Foreign investors are taking a beating in Germany. But have the politicians and unions really thought through the implications of their rhetoric? Courtney Fingar thinks not.

It is often far too tempting for politicians to look for scapegoats (and all the better if the scapegoat also happens to be foreign) rather than seriously address complex domestic issues. Given the magnitude of Germany’s economic problems, this temptation has proven too great to resist.

A number of recent measures taken by the Indian government are set to boost FDI, as well as making business easier for locals. The changes go beyond IT services and outsourcing, responsible – despite the publicity – for only 3% of GDP, but also encompass manufacturing, which has received less coverage outside India but is responsible for 31% of Indian GDP, according to the government.

Despite a rise in logistics and distribution projects, growth in free zone investments has not matched the pace of overall FDI growth, according to data from OCO Consulting, a provider of consultancy services and products for inward investment, export development and competitiveness.

Many communities and states invested millions of dollars in their attempt to prevent their local military bases from being on the Pentagon’s list for closure or realignment. The dreaded list was released in May and is now in the hands of the Base Realignment and Closure Commission (BRAC). BRAC’s nine members – recently appointed, just for this task – will provide a “final” list to the president in early September. Once he agrees to it, the full list will go on to the congress for an up or down vote – no changes.

A new report from law firm Baker & McKenzie has highlighted the appetite among UK companies for doing business with the emerging markets of Brazil, Russia, India and China – the so-called BRIC markets. Nearly all the publicly listed companies (PLCs) who responded were alive to the possibilities and opportunity that exist, with almost all of them operating in at least one of these BRIC markets.

The term “pollution haven” (the comparative advantage that countries with lax environmental controls have in attracting FDI) has been gaining weight in academic circles, at least since the 1990s. Until now, however, most have stopped short of accusing multinational companies of relocating to developing countries to escape tougher environmental controls in home markets.

The international airline Emirates is building a $353m facility in Dubai that is to rank as one of the world’s largest civil aviation engineering centres and the airline’s single largest facility investment. It is scheduled for completion early next year.

Despite a fierce internal debate about France’s competitiveness, and much hand-wringing over its international image, its FDI inflows have shown an increase for the second year running.

Recently, the BRICs – Brazil, Russia, India and China – have been receiving a lot of attention. Why? Because they are heavyweights among the emerging markets and this captures the imagination of policy makers.

George Huang Chang Yi, chairman of food manufacturer and distributor Singapore Food Industries (SFI), talks to Lawrence Yeo about where his company is investing and why, and what is driving decisions with regards to international investment and expansion.

• India has a new Special Economic Zone Bill that stipulates a single clearance and approval mechanism for both the establishment of special economic zones and for companies seeking to set up operations in such zones. In addition, the bill provides fiscal incentives to both developers of such zones and to companies operating in them. The bill also seeks to set up a single enforcement agency, responsible for the quick investigation and resolution of offences committed in such zones. Additionally, the bill sets up a legislative framework for establishing offshore banking units.

Over the past 12 months, the number of cross-border investment projects in the life sciences sector has increased. These investments have been driven by partnering and R&D rather than manufacturing or supply chain support. The overall number of jobs created has, therefore, declined.

ICT investment around the world shows strong differences between manufacturing activities and R&D operations.

For manufacturing activities, most investment by ICT companies can be categorised as efficiency-seeking investment.

Real estate is a global activity involving constantly increasing numbers of cross-border transactions. Dutch pension funds, for instance, have already invested over €30bn in real estate, of which more than half is invested in other countries.

Most industry observers agree that Asia has become the world’s most dynamic automotive market. However, compared to north America and Europe, the Asian market remains fragmented, and no clear pattern has emerged regarding the geographic structure of the region’s automotive industry.

Chicago wins the accolade of US City of the Future and Texas is named US State of the Future by fDi’s judges. Karen E Thuermer reports on the strengths of these and the category winners in this first annual contest.

Chicago is without doubt a world-class city – so much so that the entity that promotes it is called World Business Chicago. The details explain why.

Perhaps it is the sheer size and diversity that gives Texas much of its strength. In 2004 the state lassoed a steer-bucking GDP of $847.81bn. Forecasts for 2005 are an increase to $886.15bn, and up to $1146.31bn for 2010. The only FDI figures available date back to 2001, putting inflows at $112bn.

With such a diverse offering of locations around the US, a number of cities and states deserve a mention, shining out above the rest in specific categories: best economic potential; most cost effective; best human resources; best transport; best IT and telecoms; best quality of life; and best FDI promotion strategy.

