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     Global Outlook Report 2011 video

While the world economy rebounded with solid GDP growth in 2010, investors remained cautious about their foreign expansion plans. The number of greenfield FDI projects declined fractionally by 0.38% in 2010, following a decline of 17.3% in 2009. Greenfield capital investment fell by 16% in 2010, on top of the 36% decline in 2009, due to major declines in the capital-intensive natural resources and real-estate sectors. Job creation by greenfield investors also declined by 4% last year.

Lacklustre economic recovery, exchange rate instability and the sovereign debt crisis weighed heavily on investors' FDI plans for Europe, with a 15% decline in greenfield FDI projects in western Europe in 2010 – a larger decline than in any other region. With a further scaling back of investments in real estate and natural resources, FDI in the Middle East continued to decline, with a 45% fall in capital investment in 2010.

Brazil and Australia thrive

Brazil moved rapidly up the rankings of the leading FDI locations in the world in 2010. With 28% growth in greenfield FDI projects, Brazil was the seventh leading location for projects in 2010, up from 11th place in 2009. Capital investment into Brazil increased by 19.7% and job creation by 64.5%, making it the fourth biggest country in the world for greenfield investment and jobs. Brazil was behind only China, India and the US when it came to job creation in 2010. The country experienced very strong growth in inward investment in the renewable energy, electronics, chemicals and food and beverages sectors in particular.

Australia also performed strongly in 2010, with a 39.5% increase in FDI projects (moving it from 16th place in 2009 to ninth in 2010) and a 2.5-fold increase in capital investment, catapulting the country from 16th place in 2009 to fifth place in 2010. Poland and Canada also recorded very strong growth of FDI projects in 2010, with 33.7% growth in project numbers in Poland (although the 254 projects attracted in 2010 were still far below the peak of 355 in 2008) and 16.3% growth in project numbers in Canada.

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US and China consolidate lead

While Brazil, Australia, Poland, Canada and other countries achieved faster growth in FDI in 2010, the US and China further consolidated their market share dominance. With strong growth in FDI into both US and China, their combined market share of global FDI projects increased from 17.7% in 2009 to 20.3% in 2010. The countries' combined share of global capital investment remained unchanged at 17.6% in 2010.

The overall ranking of the world’s leading locations for FDI remained unchanged in 2010 in terms of number of greenfield FDI projects attracted, with US at the top followed by China, UK, India and Germany.

Asia's big four expand rapidly

Indian, South Korean, Japanese and Chinese companies were among the fastest growing investors overseas in 2010. Indian companies established 24% more FDI projects overseas in 2010, making India the ninth largest investor by number of projects in 2010. Indian firms created 43% more jobs overseas, moving the country from 18th place in 2009 to 10th place in 2010 by number of jobs created overseas. Indian companies accelerated investment overseas across different industries, with the biggest growth in the business services, metals, software and IT, and leisure and entertainment sectors. Indian companies expanded fastest in the UK, but the US and Gulf states also attracted increased FDI.

South Korean FDI projects overseas increased by 12.5%, with capital investment up 36% and job creation up 50% in 2010. South Korea moved up the rankings to be the sixth largest global investor overseas in 2010 in capital investment and the fifth biggest creator of overseas jobs. The fastest growth by South Korea's firms overseas was in the electronics, automotive and plastics sectors.

There was a 13.9% increase in FDI projects overseas from Japan in 2010 and a 25% increase in job creation, as Japanese companies established larger projects overseas. Japanese companies were the second largest creator of jobs overseas, after the US. Chinese firms also increased the number of jobs created overseas by 10% and capital investment by 2.5% in 2010. China ranked eighth in the world by capital investment and job creation overseas.

Software and IT top sectors

With a 5.4% growth in FDI projects in 2010, software and IT replaced financial services as the leading sector for greenfield FDI projects in 2010. FDI projects in financial services fell by 5% in 2010. However, the main trend in 2010 was the major growth in manufacturing sectors. Overall, the number of FDI projects in manufacturing sectors grew by 20% in 2010, and job creation grew by about 25%.

The metals and automotive original equipment manufacturer (OEM) sectors had the biggest absolute increase in capital investment overseas in 2010, with 43% and 34% growth, respectively. In 2010, the metals sector became the second major sector for capital investment globally (after coal, oil and natural gas) and automotive OEM the third biggest sector.

Real estate was again one of the worst performing sectors, with a more than 50% decline in capital investment overseas in 2010. Capital investment in 2010 was less than one-fifth the level of 2008.

Creative industries and environmental technology, which have been the two fastest growing sectors for FDI, remained relatively flat in 2010, with 1.9% and 0.3% increases in projects, respectively. However, their market share of global FDI increased marginally from 5.1% in 2009 to 5.2% in 2010 for creative industries and from 5.2% to 5.3% for environmental technology.

Recovery forecast in greenfield FDI in 2011

The FDI forecasting unit of fDi Intelligence is expecting a 6.5% growth in greenfield FDI in 2011, with most countries attracting more greenfield FDI in 2011 than 2010. Strong growth is expected in the automotive, industrial machinery and equipment, metals and chemicals sectors in particular. Renewable energy should also recover in 2011 and grow strongly. fDi Intelligence also expects growth in natural resources investment in 2011, after a sharp decline in 2010, although this will depend on the easing of political instability in the Middle East and north Africa. Slower growth in FDI is expected in business services, financial services, and food and beverages.

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Outlook Report 9.08 MB