economy Hong Kong, China Bulgaria Congo Angola Belgium Singapore Malta Guinea Georgia Jordan Guyana Panama Lebanon Madagascar Bahrain Gambia Estonia Moldova, Republic of Bahamas Kazakhstan

4 Main gainers and losers in FDI Performance ranking, to Venezuela Mexico Cameroon Bolivia Ethiopia Ecuador Mali Brunei Darussalam Ireland Azerbaijan Egypt Guinea Saudi Arabia Madagascar Oman Ghana Libyan Arab Jamahiriya Tajikistan Jordan Iceland

5 FDI potential index Evaluate the host country ability to attract FDI flows vis-a-vis other countries However, some FDI-related factors are difficult to be quantified: Social, political and institutional factors; To compare how efficiently policies are implemented; The perception of individual TNCs;

6 FDI potential index The Inward FDI Potential Index is based on several quantifiable factors: GDP per capita, The rate of GDP growth over the previous 10 years, The share of exports in GDP, Average number of telephone lines per 1,000 inhabitants Commercial energy use per capita The share of R&D spending in GDP, The share of tertiary students in the population, Country risk The world market share in exports of natural resources, The world market share of imports of parts and components for automobiles and electronic products The world market share of exports of services, The share of world FDI inward stock

7 Top 20 rankings by FDI Potential Index Economy United States Singapore United Kingdom Hong Kong, China Germany Luxembourg Sweden Norway Canada Netherlands Qatar Russian Federation Finland Iceland United Arab Emirates Belgium Korea, Republic of Ireland France Switzerland

8 Comparing rankings on two indexes Matrix of inward FDI performance and potential, 2007 High FDI potential Low FDI potential High FDI performance Front-runners Austria, Bahamas, Bahrain, Belgium, Bulgaria, Canada, Chile, Croatia, Cyprus, Czech Republic, Estonia, France, Hong Kong, China, Hungary, Iceland, Israel, Jordan, Kazakhstan, Latvia, Libyan Arab Jamahiriya, Lithuania, Malta, Netherlands, Oman, Panama, Poland, Qatar, Romania, Saudi Arabia, Singapore, Slovakia, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Ukraine, United Arab Emirates and the United Kingdom. Above potential Albania, Angola, Armenia, Colombia, Congo, Costa Rica, Egypt, Gambia, Georgia, Ghana, Guinea, Guyana, Honduras, Jamaica, Kyrgyzstan, Lebanon, Madagascar, Mongolia, Namibia, Nicaragua, Nigeria, Republic of Moldova, Sierra Leone, Sudan, Suriname, Tajikistan, The former Yugoslave Rep. of Macedonia, Uganda, United Republic of Tanzania, Uruguay, Viet Nam and Zambia. Low FDI performance Below potential Algeria, Argentina, Australia, Azerbaijan, Belarus, Brazil, Brunei Darussalam, China, Denmark, Dominican Republic, Finland, Germany, Greece, Ireland, Islamic Republic of Iran, Italy, Japan, Kuwait, Luxembourg, Malaysia, Mexico, New Zealand, Norway, Portugal, Republic of Korea, Russian Federation, Slovenia, South Africa, Spain, Taiwan Province of China, United States and the Bolivarian Rep. of Venezuela. Under-performers Bangladesh, Benin, Bolivia, Botswana, Burkina Faso, Cameroon, Côte d' Ivoire, Democratic Republic of Congo, Ecuador, El Salvador, Ethiopia, Gabon, Guatemala, Haiti, India, Indonesia, Kenya, Malawi, Mali, Morocco, Mozambique, Myanmar, Nepal, Niger, Pakistan, Papua New Guinea, Paraguay, Peru, Philippines, Rwanda, Senegal, Sri Lanka, Syrian Arab Republic, Togo, Turkey, Uzbekistan, Yemen and Zimbabwe.

9 Potential ranking Comparing rankings on two indexes, Best Potential Potential is higher than performance Slovenia Bulgaria Romania Lithuania Poland Performance is higher than potential Czech Republic Estonia Latvia Slovakia Hungary Performance ranking Best Performance

10 Potential ranking Comparing rankings on two indexes, Slovakia 40 Best Potential Potential is higher than performance Poland Czech Republic Lithuania Hungary Latvia Estonia 60 Bulgaria 80 Slovenia Romania Performance is higher than potential Performance ranking Best Performance

11 Dynamics of FDI performance and potential Bulgaria Performance rank Potential rank

12 Useful guides for policy or a beauty contest? Is there evidence that such metrics and rankings have had a positive impact on the policy reform process? For example the Government of Japan initiated a numeric goal (e.g. doubling the share of FDI in GDP) after they find how low the Japan's ranking in the performance index is. Former Prime Minister Koizumi used the ranking we reported and proposed this goal How can governments seeking to improve their investment environments best incorporate such measures into their broader investment policy reform efforts? These two indices are not intended to provide a full-blown model of FDI location or to measure the impact of FDI on host economies. The exercise is more modest: to provide useful data to policy-makers and analysts on relative performance as a signal for future investment policy reviews.

13 Thank you