World Investment Climate

Introduction

According to World Bank report -The Global Investment Competitiveness Report 2017/2018, “A country’s investment competitiveness goes beyond attracting FDI. It is determined by the country’s ability to bring in, retain, and leverage private investment for inclusive and sustainable economic growth.”

Major positive developments in 2017

The year 2017 has been a year of surprise world economic growth. Most of the countries witnessed growth at a rate more than that was projected in the beginning of the year. Investment growth in Emerging Market and Developing Economies (EDMEs) has slowed sharply since the global financial crisis from double-digit rates after the global financial crisis to a post-crisis low of 3 percent in 2016.

Over the years there has been decline in investment growth and it has resulted in decline in economic growth. In 2017, there has been increase in private investment in major economies including United States, which in turn result in economic growth.

Factors that decide investment climate of a country

According to survey of 750 business executives by world bank it was observed that business-friendly regulatory environment and political stability are the top two factors influencing multinational companies’ investment decisions in developing countries.

These two factors top over characteristics, including good infrastructure, access to land, and low tax rates.

Investment growth in Emerging Market and Developing Economies (EDMEs) has slowed sharply since the global financial crisis from double-digit rates after the global financial crisis to a post-crisis low of 3 percent in 2016. Over the past three decades, strong growth spurts—defined as years in which growth accelerated in four consecutive years—have been associated with about 1-percentage-point higher potential growth than in the median normal year.

Statistics of Factors Deciding Investment - World Bank
Summary
FDI from developing countries has increased 20-fold in the last 20 years, accounting for nearly 20% of global FDI flows in 2015.