ACCORDING TO the World Investment Report 2002, published by the United Nations Conference on Trade and Development (UNCTAD), Jamaica ranked 2nd in CARICOM, and 5th in the Latin American and Caribbean region in Foreign Direct Investment (FDI) inflow performance in 2001.
The report further cites the impressive fact that of the 140 United Nations (UN) member countries, ranging from developed nations such as the United States to developing economies like Rwanda, Jamaica was ranked 26th overall in attracting foreign investment inflows, according to JAMPRO. This was a significant increase over the 33rd place ranking achieved in the previous decade.
The World Investment Report, recognised worldwide as an authoritative source of information and analysis on issues related to foreign direct investment, arrives at these findings by utilising UNCTAD's new benchmarking tool which measures performance by standardising the inflows of a country to the size of its economy. This new methodology addresses the point that a relevant measurement of success in attracting FDI must take into account the size of the host economy in global production.
The UNCTAD report goes on to reveal that FDI inflows into Jamaica have grown from US$28mn in 1980 to US$722mn in 2001. When compared to other economies in the region such as Trinidad and Tobago (US$184mn in 1980 to US$835mn in 2001), The Dominican Republic (US$92mn in 1980 to US$1,198mn in 2001) and Costa Rica (US$53mn in 1980 to US$448mn in 2001), it is evidenced that Jamaica is outperforming many of the recognised "frontrunners" and "underachievers", and has been ranked as an "overachiever" since 1988. The report recognises Jamaica as a location that has been receiving greater FDI inflows than has been observed for other countries of similar economic size.
FDI inflows are also playing a more important role in capital formation in the economy, with these inflows accounting for roughly a quarter of total Investment in 2001, a significant increase from the eight per cent share of investment in the 1985 to 1995 period. The findings of the World Investment Report also indicate that cross border acquisitions are playing an important role in Jamaica's inflows, accounting for US$525mn or over three-quarter of the total inflows in 2001.
Of significant note, however, is the fact that enterprises registered in Jamaica are increasing cross border investors. The World Investment report shows that of all the countries in the Latin American region, Jamaica ranks 9th in outward FDI flows in 2001, outperforming countries like Argentina, Brazil, Bermuda, Costa Rica and the Dominican Republic. Outward FDI flows increased from an average of US$51mn between 1990 to 1995, to US$89mn in 2001, peaking at US$95mn in 1999.
The FDI inward stock, a measure of the value of the productive assets owned by foreign owned enterprises in Jamaica, has increased almost eightfold from US$0.6bn in 1980 to US$4.04bn in 2001, now accounting for over 44 per cent of Jamaica's 2001 Gross Domestic Product. This signals a tremendous increase over the 22 per cent recorded by the report in 1980. According to the "capacity theory" in economics that projects future investment based on the current share of capital stock to output, this phenomenon presents Jamaica's future in attracting FDI inflows in a positive light.
