21 Aug 2024
Global capital pledges were strong last year despite higher interest rates, inflation and a challenging geopolitical backdrop. More than $1.33 trillion in greenfield foreign direct investment (FDI) was announced by companies worldwide in 2023, up nearly 4 percent from the previous year, according to fDi Markets.
However, fewer FDI projects in 2023 than a year earlier means that the average capital expenditure (capex) pledged for each FDI project has reached its highest level since 2008. In practice, this higher capital intensity has made competition for FDI fiercer than ever. Nevertheless, the recovery of FDI compared to the low levels recorded during the Covid-19 pandemic years 2020 and 2021 has opened up new opportunities to encourage investment. The inaugural annual fDi 100 survey reveals the cities and regions that saw the highest annual FDI growth rates in 2023 globally, and it has some interesting results.
Methodological note: The 2023 Top 100 Fastest Growing Subnational Green FDI Locations survey includes the global top 10 lists for both cities and regions, as well as the top seven cities and top three regions in eight macrogeographies around the world. These lists are based on weighted scores for fDi Markets data. The greatest weight was given to the annual growth in the number of FDI projects between 2022 and 2023, followed by the growth rate of announced capital expenditure and expected jobs created by investment. The survey also includes retail FDI projects.
The leading city for FDI growth in 2023 was the university center of Mannheim in southwest Germany, where a number of existing investors such as pharmaceutical giant Roche decided to expand their presence. Craiova, the city where carmaker Ford is based in Romania, had the second highest growth in FDI, largely thanks to the €125 million shopping center built by NEPI Rockcastle, which attracted several foreign-branded retail stores . In third place is Azerbaijan's capital Baku, which last year registered its highest number of FDI projects since 2017. Along with several logistics FDI projects, Hungary-based Hell Group plans to invest $211 million in an aluminum can plant for drinks at Alat Free Economic in Zona city. The spread of FDI growth was demonstrated by the diverse composition of the rest of the top 10 global cities. A number of other cities saw significant FDI growth in their respective regions, including the US city of Memphis in North America; Cartago of Costa Rica in Latin America and the Caribbean and Senegal's capital Dakar in Africa.
The region with the highest FDI growth in 2023 was Sumatra in Indonesia due to infrastructure development and large Chinese investment in downstream natural resource supply chains.Calabarzon, the region south of the Philippines capital Manila, had the second-highest growth due to big promises for offshore wind projects and a $200 million investment from US semiconductor company Analog Devices.The third ranked region is Baden-Württemberg, the German federal state that is home to the fast-growing FDI cities of Mannheim and Stuttgart. The remaining global top 10 regions include Binh Duong in Vietnam, several other German regions including Thuringia, Saxony-Anhalt and Bavaria, and Penang in Malaysia.A number of other regions stood out in their respective continents, including Colorado in North America, the west-central Mexican state of Aguascalientes in Latin America, southern and eastern Serbia in emerging Europe, the capital regions of Riyadh in Saudi Arabia and Lagos in Nigeria, and the third largest an island in Japan's Kyushu in the Asia-Pacific Ocean outside the ASEAN countries.
