New Global Trends Report Indicates Foreign Direct Investment Is Ramping Up Worldwide
IBM Global Business Services, IBM Institute for Business Value (11/16/2011)

According to IBM's newly released "Global Location Trends" 2011 report, after two years of decline foreign direct investment (FDI) has finally begun to recover, and companies are learning how to adjust their global activities to new economic realities.

"The number of [FDI] projects grew by 10 percent and the number of jobs created jumped by 25 percent," said Frank Kern, Senior VP for IBM Global Business Services, in the fifth edition of this annual report.

Moreover, the nature of FDI in 2010 "indicates that businesses deepened their commitments to creating globally optimized footprints," he added, "a practice we first detected in this study in 2009. And in 2010, for the first time, we see emerging countries widely adopting this practice, setting up global operations that span their supply chains and internal operations."

Kern said that since enterprises in every region are now bolstered by a "growing capacity to analyze and act on proliferating information," they are "optimizing their operating models for efficiency and opportunity. For those prepared to act, it is welcome news."

Report authors Jacob Dencik and Roel Spee pointed out that in an increasingly integrated and volatile global economic landscape, "companies are adjusting their global activities to the new economic realities. Core to these efforts is the recognition of the needs to address supply chain challenges, manage talent requirements, and gain operational efficiencies through global footprint optimization. These needs have significant implications for how and where companies are deciding to operate, as they seek to adapt to changing demand patterns."

Thus, they summarized, "2010 marked companies' return to growth in foreign investment activities, with emerging countries as the main beneficiaries of this investment. After experiencing the worst global economic contraction for more than 70 years, 2010 saw a marked recovery in global economic activity. As mentioned in last year's report, we identified the tentative signs of a recovery in the second half of 2009."

The "winners" in the new global economy are now becoming more evident, too, revealed the report. Global investment in 2010 was more strategic in nature when compared to preceding years, which focused more on tactical and/or cost reduction activity.

Other key findings included:

Cities, regions and countries are increasingly interested in not only the quality and value of the investment projects attracted, but also with the quantity of projects and jobs, said report authors.

Using a FDI project value assessment developed by IBM, the duo discovered intriguing data about the performance of individual states and provinces within North America in regards to how some locations are able to attract high-value investment. Using this tool they found that: