New York City has once again claimed the title as the top city in the Americas for attractiveness for inward investment, but the fast-rising São Paulo is proving a fierce competitor.
Uncertainty characterises the current global economic climate. With a 16% decline in FDI in 2012, investment agencies are facing greater competition to attract FDI projects. Yet New York has remained a top global destination for FDI, and was named as fDi Magazine’s American Cities of the Future 2013/14, with São Paulo coming in second and Toronto in third.
New York, the global hub of international business and commerce, grabbed the title for the second time in a row. Despite a knock or two, the city has continued to show its strength in surviving disasters both economic (Wall Street bail out) and natural (Hurricane Sandy). The city remains one of the world’s top destinations for investors, attracting 1.08% of global FDI. The total number of FDI projects into New York increased in 2012 with figures up 10.4% on the previous year.
But a South American competitor is nipping closely at its heels. For the first time in fDi Magazine’s bi-annual rankings, the Brazilian city of São Paulo has not only entered the top 10, but it ranked second overall, just ahead of Toronto. São Paulo is a key player in the global FDI arena, reaching sixth place worldwide in 2012, and attracting 1.19% of FDI projects. FDI into the city has increased year on year since 2004, according to greenfield investment monitor fDi Markets, which is part of the same division of the Financial Times as fDi Magazine, fDi Intelligence.
Canadian cities Toronto, Montreal and Vancouver ranked third, fourth and fifth, respectively, and performed particularly well in the attraction of knowledge-intensive FDI. All three locations were among the top 20 key destination and source cities for FDI. With the exception of New York, Montreal-based companies invested in more FDI projects than other city in the Americas region.
A sound financial system, relatively low corporation tax rates and an open and affluent economy have resulted in Canadian cities dominating the category for business friendliness across all city sizes. However, a high concentration of top global companies, top world banks and continued expansion of existing FDI activities have helped New York win the award of Best Major American City for Business Friendliness 2013/14. Of the Financial Times’ Global 500 companies, 25 were headquartered in New York, along with 14 of the world’s top 1000 banks, according to The Banker magazine’s annual ranking.
Coming in second, Toronto’s business-friendly environment is encapsulated in Invest Toronto’s American Cities of the Future submission, which states: “When stable, transparent financial and regulatory systems combine with a society that enjoys some of the most advanced freedoms in the world, it creates an environment for success.” Placed in third, Montreal’s success lies in retaining and developing relationships with existing investments – data from fDi Markets shows that one in five FDI projects since 2003 were expansions.
With virtually no restrictions on foreign investment, low corporation tax rates and high levels of economic freedom, Santiago in Chile was ranked the fourth most business-friendly city across the Americas region, and the top in Latin America among major cities. Santiago utilises this advantage to encourage potential investors, as is evident in its American Cities of the Future submission: “Santiago is viewed today as a haven for foreign capital in times of crisis due to its characteristics: security and transparency, as well as its competitiveness and excellent business projections.”
Canadian cities were awarded top positions for business friendliness in various city size categories: Vancouver ranked top of the large cities, with Mississauga top of the mid-sized cities. Victoria came top among small cities, and Waterloo was positioned just ahead of Delta in the micro cities.
Source: Jacqueline Walls, FDI Intelligence