Country Rankings by Inward FDI Potential Index

This interactive map shows current rankings by Inward Foreign Direct Investment (FDI) Potential Index. The Inward FDI Potential Index captures several factors  expected to affect an economy's attractiveness to foreign investors.

What is the Inward FDI Potential Index ?

The Inward FDI Potential Index captures several factors (apart from market size) expected to affect an economy's attractiveness to foreign investors. It is an average of the values (normalized to yield a score between zero, for the lowest scoring country, to one, for the highest) of 12 variables (no weights are attached in the absence of a priori reasons to select particular weights):

• GDP per capita, an indicator of the sophistication and breadth of local demand (and of several other factors), with the expectation that higher income economies attract relatively more FDI geared to innovative and differentiated products and services.
• The rate of GDP growth over the previous 10 years, a proxy for expected economic growth.
• The share of exports in GDP, to capture openness and competitiveness.
• As an indicator of modern information and communication infrastructure, the average number of telephone lines per 1,000 inhabitants and mobile telephones per 1,000 inhabitants.
• Commercial energy use per capita, for the availability of traditional infrastructure.
• The share of R&D spending in GDP, to capture local technological capabilities.
• The share of tertiary students in the population, indicating the availability of high-level skills.
• Country risk, a composite indicator capturing some macroeconomic and other factors that affect the risk perception of investors. The variable is measured in such a way that high values indicate less risk.
• The world market share in exports of natural resources, to proxy for the availability of resources for extractive FDI.
• The world market share of imports of parts and components for automobiles and electronic products, to capture participation in the leading TNC integrated production systems (WIR02).
• The world market share of exports of services, to seize the importance of FDI in the services sector that accounts for some two thirds of world FDI.
• The share of world FDI inward stock, a broad indicator of the attractiveness and absorptive capacity for FDI, and the investment climate.