The US has knocked China out of first place in an annual A.T. Kearney survey of executives rating favourable places for foreign direct investment. The US was ranked fourth in 2012.
Respondents were most optimistic about the US’ prospects, with 63% expecting some economic growth, compared with 62% who believe Europe may have no growth or return to recession over the next three years.
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Some investors ‘have basically rediscovered the US,’ said Paul Laudicina, chairman emeritus of A.T. Kearney. He noted that the US economy, though wobbly, has outperformed Europe since the global slump of 2008 and 2009.
The US also has a healthier birth-rate than most other wealthy countries, he said
According to the report, the factors that impacted the outlook for FDI into China include a doubling of labour costs since 2007, rising transportation costs and the appreciation of its currency, the renminbi, which made it less competitive against other low-cost alternatives such as Mexico.
Other developed nations in the top 10 this year include Canada (4th) and Australia (6th), popular for their unconventional fossil fuels and minerals, and Germany (7th) and the United Kingdom (8th).
Emerging markets continued to charge ahead. They accounted for 16 of the top 25 countries in the Index, with China (2nd), Brazil (3rd), and India (5th) all in the top five once again.
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By GlobalDataMexico, with strong manufacturing and exports and close links to the US and Canada, also found place in the top 10.
Chile and Argentina re-entered the rankings after a more than decade-long absence, which highlighting South America’s increased consumer spending and rich endowment of natural resources.
This is A.T. Kearney FDI Confidence Index’s 13th edition since 1998. It ranks countries on how political, economic, and regulatory changes will affect FDI.
The report is based on a survey of more than 300 executives from 28 countries.
