By Business Facilities Staff
From the July/August 2023 Issue
A LOOK AT THE FLOW OF FOREIGN DIRECT INVESTMENT (FDI)
Global shifts due to supply chain, unrest, and other factors are causing a shift in many economies around the world. There are instances of traditional leaders on the worldwide or regional stage giving way to nations with nascent growth. Meanwhile, there are aspects of economic activity that are remaining on the same course as in past years. These observations are reflected in the 2023 Global Rankings portion of Business Facilities’ 19th Annual Rankings Report.
FDI On The Rise
An instance of this is the FDI (Worldwide) ranking in this year’s Global Rankings; once more, the United States ranks as the top destination to attract foreign direct investment. The U.S. has led in this category for more than 10 years, while the Inflation Reduction Act of 2022 ramped up interest from and action for companies from outside the country to invest.
“For over a decade, the U.S. has ranked as the top destination for international companies to set down roots and achieve their expansion goals,” recently stated U.S. Secretary of Commerce Gina Raimondo in Kearney’s Global Business Policy Council’s 2023 Foreign Direct Investment Confidence Index. “The United States’ diverse landscapes, vast resources, skilled workforce, and spirit of innovation and entrepreneurship are just a few of the reasons why investors choose to settle here.”
According to that Confidence Index from Kearney, the U.S. has been ranked as the top destination in the world for FDI for 11 consecutive years, thanks to its large consumer base, a predictable and transparent justice system, a productive workforce, a highly developed infrastructure, and a business environment that fosters innovation.
Global Smart Cities
The role of technology to improve quality of life, economic growth, and related factors is recognized as key to an effective strategy. Smart cities employ technology to impact the lives of their citizens through data intelligence, connectivity, and more. This includes city operations and services, such as public communication, utilities, traffic/infrastructure, and sustainability and cost impacts.
This year’s Smart Cities ranked in the top 10 are: Zurich (Switzerland); Oslo (Norway); Copenhagen (Denmark); New York City (United States); Toronto, Ontario (Canada); London (United Kingdom); Shanghai (China); Singapore; Seoul (South Korea); and Hamburg (Germany). This was based on a cross-reference of several sources, including the IMD Smart Cities Index Report 2023.
In its introduction, the IMD report noted that: “The basic principle that led to the creation of the Smart City Index in 2019 was that if cities wanted to be smarter, they needed to be less technology-centric, and more human-focused. Since then, this way of conceiving the nature and purpose of smart cities has moved closer to being mainstream. Many city officials are now routinely using a variety of different expressions in lieu of ‘smart cities’: ‘open and innovative cities’,’ inclusive and diverse cities’, ‘sustainable cities’ and ‘citizencentric cities’ are becoming part of the new labelling of ‘smart cities’ that were.”
This reflects how technology is inherent in city planning, and that the next frontier may be human-centered goals such as diversity and sustainability.
NYC Remains Top Financial Center
In the Financial Centers (Global) category, New York City once again landed in the top position, followed by London repeating at number two. Singapore moved up from sixth position to third, and Hong Kong remained at fourth. The global financial centers ranking also includes: San Francisco, CA; Los Angeles, CA; Shanghai; Chicago, IL; Boston, MA; Seoul; and Washington, DC.
This year’s ranking took into account several factors, then weighed against the 33rd edition of the Global Financial Centres Index (GFCI 33), published in March. In releasing the report, the group highlighted: “While there is considerable variation across centres, the index suggests that confidence in financial centres and the world economy remains high, with a recognition that inflation levels are falling and economic growth generally secure, even with the instability caused by the continuing war in Ukraine. US centres performed well, with five US centres now in the top 10, reflecting the strength of the US economy. Leading Chinese centres fell back a little.”
Investments In Artificial Intelligence (AI)
This year’s ranking took into account several factors, and leaders in Artificial Intelligence (Capital Investment) are the United States, China, and the United Kingdom.
The rankings pull from the Artificial Intelligence Index derived by Stanford Institute for Human-Centered Artificial Intelligence. The resulting Global AI Vibrancy Tool is an interactive visualization that allows cross-country comparison for up to 29 countries across 23 indicators. The tool provides an evaluation of the relative position of countries based on users’ preference; identifies relevant national indicators to guide policy priorities at a country level; and shows local centers of AI excellence for not just advanced economies but also emerging markets.
The latest edition of the Stanford report includes data from a broad set of academic, private, and nonprofit organizations as well as more self-collected data and original analysis than any previous editions, including a new survey of robotics researchers around the world, and data on global AI legislation records in 25 countries.
Key takeaways from the Stanford report include that private investment soared while investment concentration intensified. The private investment in AI in 2022 totaled around $93.5 billion. From a geographic standpoint, the U.S. and China dominated cross-country collaboration on AI, despite rising geopolitical tensions.
Rounding out the 10 nations ranked for investment into artificial intelligence are: Israel, India, South Korea, Germany, Canada, France, Argentina, and Australia.
Logistics Leaders
In 2022, air cargo volumes are estimated to have decreased by 6.7% year-over-year (-1.7% versus 2019), to close to 117 million metric tonnes in 2022. This is according to the Airports Council International (ACI World) data released in April.
