FDI performance and potential rankings Astrit Sulstarova Division on Investment and Enterprise UNCTAD
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
Top 20 rankings by FDI Performance Index Economy 1993-1995 2002-2004 2006-2008 Hong Kong, China 11 7 1 Bulgaria 93 8 2 Congo 8 41 3 Angola 23 2 4 Belgium.. 10 5 Singapore 2 6 6 Malta 20 25 7 Guinea 126 93 8 Georgia 114 17 9 Jordan 132 38 10 Guyana 1 39 11 Panama 31 37 12 Lebanon 116 9 13 Madagascar 110 95 14 Bahrain 45 30 15 Gambia 29 11 16 Estonia 15 20 17 Moldova, Republic of 60 44 18 Bahamas 56 15 19 Kazakhstan 19 13 20
Main gainers and losers in FDI Performance ranking, 2001-2003 to 2006-2008 Venezuela Mexico Cameroon Bolivia Ethiopia Ecuador Mali Brunei Darussalam Ireland Azerbaijan Egypt Guinea Saudi Arabia Madagascar Oman Ghana Libyan Arab Jamahiriya Tajikistan Jordan Iceland 150 120 90 60 30 0-30 -60-90 -120
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;
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
Top 20 rankings by FDI Potential Index Economy 1993-1995 2002-2004 2005-2007 United States 1 1 1 Singapore 3 2 2 United Kingdom 5 3 3 Hong Kong, China 14 14 4 Germany 6 8 5 Luxembourg 0 5 6 Sweden 11 7 7 Norway 7 6 8 Canada 2 4 9 Netherlands 10 12 10 Qatar 21 19 11 Russian Federation 35 26 12 Finland 15 11 13 Iceland 19 9 14 United Arab Emirates 17 22 15 Belgium 0 13 16 Korea, Republic of 18 16 17 Ireland 23 10 18 France 4 15 19 Switzerland 13 18 20
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.
Potential ranking Comparing rankings on two indexes, 1996 0 20 40 Best Potential 60 80 100 120 Potential is higher than performance Slovenia Bulgaria Romania Lithuania Poland Performance is higher than potential Czech Republic Estonia Latvia Slovakia Hungary 140 140 120 100 80 60 40 20 0 Performance ranking Best Performance
Potential ranking Comparing rankings on two indexes, 2006 0 20 Slovakia 40 Best Potential Potential is higher than performance Poland Czech Republic Lithuania Hungary Latvia Estonia 60 Bulgaria 80 Slovenia Romania 100 120 Performance is higher than potential 140 140 120 100 80 60 40 20 0 Performance ranking Best Performance
Dynamics of FDI performance and potential Bulgaria - 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 10 20 30 40 50 60 70 80 90 100 Performance rank Potential rank
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.
Thank you