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Canada is second in foreign direct investment confidence: Survey

Focus on often-overlooked Canadian market reflects a back-to-developed economies for larger, more stable markets.

June 18, 2020   by PLANT STAFF

WASHINGTON — Canada placed second in the Kearney 2020 Foreign Direct Investment Confidence Index, moving up a position from 2019.

The global strategy and management consulting firm had Canada in second in the 2018 Index.

The US continues to hold top spot for investment attractiveness for eight consecutive years.

This year Germany fell to third place, followed by Japan and France.

The annual ranking of the top 25 destinations for foreign domestic investment was in the field from Jan. 27 to March 3, just as the world was entering the protracted COVID-19 pandemic.

“Canada’s position in the index second only to the US reflects an environment of investors caught off-guard, the response being a return to the security of fundamentals to large, more stable markets, with their accompanying political and regulatory stability – to developed countries,” says Paul Laudicina, founder of the FDI Confidence Index and Kearney’s Global Business Policy Council. “We are hopeful that the Index can serve as a reminder to executives that they cannot assume the global operating environment is resistant to change, and that they will be able to predict and plan for such severe shocks in the future.”

The global FDI is predicted to plummet across the board, with fallout from the coronavirus pandemic impacting the global economy for years to come, but Kearney sees developing and emerging markets feeling the brunt of these losses.

During the six-week survey, Kearney saw investor confidence decline, with scores for developed, emerging and frontier markets all dipping 25% to 33%. By the conclusion of the survey, developed markets came out the strongest, capturing 22 out of the top 25 markets on the Index.

Said Erik Peterson, managing director of the Global Business Policy Council and co-author of the study: “Results from this year’s survey show the changing tide of opinion as investors realized only too late that the global economy was in serious crisis. It is no surprise that Canada has such a high ranking. It has a developed and stable economy, strong infrastructure and a well-educated workforce – similar characteristics to the United States, while providing a solid alternative choice for investors.”

The Kearney Foreign Direct Investment Confidence Index® is an annual survey of global business executives that ranks markets that are likely to attract the most investment in the next three years. In contrast to other backward-looking data on FDI flows, the FDICI provides unique forward-looking analysis of the markets that investors intend to target for FDI in the coming years. Since the FDICI’s inception in 1998, the countries ranked on the Index have tracked closely with the top destinations for actual FDI flows in subsequent years.

The 2020 FDICI is constructed using primary data from a proprietary survey of 500 senior executives of the world’s leading corporations. The survey was conducted between January and March 2020. Respondents include C-level executives and regional and business leaders. All participating companies have annual revenues of $500 million or more. The companies are headquartered in 30 countries and span all sectors. Service-sector firms account for about 44 percent of respondents, industrial firms for 37 percent, and IT firms for 20 percent.

Click here for past editions of the FDI Confidence Index.


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