Air cargo volumes in the top 10 airports for air cargo traffic—representing around 27% (30.8 million metric tonnes) of the global volumes in 2022—lost 9.9% in 2022 year-over-year (but kept a gain of 4.1% versus 2019 results). The decline can be attributed to the ongoing geopolitical tensions and disruptions to global trade and supply chains.
Hong Kong Airport (HKG, 4.2 million metric tonnes, -16.4%) remained in the top rank followed by Tennessee’s Memphis Airport (MEM, 4 million metric tonnes, -9.8%) and Anchorage Airport in Alaska (ANC, 3.5 million metric tons, -4.3%). Shanghai Pudong Airport (PVG, 3.1 million metric tons, -21.7%) lost its spot to ANC and ended up in 4th position.
Memphis, TN was named the global logistics leader by Business Facilities in 2023; Greater Memphis has the busiest cargo airport in the U.S. and the second busiest in the world; the fifth largest inland port in the U.S.; the third busiest trucking corridor in Interstate 40, with 75% of U.S. consumers within a two-day drive; and five Class I railroads. Memphis is the World Hub of FedEx.
The Logistics Leaders rankings also took into account the 2023 Logistics Performance Index report, released by the World Bank. This report provides information on the measure of countries’ ability to move goods across borders with speed and reliability.
The seventh edition of “Connecting to Compete,” the Logistics Performance Index (LPI) report comes after three years of supply chain disruptions during the Covid-19 pandemic. The LPI, which covers 139 countries, measures the ease of establishing reliable supply chain connections and the structural factors that make it possible, such as the quality of logistics services, trade and transport-related infrastructure, and border controls.
“Logistics are the lifeblood of international trade, and trade in turn is a powerful force for economic growth and poverty reduction,” said Mona Haddad, Global Director for Trade, Investment, and Competitiveness at the World Bank. “The Logistics Performance Index helps developing countries identify where improvements can be made to boost competitiveness.”
On average across all potential trade routes, 44 days elapse from the time a container enters the port of the exporting country until it leaves the destination port, with a standard deviation of 10.5 days. That span represents 60 percent of the time it takes to trade goods internationally.
According to LPI 2023, end-to-end supply chain digitalization, especially in emerging economies, is allowing countries to shorten port delays by up to 70% compared to those in developed countries. Moreover, demand for green logistics is rising, with 75% of shippers looking for environmentally friendly options when exporting to high income countries.
“While most time is spent in shipping, the biggest delays occur at seaports, airports, and multimodal facilities. Policies targeting these facilities can help improve reliability,” said Christina Wiederer, Senior Economist with the World Bank Group’s Macroeconomics, Trade & Investment Global Practice and the report’s co-author.
Such policies include improving clearance processes and investing in infrastructure, adopting digital technologies, and incentivizing environmentally sustainable logistics by shifting to less carbon-intensive freight modes and more energy-efficient warehousing.
Renewable Energy
While not without its challenges, the worldwide energy transition to increased renewable energy capacity is in full swing.
This year’s Global Rankings Report includes a look at the leading nations for Solar Power Installed Capacity and Wind Power Installed Capacity. And this evaluation drew from data provided by The 2022 bp Statistical Review of World Energy.
The top 3 nations for Solar Power Installed Capacity are: China, United States, and Japan, followed by Germany, India, Italy, South Korea, Vietnam, France, and Netherlands. For Wind Power Installed Capacity, China and the U.S. are leading and followed by Germany, India, Spain, United Kingdom, Brazil, France, Canada, and Sweden.
According to a recent report from Ember, an energy think tank, solar and wind power accounted for 12% of global electricity in 2022.
Global renewable capacity is expected to increase by almost 2 400 GW (almost 75%) between 2022 and 2027 in the IEA main-case forecast, equal to the entire installed power capacity of the People’s Republic of China (hereafter “China”). Renewables growth is propelled by more ambitious expansion policies in key markets, partly in response to the current energy crisis. This 85% acceleration on the last five years’ expansion rate results primarily from two factors.
First, high fossil fuel and electricity prices resulting from the global energy crisis have made renewable power technologies much more economically attractive, and second, Russia’s invasion of Ukraine has caused fossil fuel importers, especially in Europe, to increasingly value the energy security benefits of renewable energy.
Overall, China on its own is forecast to install almost half of new global renewable power capacity over 2022-2027, as growth accelerates in the next five years despite the phaseout of wind and solar PV subsidies.
Key Indicators For Canada
With Canada ranked third for FDI (Worldwide) in this year’s rankings, population growth is also of interest. Additionally, as people migrate from all over the world to attend the colleges and universities in the nation, the talent pool expands. Looking at statistics from Statistics Canada, 2021 Census of Population, the following provinces were found to be the three fastest growing: Yukon, Prince Edward Island, British Columbia. These are followed by Ontario, Manitoba, Nova Scotia, Alberta, Quebec, New Brunswick, and Saskatchewan. Growth rates ranged from 12.15% at the top to 3.11%
This year’s rankings took a peek at EV charging infrastructure in Canada, according to data tracked by the U.S. DOE. Looking at the number of station locations for all types of EV chargers by province, Quebec, Ontario, and British Columbia are leaders currently.
Continue reading Business Facilities’ 19th Annual Rankings Report:
2023 State and Metro Rankings
