ICT accounted for about 2400 investment projects around the world – an increase of 8% on 2003 (investments rose 7% across all sectors). The majority of growth is in ICT services, which make up more than half of all ICT investment projects. Manufacturing is showing a gradual decrease.

The most striking trend is that investment in ICT research and development (R&D) overtook manufacturing

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investment. In 2004, the number of R&D projects was constantly higher than in 2003, and the market now generates about 40-50 such projects every month. Software development is a key factor in this growth.

In line with the global trend of booming investment in Asia, most ICT investment has been in China and India, which together absorb 38%. Due to the growth in services-related investment and R&D, India took over the lead position from China in 2004. China is still the most successful country in attracting manufacturing activities.

Compared with these two huge magnets for ICT investment, traditional markets like the US and western Europe have a modest market share in ICT FDI. Asia’s dominance in ICT manufacturing and R&D (more than 70% of new investment in these activities) is striking.

IPAs that are targeting foreign investment in ICT need to have the US at the top of their target list. Almost half of all FDI projects globally in ICT is generated by companies with headquarters in the US. The US lead is historically unchallenged.

Roel Spee is associate partner at IBM Business Consulting Services–Plant Location International

roel.spee@be.ibm.com