US Overtakes China As Preferred FDI Destination
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The United States has overtaken China for the first time since 2001 in an annual survey on foreign direct investment sentiment, an indication of growing investor confidence and optimism in the world’s largest economy, a study showed on Wednesday.
The United States narrowly outscored China to reclaim first place in this year’s foreign direct investment confidence survey by consulting firm A.T. Kearney of executives from 302 companies worldwide.
The United States has overtaken China for the first time since 2001 in an annual survey on foreign direct investment sentiment, an indication of growing investor confidence and optimism in the world’s largest economy, a study showed on Wednesday.
The United States narrowly outscored China to reclaim first place in this year’s foreign direct investment confidence survey by consulting firm A.T. Kearney of executives from 302 companies worldwide.
While likely to remain an investment hotspot, factors that impacted the outlook for FDI into China include a doubling of labour costs since 2007, rising transportation costs, a rapidly aging population as well as and the steady appreciation of the yuan. Brazil, which maintained its position in third, is expected to continue benefitting from investments related to its 2014 World Cup and 2016 Olympic Games.
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The FDI Confidence Index ranks countries on how political, economic and regulatory changes will affect foreign direct investment.
Confidence in the U.S. has grown with the surge in U.S. oil and gas production, which promises lower energy costs and export opportunities in petrochemicals and other products. Despite the fiscal deadlock in Washington and a sizeable debt load, “investors are demonstrating more mature judgement about what the risks are and what the expected returns will be and how long it will take the global economy to recover,” said Paul Laudicina, chairman emeritus of A.T. Kearney.
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Laudicina added that the U.S. economy, though not fully recovered, has outperformed Europe since the 2008-09 financial crisis and has a healthier birth-rate than most other developed nations.
Respondents were most optimistic about the United States’ prospects, with 63 percent expecting some economic growth, compared with 62 percent who believe Europe may have no growth or return to recession over the next three years.
The release of the survey Wednesday comes amid several indications of foreign interest in U.S. manufacturing. Japanese carmaker Toyota last week said it would invest $200 million to expand parts plants in Alabama, Missouri and Tennessee, bringing its investments in North America over the past two years to more than $2 billion.
