Foreign direct investment (FDI) is an engine for growth, but inflows—and competition for them—are tightening. We help governments take an end-to-end approach to accelerate and attract investment.
Foreign direct investment has undergone a sea change as digital economies, geopolitics, and factory automation spark declines in FDI inflows. To attract investment, governments need to create value propositions that don’t just resonate but differentiate.
Some countries are already on this path. With strategies to spur local innovators, ecosystems, and talent, they’re creating assets—and opportunities—that help them stand out in a heated FDI environment. Success requires a holistic, end-to-end approach to drawing and facilitating investment. For many countries, that will be a sea change, too.
With many products now taking digital form, and Industry 4.0 technologies making it more practical to reshore certain work, governments need to create an effective—and sustainable—engine for foreign direct investment in international business.
Our foreign investment consultants work with key stakeholders—such as investment promotion agencies (IPAs) and ministries of development—to create strategies and structures that drive FDI, job creation, and economic development for the long term.
And because we can call on a global network of experts, covering a full range of topics and capabilities, we can help at every step along the FDI journey:
Our experience on the other side of the equation—assisting global companies with their location and sourcing strategies for foreign direct investment—is another key asset we can call upon. By understanding business requirements and challenges, in industries as varied as agriculture and technology, we help countries develop the kind of compelling value propositions that generate FDI opportunities. And keep generating them.
The geographies and strategies may differ, but all of our foreign direct investment work shares one overarching goal: to convert investments into sustainable economic development. We achieve this through experience, collaboration, and innovation. Here are a couple of examples:
Rwanda’s Investment Accelerator. Our foreign investment consultants worked with the government of Rwanda to create the country’s first investment accelerator: a central hub to propel FDI in a landlocked country with a relatively small population. The investment accelerator manages the investment process from end to end, identifying where to focus, developing value propositions, designing deals, and building long-term government capacity. And it moves fast, utilizing the same agile principles that have transformed many private-sector firms and can transform FDI. In its first 18 months, the investment accelerator sparked $130 million in investment and created 9,000 jobs, with another 20,000 jobs created indirectly.
Innovation in Bangladesh. We developed the country’s emerging-tech center of excellence to drive innovation and talent growth at a national level. The center has enabled Bangladesh to position itself as a hub for emerging technology and get the country—and local companies—on the radar of global IT and business-process-outsourcing (BPO) firms. Within two years, the initiative created more than 1,500 jobs and more than $50 million in export revenues.
One other unique resource we tap: our FDI Tool Box, a set of proprietary tools that support our experts and clients in assessing FDI readiness, identifying obstacles, and attracting FDI in a more efficient and sustainable manner.
We use this tool to assess a country’s ability to attract and facilitate different kinds of FDI. The health check looks at underlying conditions that can enable—or hinder—investment, such as the physical and digital infrastructure, education level, and market access, as well as government policies, incentives, and regulatory frameworks. This lets us rapidly create a baseline and identify opportunities for improvement and change.
In FDI engagements, our foreign investment consultants follow a holistic framework comprising five key phases: preproject diagnosis (assessing the current FDI landscape), country strategy (identifying sectors and opportunities to prioritize), FDI enablers (creating incentives, policies, and structures to increase investor interest), IPA operations (designing strategy and governance to help IPAs promote and close deals), and postproject diagnosis (assessing FDI performance and economic impact).
Sustainability-focused foreign direct investments tripled over the past seven years. But it’s not enough. Green FDI needs to reach more sectors and emerging markets.
Read the full report
BCG’s AI Maturity Matrix helps policymakers understand the impact of AI in the public sector on economic growth, resilience, and global progress.
Driven by concerns about national security and foreign control over strategic businesses, countries are increasingly screening proposed foreign direct investments.
Green FDI is key to achieving climate goals, but too little is going to emerging market economies. Here’s how four countries are changing this.