City: Chattanooga

With extremely attractive rental and salary rates, Chattanooga is judged the most cost-effective US city, followed by Huntsville, Alabama. Three cities tied for third place: Jacksonville, New Orleans and Oklahoma City.

City: Boston and Cambridge

Boston and Cambridge, both in Massachusetts, tied for having the best human resources.

City: Chicago

Chicago has long been known as North America’s transport hub. Not only is the city located in the mid-west, but also, thanks to a well-developed rail system, the location offers advantages for all modes of transport.

City: Chicago

Chicago is the North American hub of fibre-optic telecoms, the most advanced telecoms system in the world. More data moves through its internet infrastructure than anywhere else: 10 terabytes per day.

City: Boston

The judges determined that Boston offers the best quality of life for expatriate executives out of all the entries received. Boston’s median sale price for single-family homes was about $333,000 in 2003 and the median advertised rent that year was $1,500 a month. Neighbourhoods range from the suburban-like Jamaica Plains to the exclusive Beacon Hill.

City: Chicago

Chicago ranked first for best FDI promotion strategy for a number of reasons. Primarily, World Business Chicago works in concert with Mayor Richard Daley and the business-focused Board of Directors to reach out to business leadership on a global scale.

The winners of fDi’s Canadian Cities and Provinces of the Future have been chosen: Greater Toronto and Ontario. Karen E. Thuermer reports.

City: Calgary

The judges decided that Calgary shows the greatest economic potential of all the Canadian cities that entered the contest. Its GDP, estimated at C$46.2bn in 2004, generates Canada’s highest GDP per capita, C$74,873. It is Canada’s fastest growing economy, with growth of 19.7% total GDP between 1999 and 2003, higher than any other Canadian city. It is projected to lead the country in GDP growth each year until 2009.

City: Toronto

Toronto is one of Canada’s major transportation centres. Its location gives the city’s businesses easy access to prosperous consumer and industrial markets. The province has an up-to-date, integrated transportation infrastructure, including highways, commuter and urban public transit, province-wide and internationally connected railways, worldwide cargo aviation systems and among the most extensive inland and international marine shipping facilities anywhere.

Glasgow is showing off its stylish new image, having reversed years of decline. But don’t call it post-industrial, city council leader Charles Gordon tells Courtney Fingar.

The city of Glasgow’s official slogan, “Scotland with Style”, is an accurate reflection of this once-downtrodden city’s trendy new vibe. The aim is to have people associate the Glasgow of today with the eye-catching architecture of Charles Rennie Mackintosh, high-end shops of Princes Square and liveliness of its night scene, rather than the blight of post-industrial decay.

Why aerospace and defense companies choose Arizona.

The Arizona Advantage features a pro-business environment combining targeted incentives for aerospace and defence companies, a supportive political environment, year-round near-perfect flying weather, competitive operating costs, and world-class educational and infrastructure assets.

Arizona ranks in the top five for federal defence contracts and in the top 10 for aerospace exports. In 2002, Arizona won more than $6.6bn in Department of Defense contracts and expects an increase of 30% in 2004-05. Aerospace products exported in 2003 totalled nearly $13bn.

Gulfstream Aerospace has been serving its high-flying global clientele from a hub in the charming city of Savannah, Georgia since 1967, using its access to air, road and sea routes to maximum benefit, reports Karen E Thuermer.

The aviation and aerospace industry is enjoying a smooth flight, which is good news for the many locations around the world that depend on its investment for jobs and growth. Karen E Thuermer reports.

Canada’s aerospace industry is the third largest in the world, behind only the US and the EU. A total of 400 aerospace companies operate in Canada, generating revenues of $21bn and employing 80,000 people.

Belfast’s ‘decade of renewal’ will focus on its emerging ICT and life sciences industries, backed by a £14m capital investment programme to transform the city centre into a major retail destination for locals and visitors, reports Courtney Fingar.

The fDi Personality of the Year Awards recognise those individuals in every region of the world whose extraordinary efforts have transformed their cities, states, regions or countries through innovation and vision, by attracting investment and expanding economies, writes Courtney Fingar.

Success in business as well as politics all boils down to trust, Lee Myung-bak insists. “I believe that trust is the most important social capital in the 21st century. For the 20 years that I have worked as a corporate CEO and the years that I have served in the National Assembly as a lawmaker, building public trust has been the foremost priority that I have never compromised with.”

Wolfgang Tiefensee has made his city arguably the most successful metro area in Germany in terms of FDI attraction. Leipzig is now seen as a model for the rest of the country. Under his leadership, the city has had a string of big project wins over the past few years, including BMW, Porsche and most recently, DHL’s decision to move its European hub from Brussels to Leipzig.

