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São Paulo has retained the top spot in the South American States of the Future ranking for 2016/17, with Buenos Aires Autonomous City rising to claim second place and Rio de Janeiro ranking third. Cathy Mullan reports. 

For the second time in a row, Brazil’s most populous state of São Paulo has been named fDi’s South American State of the Future. The state ranked first in both the Economic Potential and Human Capital and Lifestyle categories of the ranking, second in Connectivity and Business Friendliness and third in FDI Strategy. The state attracted the highest number of inward FDI projects of all states analysed. In total, 870 projects were recorded between 2011 and 2015, according to greenfield investment monitor fDi Markets. 

The highest proportion of investments in São Paulo were in the software and IT sector, which attracted 17% of all projects. US-based Rocket Fuel, a digital ad sales company, invested in São Paulo in January 2015, stating that “Brazil is primed to be a Latin American bellwether for programmatic media”, while US-based Search Optics said of its June 2015 investment in the state: “The opportunity in Brazil is huge.” São Paulo state is home to the ‘Brazilian Silicon Valley’ region of Campinas, an area close to São Paulo city with a focus on research and innovation. Of all states in South America, São Paulo attracted the highest number of R&D FDI projects.

R&D investment in São Paulo state reached a peak in 2012, then fell by 55% in 2013. However, there have been year-on-year increases in the number of R&D projects recorded since 2013, signalling a slight improvement in the R&D investment landscape. China-based BYD, a manufacturer of rechargeable batteries and automobiles, invested in Campinas in July 2014, crediting its investment decision to the city’s “spirit of innovation”. Campinas is home to many universities, which contributes greatly to the research environment in the state. São Paulo boasts the highest number of higher education institutions of all states in the study, which contributed to the state’s first place ranking in the Human Capital and Lifestyle category. Twelve of the state’s universities are featured in the QS University Ranking’s list of Top 300 Universities in Latin America, and 1.6 million students study in São Paulo, the highest number of any state analysed.

Buenos Aires on the rise

Buenos Aires Autonomous City in Argentina ranked in second place in this year’s ranking. The state rose from fourth place in 2014/15, ranking second in the Human Capital and Lifestyle category and third in both Economic Potential and Business Friendliness. Of the 106 FDI projects that were recorded in the state between 2011 and 2015, 24 investments were made by companies in the software and IT sector. 

Capital expenditure in software and IT peaked in Buenos Aires Autonomous City in 2015, having suffered declines in 2013 and 2014. In November 2015, US-based Bluesmart, a developer of smart luggage, announced a $100m investment in the state, establishing an R&D centre that will create about 150 jobs.

Thirteen of the state’s universities are featured on the QS ranking of Top 300 Universities in Latin America, the joint-highest of all states analysed (along with Brazil’s Minas Gerais), and Buenos Aires Autonomous City’s student population is one of the highest of all South American states (as a percentage of its total population).

Rio de Janeiro, Brazil’s second largest state, ranked third in this year’s ranking. The state performed well in several categories, notably ranking second place in Economic Potential. Almost 250 FDI projects were recorded in the state between 2011 and 2015, with the automotive OEM sector commanding the highest level of capital investment of all sectors. In recent years, major investments have come from Japan-based Nissan, and India-based Tata Group, through its Jaguar Land Rover subsidiary. 

Methodology

To create a shortlist for the fDi South American States of the Future 2016/17 ranking, the fDi Intelligence division of the Financial Times collected data using specialist online FDI tools – fDi Benchmark and fDi Markets as well as other sources. Data was collected for 133 locations, under five categories: Economic Potential, Human Capital and Lifestyle, Cost Effectiveness, Infrastructure and Business Friendliness. Locations scored up to a maximum of 10 points for each data point, which were weighted by importance to the FDI decision-making process in order to compile both the subcategory rankings as well as the overall ‘South American States of the Future 2016/17’ ranking.

In addition, surveys were collected under a sixth category, FDI Strategy, for which there were 28 submissions. In this category, locations submitted details about their strategy for promoting FDI, which was then scored by fDi’s judging panel.

Click on the link below for a PDF version of the complete results: 

This article is sourced from fDi Magazine
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