fdi 2012
Happy New Year!
As we start 2012, it is a good time to reflect and look forward. We are very pleased to welcome Courtney Fingar the editor of fDi Magazine to share her views on where FDI is going and where investment promotion agencies should be focussing their efforts.
Q: fDi Magazine recently celebrated its 10-year anniversary and you referred to some of the changes in the market since it started, as well as some of the constants. What big changes do you see for the next 10 years?
A: I see Brazil completing its ascent and establishing itself firmly as a world-leading economy and heavyweight on the world stage, and in Latin America generally there will be continued rises in FDI levels, incomes and living standards. Mexico is the big question-mark here, mainly for security reasons; its future hinges entirely on the extent to which violence in the border states can be contained and reversed. Within the US - as argued in a brilliant article by Michael Lewis recently - the shift in the economic centre of gravity to the Sun Belt states and away from the northeast and north-midwest (largely off the back of more business-friendly investment environments and faster job creation and thus more inbound migration) will have seismic political ramifications. I see at least some level of disintegration in the euro zone, and increasing clout, both economically and politically, for CEE countries such as Poland. I see a widening of the gap between northern and southern European countries. In Asia, the most interesting question is whether the political structure in China could change; I consider that highly possible. Some southeast Asian countries - Cambodia, Laos - will come out of the shadow of neighbours and become of investor interest in the way that Vietnam already has.
For all the talk of the potential for protectionism and isolationism as a natural reaction to some of the excess of globalisation, I do not see companies pulling back in any great number from crossborder expansion. However, due to a natural process of plateauing, we might not see the huge ramp-up in globalisation that characterised the 1990s, and FDI levels might not greatly exceed the pre-2008 high-water marks.
Q: If you were an investment promotion agency (IPA) in today’s FDI market, how would you be marketing your location?
A: Before marketing anything, I would do a very thorough examination of the location’s real (not imagined) strengths and assessment of where it can fit in the market. I would also insist that every single member of the team completes training in general business, business strategy and basic economics - after all, how can they pitch to companies if they don’t know how companies function or what they need? In the current climate companies are looking for bespoke solutions, and so it is essential that IPAs are able to carefully identify the most appropriate target companies, study up on the companies, and be able to present to the companies highly specific commercial opportunities in that location. A location can never be all things to all companies, so broad-brush marketing and generic brochures are just not going to cut it in today’s climate.
Q: What stories are you looking for from IPAs?
A: I am interested in anything that is unique. I am also interested - perhaps even more interested - in hearing about challenges they face and how they are working to overcome them, as opposed to just straight success-story type pitches.
Q: What IPAs have given you a surprise (good or bad)?
A: The most fascinating and surprising organisation carrying out investment promotion activities these days - whose work in this area I have had the great pleasure to witness first-hand - is the US Marine Corps. In line with the concept of what can be termed “economic counter-terrorism”, forward-thinking members of the military are utilising FDI as a tool for reducing violence and instilling peace in conflict-ridden territories, the idea being that creating jobs deprives radical groups of potential recruits and also illustrates to the local populace the gains that can be made in their own lives through channelling productive rather than violent energies. This worked to quite some significant effect in Al Anbar province in western Iraq, where the governor bought quickly and enthusiastically into these efforts. The result is a very intriguing scenario in which career military officers are now, in essence, learning the ins and outs of investment attraction. Actually, they are well cut-out for such a mission, because of their pragmatic, flexible and results-driven ethos, and I feel that most civilian IPAs could learn a thing or two from them.
Q: What are the favourite (over-used) words/terms that IPAs use when they are pitching to you?
A: “Strategic location” (complete with requisite map showing diametric circles radiating outwards from the location to show how it is, in fact, the centre of the region/world/universe); also “value-added services” and “moving up the value chain”. For once I would like to hear an IPA say, “You know what, for now, we need to just work to excel in more basic services and fill that gap before we seek upgrades”, because actually, there is still great demand and need for production facilities and what could be classed as low-end services. And I cringe horribly when anyone uses the term “glocalisation”, although to be fair, this most likely was the brainchild of a consultant somewhere and only a few IPAs have so far latched on to it. I wish they would stop!