Ebrahim Rasool has seen to it that the Western Cape of South Africa is quite literally a major point of contact for companies investing in Africa.

A professor turned public official, the now retired Eduardo Lizano Fait is often referred to as the Alan Greenspan of Costa Rica – and for good reason. It is not an exaggeration to say he has been the main driving force over the past 20 years of the reform and modernisation of Costa Rica’s financial system that helped to turn it into one of Latin America’s hottest FDI destinations.

Founder of the first privately developed free zone in Turkey, US citizen Kaya Tuncer says he was moved to act by “a desire to contribute to the development of my country of origin”. This he has done immeasurably, and in the process shown just how effective the private sector can be in developing and operating industrial parks.

Just back from trade missions to Japan and India and now heading for Germany, Governor Mark Warner is crisscrossing the globe to drum up FDI for his state.

Like China, India has received enormous press coverage in the US for offshore investment there. “But no one is looking at India as an opportunity of both selling products and getting FDI back into the US,” Mr Warner says.

Turkey certainly loves its free zones, but it may have to wean itself off what it sees as ‘medicine’ for its developing economy if it wants to join the EU. Courtney Fingar reports from the World Free Zone Convention in Izmir.

Ukraine’s new government’s attempts to stamp out illegal trade and meet WTO standards have led to hasty legislation on special economic zones. In the process, it has alienated current investors and made potential ones wary, reports James Hydzik.

Ukraine’s development zones are undergoing a much needed legislative overhaul. However, recent turmoil involving Ukraine’s special economic zones (SEZs) and priority development territories (PDTs) reflects both the positive and less attractive characteristics of the learning process on the part of Viktor Yushchenko’s government.

Hamriyah Free Zone offers a prime location for businesses looking to set up in the UAE.

As goods move around the world at an ever-quickening pace, islands are naturally well placed to offer convenient logistics platforms, especially for trans-shipment. Karen E Thuermer reports.

US state investment incentives are under threat as an Ohio-based case winds its way towards the Supreme Court. The ruling will have far-reaching implications, leaving investors wondering whether they should press ahead or put the brakes on. Erika Morphy reports.

Now that the flat-tax revolution has spread to other parts of Europe, Lithuania’s low taxes are no longer enough to keep it on the investment map. Prime minister Algirdas Brazauskas tells Courtney Fingar what else the country has to offer.

British investors have historically shown little interest in Tunisia and recent overtures from the UK government are unlikely to bear fruit unless the country dismantles some bureaucratic barriers. Kate Luxford reports.

The $60bn diamond industry has taken a shine to locations far beyond its usual hubs for mining and trading in response to rising demand and a crackdown on gems from conflict areas, report Lewis C Crofts and Gabriel Goldberg.

Haruhiko Kuroda, the new president of the Asian Development Bank, tells Blanca Riemer that he will work more closely with private investors. A major effort in infrastructure, particularly for urban centres, is planned.

When it comes to growth and investment, Asia is where the action is. But the buoyant economic picture also conceals the world’s most significant disparities, both among and within countries.

Developing countries struggling to adapt their investment promotion strategies to the new ‘global factory’ can look to south-east Asia for a positive example, writes Frank L Bartels of UNIDO.

The north-east of the US retains its status as the highest-cost region to do business in Economy.com’s North American Business Cost Review.

It is true that investing in Afghanistan is not for the faint-hearted but the opportunities are almost limitless. Those who feel their nerve slipping need only look to the optimism of the country’s government and its citizens. James Eedes reports.

Despite the worsening security situation, no-one is predicting the start of a slide into chaos. Indeed, the current insecurity was anticipated by intelligence, once mountain roads became passable after the particularly harsh winter. In fact, many feel the security situation has improved, on balance.

Afghanistan’s minister of commerce, Hedayat Amin-Arsala, left the World Bank in 1987 to join the Afghan resistance against the Red Army. He later served as senior adviser and member of the Afghan Mujahideen Unity Council. From 1989-1992, he served as minister of finance in the Transitional Government of Afghanistan before being appointed foreign minister in 1993.

The government of Afghanistan is working to turn the country into a pro-business environment that will entice foreign firms to invest. With multinationals already biting, the plans seem to be working.

The government is making Afghanistan’s infrastructure a priority, with every sector from roads to communications in need of funding. Some major projects are under way but much more needs to be done, says James Eedes.

The wave of reconstruction under way in Afghanistan is fuelling demand for supplies, giving locally based producers an advantage, writes James Eedes.

Afghanistan boasts a wealth of natural assets, including metals, minerals and gemstones. The government is keen to open up the mining sector to investment but first needs to reform legislation.

