While software and IT, business services and financial services remain the top three sectors for global FDI projects, there has been a change in their ranking. Financial services was the leading sector in 2008 and 2009 but with a 5% increase in FDI projects, the software and IT sector is ranked as the leading sector for FDI projects in 2010, with a total of 1378 projects. FDI in the software and IT sector accounted for 11% of global projects in 2010. Software and IT was also the leading sector for FDI projects between 2003 and 2007.
The business services sector was the second biggest sector for FDI projects in 2010, also moving ahead of financial services, despite experiencing a 3% decline. Job creation in business services reached an all-time high in 2010 with the creation of an estimated 88,747 jobs.
Financial services decline
The financial services sector experienced a decline of 5% in project numbers, with 1243 projects in 2010. This resulted in the sector falling from first to third position in the rankings. Despite a drop in project numbers and a 19% fall in job creation, capital invested in the sector remained relatively stable, with $20.2bn invested in 2010.
The top five sectors in terms of project numbers also included the industrial machinery, equipment and tools sector, and communications sector. Combined, the top five sectors accounted for 43% of global FDI projects in 2010. This was the same as in 2009.
In contrast to the decline in FDI in 2008 and 2009, FDI projects in the plastics sector increased by 45% in 2010 to 293 projects. The jobs associated with these projects grew by 72% and capital investment was an estimated $11.9bn in 2010. China and the US were the main destinations, attracting 39% of plastics projects in 2010.
Electronic components on the increase
The electronic components sector saw the biggest increase in project numbers, up from 393 in 2009 to 515 in 2010. This sector moved to sixth place in the global rankings, up from 10th place in 2009, with the highest number of projects recorded in electronic components since fDi Markets records began in 2003. The majority of these projects involved manufacturing and sales, marketing and support operations. Capital investment in electronic components grew by 63% to an estimated $35.57bn in 2010, also an all-time high, while job creation increased 41.2%.
Although the metals sector did not feature in the top 10 sectors in 2009, a 26% increase in FDI project numbers in 2010 resulted in the sector climbing to eighth position in the 2010 rankings. Capital investment in the sector increased by 43%, with an estimated $92bn in 2010. There were a number of large investments in the sector in 2010, the biggest of these being South Korean steel company Posco investing $7.03bn to establish its steel plant in Karnataka, India. The metals sector increased the number of jobs created overseas, with a 54% growth in job creation in 2010 to an estimated 162,241 jobs.
Fossil fuel dip
The coal, oil and natural gas sector experienced the biggest decline in project numbers in 2010, with a drop of 41% (a decline of 217 projects). Likewise, the number of jobs created by this sector declined by 51% to an estimated 49,124. In terms of capital invested, the sector still remained the leading sector for FDI globally despite a decline in capital investment of 41% in 2010 to an estimated $136bn.
FDI in the real-estate sector also continued to decline in 2010. fDi Intelligence's recap of 2009 trends reported the number of real-estate projects fell by 53% compared with 2008. The number of projects has declined further in 2010, with a 25% decline. Jobs created by the real-estate sector fell by 43%, although it remains the leading sector for jobs creation, ahead of automotive original equipment manufacture.
The alternative/renewable energy sector experienced a decline in project numbers by 21% in 2010 and job creation by 50% as companies cut back on renewable energy electricity projects, partly due to the phasing out of attractive incentives in key countries such as Germany, Denmark and Spain. However, the number of projects in the engines and turbines sector increased by 34% in 2010 to 139 projects. The number of jobs created more than doubled to an estimated 46,042, while capital investment grew by 97% to an estimated $13.3bn. A high proportion of these projects, investment and jobs went to the US, China and India, which are new growth markets for renewable energy after the initial lead by European countries.
Communications growth continues
FDI in the communications sector continued its expansion in 2010. FDI in the sector grew by 11% in 2010, reaching a record 582 projects. Capital investment increased by 11% and the number of jobs created by the sector increased by 15% in 2010. Spanish telecommunications provider Telefonica was a leading investor in the sector, with major investments in Brazil, Argentina and Peru to develop broadband infrastructure. Vodafone also featured highly in terms of the number of projects and capital invested, also in broadband infrastructure. A growing number of data centre projects also fuelled investment growth in the communications sector.