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GLOBALOUTLOOK PERFORMANCEINDEX


CostaRicasecuresthe top spot in greenfield FDIperformance


LITHUANIA AND THE UAE FOLLOWAS TOP FDI PERFORMERS RELATIVE TO THEIR ECONOMIC SIZE. MEGAN McGARRITY REPORTS


T


he resilience that Costa Rica has shownduring theCovid-19 pan- demic has securedit the top


ranking as theworld’s best perform- ing locationrelative to its size,whenit comes to attractingforeigndirect investment (FDI). Costa Rica climbedto the topof


this year’sannual Greenfield PerformanceIndex witha score of 11.4. Thisputs it significantlyahead of the runners-up, Lithuania with8.3 and theUAEwith7.1. Of the 84 countries analysedby fDi


in the 2021 Greenfield Performance Index, 64hadan index score greater than 1.0,while 20hada score of 1.0 or lower.Ascore of 1.0indicates that a country’s share of global inward greenfield FDI in 2020matches its rel- ative share of global grossdomestic product (GDP),while a score greater than this indicates a larger shareanda score of less than 1 indicates a smaller share. Costa Rica is therefore attract- ing 11 times theamount of greenfield FDI thatmightbe expected given the size of its economy. At the other end,ChinaandJapan


stand out as the lowest performing countries, scoring 0.18and0.28 respectively.While itsGDP withstood the pandemic relativelywell,China witnesseda55%drop inFDI project levels during 2020, fDiMarkets data show, whichsankthe country to the bottomof the index ranking. South Korea (0.34), Bangladesh (0.35) and Indonesia (0.4) are also attracting muchless FDI in proportionto the size of their economies. Costa Rica,oneof Latin America’s


smallest countries, attracted96pro- jects in 2020, according to fDiMarkets


42


Growth industry: medical technology has become a key part of Costa Rica’s economy


data. Whilethis represents a drop of 7.7%from2019, it remains the coun- try’s second-best year since records beganin2003—a performance that stands out evenmoreconsidering the challenging investmentenvironment of last year,whengreenfield FDI pro- jects fell byabout a third globally.The country hascomea longway since beinganexporter of agriculture com- modities decades ago; in 2020, medical devices, softwareandITandbusiness service sectors accounting for60%of its inward FDI projects.Amongothers, the countrymanagedto secure a $600minvestmentcommitmentby Intel to reestablish assemblyandtest- ing operations in the country after a hiatus of sevenyears—theUScompany hadterminated its local manufactur- ing functions in2014—to address the global shortage of microchips. Emerging Europeaneconomies


also performedwell in this year’s index, securing six of the top10posi-


tions. Lithuania, another country that showeda certainlevel of FDI resilience toCovid-19,jumped fromsixthplace in the previous iteration of the rank- ing to secondin the 2021 index, improving its score by 1.8 points. Estonia scaledthe rankingfrom 34th place in 2020 to fifththis year, after increasing its project levels by37% year-on-year in 2020andimproving its score by 2.99 points. TheUAEalso scaled the ranks,


jumping from12th place to thirdthis year, despite a 14.7% drop in project levels from2019. Software and IT ser- vices was the country’s leading FDI sector in 2020andwitnessed a35% increase in the period. The Greenfield Performance Index


uses amethodology devised byUnctad for overallFDI,andapplies it to only greenfield FDI, excludingmergersand acquisitions, intra-company loans and other forms of cross-border invest- ment.■


www.fDiIntelligence.com August/September 2021


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