Afghanistan’s once-burgeoning agricultural sector has suffered years of neglect and a lack of modernisation. Now research initiatives and efforts to improve basic requirements such as irrigation signal its revival.

The Afghan government wants to sell off state-owned industries at the right price but, as James Eedes reports, it is a slow and often painful process.

The central bank is working hard to develop Afghanistan’s fledgling financial system.James Eedes reports.

Investors concerned by Afghanistan’s weak infrastructure are being offered an ideal solution in the shape of new industrial parks. James Eedes reports on this new option for the risk-averse.

There is no single answer to the question of security in Afghanistan as it is in a constant state of flux. While investors should take the issue seriously, they should also keep the situation in perspective.

Anyone constructing and running a luxury hotel in Afghanistan is bound to encounter some challenges, but the management of the Kabul Serena have the experience to make it work.

Shaun Brogan, acting general manager of the three-quarters-built, five-star Kabul Serena, half smiles, half grimaces when asked what the hotel’s policy will be on the sale of alcohol.

Telecoms company Roshan attributes its success to its strategy of focusing on its customers – the local population.James Eedes explains.

Rebuilding the local sugar beet industry proved a massive challenge for a joint Afghan-German venture. But they believe the potential rewards are worth the risk, as James Eedes reports.

The Afghan Investment Support Agency can smooth the way for both local and international investors who want to set up business in the country with a wide range of services.

President Leonel Fernández seems to have pulled the Dominican Republic back from the brink of disaster. Though many challenges remain, as he approaches the end of his first year in office most signs look encouraging.

Since coming back into power as president of the Dominican Republic, Leonel Fernández has traversed the globe spreading the message that the country is, as he puts it, “back in business”.

The Dominican Republic has been ravaged by economic crisis but the damage to its creditworthiness is being repaired and its economy rebuilt. Jules Stewart outlines the government’s three-fold strategy to restore the country to health.

Restoring investor confidence in the Dominican Republic represents a major challenge for the Fernández government. The previous administration had discredited itself not only with its own people, who were suffering under a crippling spiral of inflation and insecurity, but the international financial community had lost confidence in the country in the wake of the foreign debt crisis.

Improved ratings, the return of foreign banks, and the naming of a respected central bank governor shows the Dominican Republic is putting its banking system back together. Courtney Fingar reports.

On April 21, Fitch Ratings affirmed, and removed from ‘Watch Negative’, the long-term foreign currency ratings for four Dominican banks, Banco BHD, Banco Dominicana del Progresso, Banco Leon and Banco Mercantil. The rating outlook remains stable.

Thanks to a re-write a decade ago, the Dominican Republic’s foreign investment law provides a hospitable climate, as investors in such thriving sectors as technology, telecoms and tourism are finding out. Jules Stewart reports.

Following are some of the largest companies registered as foreign businesses by the Central Bank of the Dominican Republic:

Eddy Martínez, the Dominican Republic’s minister for exports and investment, is charged with convincing jittery investors that the country is once again a safe bet. He tells fDi how he intends to ease the doubts.

Canadian mining company Falconbridge was one of the first foreign investors to discover the Dominican Republic in the 1950s and has been there ever since. fDi reports on why it remains committed to the country.

President Leonel Fernández is determined to take on corruption in the Dominican Republic. He has won the first few battles but the war will be a long and ugly one, reports Jules Stewart.

An acute power shortage is the single biggest challenge facing the Dominican Republic in its bid to achieve sustainable economic development. Jules Stewart reports on the government’s efforts to keep the lights on.

The DR-CAFTA trade deal should bring both tangible and intangible benefits to the Dominican Republic – that is, if and when it goes into effect. The country is anxiously anticipating the nod from Washington, reports Courtney Fingar.

The Dominican business community seems to have given its tentative blessing to the Leonel Fernández administration and looks willing to be patient as he works to make the country and its businesses more competitive. But they are patient only up to a point.

“I feel the president has a good vision for the country and should be able to improve its international image. Macroeconomic stability is in place, which has got to give investors confidence in the market,” says Circe Almanzar, executive vice-president of Asociacion de Industrias de la Republica Dominicana (AIRD), a group that represents foreign and domestic companies in the industrial sector.

Tourism minister Félix Jiménez is keen to capitalise on the Dominican Republic’s attractiveness to sight-seers and holiday-makers. He tells Courtney Fingar about cruise ships, marinas and the first planned city in the Caribbean.

With plans for an artificial island packed with leisure facilities, the Novo Mundo XXI project promises to revitalise Santo Domingo’s waterfront, create a new skyline for the city and haul in tourists by the boatload.