Kearney's 2022 FDI Confidence Index® reveals initial business leader optimism about the investment outlook. Subsequent geopolitical shocks are now remaking the world
The United States retains the top position for investment attractiveness for the 10th consecutive year.
Our results reflect the continued strength of developed markets in periods of crisis, be it a pandemic or geopolitical crisis.
Investors cited a rise in commodity prices, increasing geopolitical tensions, and persistent inflation as developments that were likely to occur in the year ahead—and each of these areas has been exacerbated by Russia's military actions in Ukraine.
Kearney's Global Business Policy Council today released its 2022 Foreign Direct Investment Confidence Index (FDICI), an indicator of future FDI flows. The ranking reveals rebounding investor optimism about the global economy when the survey was in the field in January. However, their sanguine views on the economy, plans to increase FDI, rising FDI country scores, and a belief that most countries in the Index would see their three-year economic prospects improve indicate that the conflict in Ukraine must have caught investors by surprise, as it did much of the world.
"Entering year three of the pandemic, investors seemed much more hopeful about the global economy and FDI flows than they did just a year ago," says Paul A. Laudicina, founder of the FDI Confidence Index® and Kearney's Global Business Policy Council. "They did, however, have concerns that a rise in commodity prices, escalating geopolitical tensions, and persistent inflation were likely in the year ahead. Just a few months into the year, these concerns have come to fruition and been exacerbated by the Russian military actions in Ukraine."
The results of this year's FDI Confidence Index® illustrate both areas of business leader foresight as well as the blind spots regarding the changes that were on the immediate horizon. While the results cannot show directly how investor sentiment has shifted since the conflict began, several findings suggest we are likely to see a continued shift in FDI to developed markets, capitalizing on destinations marked by regulatory transparency and stability. In fact, investors cite transparency of government regulations and lack of corruption as the most important overall factors when choosing where to make FDI.