In the seventh edition of the Greenfield FDI Performance Index, Costa Rica entrenched its global leadership as the country that attracts the most foreign direct investment (FDI) relative to the size of its economy, thus proving the resilience of its investment proposition in the wake of the Covid-19 pandemic. The UAE and North Macedonia also showed their strength, coming in second and third respectively. 

The pandemic redrew the map of the world’s best FDI outperformers relative to the size of their global gross domestic product (GDP). In this respect, Costa Rica is both an outperformer and an outlier as the only Latin American country in the top 10, which is dominated by major business hubs such as the UAE and Singapore, and countries in emerging Europe. On the other hand, African countries paid the highest price as investment flew back to the safety of OECD countries. In 2019, as many as five African countries featured in the top 10; two years later, none of them made it. 

Of the 84 countries recording more than 10 FDI projects in 2021 and thus being considered for the 2021 index, 68 have an index score greater than 1.0, indicating a larger share of investment projects relative to its share of GDP. The remaining 16 have a score less than 1.0, indicating a smaller share of projects relative to GDP. 

Costa Rica’s 2021 score stands at 15.5. This suggests that, given the size of its economy, it attracts 15.5 times more projects than the size of its GDP would suggest.  

China sits bottom of the index as the lowest scoring country. The world's second largest economy, the Asian powerhouse has struggled to recover its investment appeal in the wake of the pandemic, with FDI dropping to record low levels both in 2020 and 2021 despite the overall GDP bouncing to pre-Covid levels already by the end of 2020. 

The bottom six places in the index are all taken by countries in the Asia-Pacific region — joining China are Indonesia and South Korea with a score of 0.4, Pakistan and Bangladesh at 0.3, and Japan at 0.3. 

While Costa Rica’s GDP has not quite recovered to the levels recorded in 2019, 2021 brought the country its largest number of recorded FDI projects since fDi Markets began collecting the information in 2003. Software and IT services makes up 31% of FDI projects recorded in 2021, growing by 15 percentage points from its share of 2017’s investments.

The Middle East was the only region in which all locations have a score greater than 1.0. However, despite the region’s excellent ability to attract FDI, it only has one country place in the top 10. The UAE’s score has improved for the third consecutive year and now stands at 8.9, after an increase of 153 projects recorded in 2021.

North Macedonia climbed the most places of all countries analysed, rising an impressive 41 places. FDI into the country was hit hard during the pandemic, falling by 67% between 2019 to 2020. Its recovery and growth of FDI attractiveness went hand-in-hand with the country's Nato membership, which was announced in March 2020, and the country's continuing negotiations with EU members to officially start its EU membership talks, which eventually were launched in July. In 2021, the country attracted major projects in renewable energy, as well as in the software and IT sector. 

Emerging Europe

Emerging Europe saw mixed fortunes, with North Macedonia joining the top three as Lithuania fell down the rankings. Cyprus (3.4) and North Macedonia (8.8) rose the most places in this year’s index (50 and 41 places, respectively).

The region collectively recorded an increase of 210 FDI projects from 2020; however, the rising tide did not lift each country equally. Estonia, Latvia and Lithuania each saw their scores fall by more than two points between 2020 and 2021, driven by a change in the nominal project numbers recorded by fDi Markets. 

Africa

The 2021 index contains nine African countries, and continues a trend that has seen African nations appear less in the index compared to the previous edition – only countries with 10 or more FDI projects in the full year are considered. Of those included, only Egypt (1.0) and Tanzania (1.4) saw their scores increase from 2020.

South Africa had an unfortunate year in that while FDI increased, its economic growth outpaced investment, resulting in a drop in this year’s index.

Asia-Pacific

Despite the bottom six places in the index being made up of nations in the Asia-Pacific, 11 of the 19 recorded a score greater than 1.0. Although India (1.0) and China (0.2) attracted the most projects in 2021, Singapore (6.2) remains the regional winner when it comes to attracting investment relative to GDP.

Western Europe

After failing to meet minimum 10 FDI projects criteria necessary to be included for last year’s index, Malta (5.8) has returned to the region’s top spot. Ireland and Portugal now now place joint second with a score of 3.7 each. Western Europe received more than 4900 projects in 2021 — more than any other region and accounting for 37% of the projects counted for this index.

Middle East

The Middle East is the only region in this year’s index that all locations have a score above 1.0. The region recorded an additional 299 projects year-on-year, with only Oman (1.8) seeing its project numbers fail to increase. The UAE confirmed its leadership in the region with an 8.9 score of the index, followed by Bahrain (3.9) and Qatar (3.2).

North America

Both Canada (1.3) and the US (0.5) recorded increases in their project numbers between 2020 and 2021. However, their economic gains outpaced investment, with both nations seeing their scores fall slightly. The US recorded its peak investment figures in 2019 and although they recovered slightly, 2021 project numbers are still 18% lower than their previous peak.

Latin America

Last year Panama (1.2) surged and placed second in Latin America. This year, however, it could not maintain its project volumes and saw its fortunes reverse. Panama fell the most places of any country in this year’s ranking, dropping 39 spots. In 2021, El Salvador (3.3) followed Panama’s example and jumped from fifth to second in the regional ranking.