• The United Arab Emirates is one of only four emerging markets on the 2022 Foreign Direct Confidence Index, and has recorded a higher ranking this year in an increasingly competitive global FDI attraction environment
  • The UAE’s continued commitment to policy innovation, the opening of Expo 2020 in Q4 of 2021, and its accelerating investment in innovation capabilities and digital infrastructure have been key to building and retaining investor confidence.
  • Kearney projects a strong average growth of 5.4 percent over the next three years, bolstered by the ease of doing business in the country.

Dubai, UAE: — The United Arab Emirates (UAE) has ranked 14th globally and first regionally in Kearney’s 2022 Foreign Direct Investment (FDI) Confidence Index. The country is one of only four emerging markets on the 2022 index along with Qatar, China, and Brazil, and has recorded a higher ranking this year in an increasingly competitive global FDI attraction environment.

The business environment in the UAE has continued to strengthen based on factors that are most important to investors, including growing technological and innovation capabilities. Central to the country’s attractiveness as a business and financial hub are plans to deepen trade ties in fast-growing economies in Asia and Africa with the aim to invite $150 billion in foreign investment. Kearney projects a strong average growth of 5.4 percent over the next three years, bolstered by institutional reforms to promote trade and investment and improve the ease of doing business in the country.

“The UAE’s steady rise in the rankings in the past years speaks to the power of consistency and momentum. With Expo 2020 opening in Q4 of 2021, the country has had a surge of tourism and new businesses opportunities. These have contributed to the growth of the country’s GDP, new job opportunities at various levels, and an estimated foreign direct investment of AED 122 billion. The success of the Expo coupled with the UAE’s continued investment in advanced technological infrastructure has diversified the economy, making the country more attractive for investors,” says Rudolph Lohmeyer, Partner, National Transformations Institute, Kearney Middle East.

The report from the global strategy and management consulting firm is an indicator of future FDI flows around the world, and the rankings reveal rebounding investor optimism about the global economy. The results illustrate both areas of business leader foresight as well as blind spots regarding the changes that were on the immediate horizon. Findings from the latest report suggest that we are likely to see a continued shift in FDI to developed markets, capitalizing on destinations marked by regulatory transparency and stability. Investors cite transparency of government regulations and lack of corruption as the most important overall factors when choosing where to make FDI.

Commenting on the 2022 FDI Confidence Index, Paul A. Laudicina, founder of the index and Kearney’s Global Business Policy Council says: “Entering year three of the pandemic, investors seemed much more hopeful about the global economy and FDI flows than they did just a year ago. They did, however, have concerns that a rise in commodity prices, escalating geopolitical tensions, and persistent inflation were likely in the year ahead. Just a few months into the year, these concerns have come to fruition and been exacerbated by the Russian military actions in Ukraine.”

This year’s report also includes a thematic section that reflects on how investors view their companies’ environmental, social, and governance (ESG) commitments as well as those of their foreign investments. “Investors are clearly enthusiastic about pursuing ESG commitments,” said Erik Peterson, managing director of the Global Business Policy Council and co-author of the study. Indeed, a striking 94 percent of investors agreed that their respective companies had developed a strategy to achieve their ESG commitments, 89 percent view their company’s ESG commitments as a source of competitive advantage, and 73 percent said their ESG commitments had become stronger over the past three years. They also point to the role that ESG can play in improving supply chain issues and boosting productivity as among the most important factors driving their company’s commitment to ESG. However, Peterson added, “Investors are still frequently split on which ESG goals to prioritize and how to measure them.” 

“The title of our 2022 FDI Confidence Index®, Optimism dashed, should be qualified: For how long? While global developments have certainly transformed the world, this does not preclude investors from building on existing momentum or pursuing new opportunities that arise. Focusing on investing in key sectors such as infrastructure and implementing ESG strategies sooner rather than later at home and abroad will provide a solid path forward for investors and companies, and ultimately help to build a stronger, more enduring investment environment consistent with fundamental changes evolving in global business conditions,” Laudicina concluded.

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About The 2022 Kearney FDI Confidence Index®

The Kearney Foreign Direct Investment Confidence Index (FDICI) is an annual survey of global business executives that ranks markets that are likely to attract the most investment in the next three years. In contrast to backward-looking data sources on FDI flows, the FDICI provides unique forward-looking analysis of the markets that investors intend to target for FDI in the coming years. Since the FDICI’s inception in 1998, the countries ranked on the Index have tracked closely with the top destinations for actual FDI flows in subsequent years.

The 2022 FDICI is constructed using primary data from a proprietary survey of senior executives of the world’s leading corporations. The survey was conducted in January 2022. Respondents include C-level executives and regional and business leaders. All participating companies have annual revenues of $500 million or more. The companies are headquartered in 30 countries and span all sectors. The selection of these countries was based on UNCTAD data, with the 25 countries represented in the Index originating more than 95 percent of the global flow of FDI in recent years. Service-sector firms account for about 41 percent of respondents, industrial firms for 38 percent, and IT firms for 21 percent.

The Index is calculated as a weighted average of the number of high, medium, and low responses to questions on the likelihood of making a direct investment in a market over the next three years. Index values are based on responses only from companies headquartered in foreign markets. For example, the Index value for the United States was calculated without responses from US-headquartered investors. Higher Index values indicate more attractive investment targets.

All economic growth figures presented in the report are the latest estimates and forecasts available from Oxford Economics unless otherwise noted. Other secondary sources include investment promotion agencies, central banks, ministries of finance and trade, relevant news media, and other major data sources.

About Kearney

As a global consulting partnership in more than 40 countries, our people make us who we are. We’re individuals who take as much joy from those we work with as the work itself. Driven to be the difference between a big idea and making it happen, we help our clients break through.

To learn more about Kearney, please visit www.kearney.com.

For past editions of the FDI Confidence Index, please go to: www.kearney.com/foreign-direct-investment-confidence-index