After a 12-year hiatus, the United States reclaimed first place among top executives in a survey on foreign direct investment (FDI) sentiment, displacing China as it makes progress toward sustainable and steady economic growth, a study showed.
The United States jumped from fourth place in 2012, according to the 2013 Foreign Direct Investment Confidence Index, a survey of more than 300 executives from 28 countries by global consulting firm AT Kearney.
The survey, conducted between October and November of last year, highlighted executives' views that US workers are becoming more competitive and, until recently, the weakness in the US dollar helped improve the country's exports profile.
Combined with a recovering housing market and the surge in production of unconventional oil and gas, the United States took back the top spot for the first time since 2001 despite still serious fiscal policy uncertainty and sizeable debt issues.
Malaysia, meanwhile, fell 15 notches to 25th place.
More than half the respondents believe the global economy will recover from the financial crisis and recessions in 2014 (26%) and 2015 (28%). That is a shift in sentiment from 2010 when 42% believed the recovery would occur in just one year. “Investors are demonstrating more mature judgment about what the risks are and what the expected returns will be and how long it will take the global economy to recover,” Paul Laudicina, chairman emeritus of AT Kearney, told Reuters in a telephone interview.
The FDI Confidence Index ranks countries on how political, economic and regulatory changes will affect foreign direct investment. The United States is the top recipient of FDI inflows for a sixth consecutive year, according to the survey. Respondents were most optimistic about the United States' 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. The survey found that roughly 90% of investors report the euro zone crisis has or will impact their FDI decisions. Rounding out the top five in the confidence index are Brazil, Canada and India.
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 lowcost alternatives such as Mexico. The push by China, the world's second-largest economy, for the last 30 years to be a manufacturing powerhouse has given way to trying to create a more consumerdriven economy.