While spring is in full swing in the Northern Hemisphere, the green shoots of an FDI recovery are springing forth. But just as it is never spring everywhere in the world at the same time, the FDI seasons, and fortunes, are not equally sunny everywhere. 

fDi Intelligence’s annual report on greenfield investment flows, released in May and recapped in our cover story in this issue, indicates how foreign investors are responding to the world economic recovery, and which investment locations are benefiting. The report, based on data from fDi Markets, a real-time service for tracking greenfield investment flows, reveals that capital expenditure in greenfield projects increased by nearly 11% in 2013 over the previous year. This tallies with the 11% increase in headline FDI flows that the UN Conference on Trade and Development reported, taking into account mergers and acquisitions and other types of investment that are not strictly greenfield. The overall data picture shows that growth has resumed in both long-term capital flows and productive investment by foreign investors.

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It means that companies are increasingly confident in economic growth, and our studies on investor motives – also presented in the report – demonstrate that this is what matters most to companies in their search for their next investment locations. Analysis of location determinants for investment projects shows that FDI is primarily market-seeking, with nearly half of all projects driven by domestic market growth potential and more than one-third by proximity to markets and customers. 

The figures suggest Latin America and the Caribbean, which straddles both hemispheres, had a bumper year in 2013, with the largest regional increase in FDI capital expenditure posted – although one huge Nicaraguan project gave overall numbers an undeniable boost. Even within that region, fortunes differ, with big-daddy Brazil seeing a decline while FDI in Mexico is up by 49%. 

While FDI heavyweights China and the US, along with most of the world’s major economies, saw slight declines in inflows, small and medium-sized emerging and frontier economies such as Vietnam, Iraq and Colombia posted big gains. Investors are spotting growth potential in these markets and others, while perhaps expecting a cooling off in overheated or already saturated economies.

fDi Intelligence predicts the recovery in FDI to accelerate and flows to continue to grow over the next five years. The locations that pace themselves ahead of economic growth forecasts while ensuring their markets stay open, growing and accessible will be the most likely to have the FDI rain down on them.

Courtney Fingar is editor-in-chief of fDi Magazine. E-mail: courtney.fingar@ft.com