Successive events have altered the global economic fabric. From the work-from-anywhere boom triggered by Covid-19, to waves of skilled migrants from Hong Kong, Afghanistan and Russia, the way in which the world works is drastically different to 5 years ago.
This extends to the world of FDI – types of investment are changing, as are the reasons why investors chose specific locations. Access to tax and incentives and domestic market growth were previously key factors, this is no longer the case. OCO’s proprietary analysis showed three motivations that are dominating investment decision-making:
- Access to skilled talent – driven by a global shortage of talent, investors are following the degree paper trail, actively seeking out locations that give them ready-made access to world-class skill. Knowledge is power, and for investors, talent is commercial. Locations need to invest in growing the workforce to cope with the demands of industry 4.0, AI, blockchain and other factors that were not a consideration 5 years ago.
- A safe house – increasingly tense geopolitics and the re-emergence of conflicts means investors are looking for locations that aren’t going to be compromised. While investment attraction entities cannot influence national political dynamics, they need to advocate for an investor-centric business environment that provides core protections around capital, intellectual property and provide a seamless investor journey.
- Sustainable solutions – ESG is moving from a buzzword to a business fundamental. The businesses of today that drive negative environmental externalities will not survive the consumer of tomorrow. Locations need to provide a compelling offer to help investors meet their own obligations. This includes solutions to leverage renewable energy, drive circularity and promote decarbonization.
The world has changed in the last 5 years, and there’s nothing to suggest it won’t change again. However, locations need to get onto the curve before they can get ahead of it, and so tapping into these three key themes is fundamental to national economic prosperity.