Nearly two years ago, Investment Monitor published its FDI drivers guide to help multinational corporations (MNCs) make an informed and up-to-date decision when choosing their next foreign direct investment (FDI) location.

While the drivers indicated in that series should remain at the core of investors’ site-selection process, a significant shift in the world’s macroeconomic and political scenario means that the list warrants an update.

Provisional data and research from Investment Monitor’s FDI database shows that software and IT services was the largest FDI sector in 2021, accounting for 16% of total FDI.

Analysing earnings calls, it emerged that customers and talent were the main FDI drivers for investors in the same period.

Provisional data also shows an 18% annual increase in greenfield FDI in 2021, signalling a rebound in the industry after a significant drop during the Covid-19 pandemic.

The outbreak was only the beginning of a series of events that brought the FDI industry – as well as the rest of the world – to the rocky scenario that continues to make its presence felt to this day. Supply chain disruptions, the war in Ukraine, rapidly rising inflation, the race to net zero and the consequent focus on ESG issues have altered the hierarchy of FDI drivers and added some new items to the list.

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Supply chains

Supply chains have been hit hard by the Covid-19 pandemic. An Investment Monitor study of the first-quarter 2022 earnings call transcripts shows that “supply chain” emerged as the top keyword for the period, alongside “supply chain issues”, “supply chain disruptions” and “supply chain challenges”.

This business area has certainly gained in importance during the pandemic and is fully justified in being considered a new FDI driver.

As part of a network-wide week of targeted coverage, GlobalData has put together the Supply Chain Vulnerability Index 2020 collating export and import data for the year.

The index shows that the US emerged as the most vulnerable country to supply chain disruptions, while Germany came out on top of the list, closely followed by China.

“The Covid-19 pandemic has had a huge disruption in most industries,” said Investment Monitor chief economist Glenn Barklie at the time. “The US has supply chain issues in both transportation and warehousing. It will continue to experience supply chain problems in 2022, as the demand and supply of goods and labour take time to recalibrate.

“Even before the pandemic, the US had concerns over its reliance on countries such as China. Nearshoring, and in particular reshoring, could help address the US’s supply chain issues as well as investment in its key industries and labour force.”


The Covid-19 pandemic had already highlighted the importance of technology in a world of increased remote working. The industry had already started to stress that internet connectivity, reliable broadband and Wi-Fi, the roll-out of fibre-optics and the establishment of data centres in a location were all positive markers.

Investment Monitor’s analysis of first-quarter 2022 earnings calls shows that the technology sector had the highest levels of sentiment towards digitalisation, followed by consumer industries, industrials, healthcare and financials.

Within that, digitalisation and e-commerce emerged as the main technology themes that were discussed by companies in earning calls in the first quarter of 2022. The metaverse and NFTs continue to garner interest among public companies, the analysis shows.

Previously part of the infrastructure driver, digitalisation now certainly deserves an entry of its own as an FDI driver.


Russia’s invasion of Ukraine showed just how important political stability is as a driver, as Russia quickly became a business pariah after the conflict.

Meanwhile, a recent report from risk analytics company Verisk Maplecroft shows that more than one-fifth of major global cities face high risks from terrorism, conflict, crime or civil unrest.

With such a wide reach, conflict – or the possibility of conflict – should be carefully considered by MNCs when selecting a new FDI location.

The war in Ukraine, for instance, caught many investors off guard and has already had strong repercussions for the energy sector, trade more generally, and has caused many companies to leave Russia.


Inflation emerged as another top keyword in the first-quarter 2022 earnings calls analysed by Investment Monitor. This is understandable, given that for the first time in years both the US Federal Reserve and the Bank of England have increased interest rates in an attempt to curb rising prices.

Inflation keeps rising sharply in Western economies, and in the UK consumer confidence has sunk to its lowest levels since 2008, raising concerns that the country may be sliding into recession.

Rising prices erode consumers’ ability to spend and may temporarily cause a country’s economy to stall. This is only one of the implications of raising inflation levels that should make investors think carefully about where to invest in next.


As the climate change emergency has become more pressing in recent years, and the latest Paris Agreement set a very ambitious net-zero target for 2050, companies’ focus on environment, social and governance (ESG) issues has also increased.

Mentions of various UN Sustainable Development Goals (SDGs) have been steadily increasing in companies’ ESG reports since 2016, Investment Monitor’s analysis shows.

SDG16 (peace, justice and strong institutions), SDG12 (responsible consumption and production), SDG3 (good health and well-being) and SDG8 (decent work and economic growth) had the most mentions in the past two quarters for all filings. SDG16 seems to be rising in importance as geopolitical tensions worsen.

As far as investment concerns go, ESG is only going to rise in importance over the coming years, and the same is true of digitalisation. It can only be hoped that in future such lists, inflation, conflict and supply chain access are less of an issue for investors, although as the past two years have shown, businesses need to be nimble and prepared for all kinds of black swan events.

Here is the full list of Investment Monitor’s 2020 FDI drivers: