This was a bumper year for FDI, with worldwide investment flows nearly reaching the record levels of the year 2000. As a result, investment promotion agencies everywhere will be crowing about the big numbers of inward investment they have racked up. This good news is darkened a little by worries over the ultimate effect of the subprime crisis on the US economy, and, by extension, US corporate sector expansion and the global economy.

These fears would seem to put paid to the urgency with which many business locations are seeking to decrease their reliance on US investment and attract companies from China, India and other emerging markets, which is further justified by the real and rising levels of outflows emanating from these countries.

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But the stampede to chase after emerging-market FDI has a whiff of the biotech obsession about it (the one in which every town with a university and a lab or two throws money and resources after the great dream of being a ‘biotech hub’, ignoring less sexy but more reliable sectors).

Tapping a new source of investment that has large potential for future growth is a sensible enough strategy. Yet for all the excitement over the fast-expanding emerging-market companies, and for all the enthusiastic efforts (some more successful than others) of economic developers, especially in Europe, to court these companies, the US is still the largest outward investor by quite some measure.

In fDi’s 2006/07 rankings of the world’s 100 most prolific foreign investors, companies from the traditional triumvirate of the US, Germany and Japan dominated with very little representation from the emerging markets.

As many a CEO could attest, over-reliance on any one source of business can be dangerous; so too can diversification if it serves to chip away at the core business.

And as many a lemming would attest, following the pack can lead you right off the edge of the cliff.

It may be a less exotic and less interesting prospect than closing investment deals in Asia, but as I write this, in the final weeks of 2007, the archetypal foreign direct investor is still a guy named Chuck in California. At some point in the not too distant future, he might well be called Chandra and come from Chennai.

By all means, economic developers should start getting to know Chandra – but in the meantime, just to be safe, they should also be sure to send Chuck a Christmas card.

Courtney Fingar