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18 Sep 2007:
The study by IBM's PLI-Global Location Strategies service also reveals that the top 15 inward investment locations in 2006 accounted for 73 percent of jobs, as opposed to 85 percent in 2005, which indicates corporations are widening their search for investment opportunities. Indonesia, Kazakhstan, Pakistan and Vietnam, for example, are among a growing number of emerging market countries selected for new investments.
According to the report's authors, the increase in investment projects has in part been buoyed by the strength of corporate performance in traditional source economies, such as Japan, the U.S. and Western Europe. The study's results also reveal a broadening source of investment. For example India and China, which ranked number one and two respectively in terms of number of jobs created by inward investment, also are emerging as important sources of outbound investment as companies in those countries enter into new markets in other geographic regions. Both countries are now in the top 15 ranking of source countries for outbound investment, which is led by the U.S., Japan and Germany.
"Taken as a whole, these findings are indicative of global location investment activity in 2006 being predominantly driven by optimism and a search for new market opportunities, rather than by cost reductions," said Roel Spee, Co-Global Leader, IBM PLI-Global Location Strategies service.
Manufacturing jobs created by inward investments totaled 900,000 around the world, while services jobs totaled 330,000, and R&D accounted for 100,000.
India and China continue to lead in the total number of new manufacturing jobs created through inbound corporate location investments, however Vietnam has risen at a rapid clip. While India rose to first place in terms of manufacturing jobs created (126,000), displacing China, Vietnam doubled its performance of the previous year, tying China with 100,000 jobs. Mexico and Eastern European countries also have a strong focus on manufacturing jobs. India was particularly successful in the ICT and Transportation Equipment industries, whereas China's and Vietnam's manufacturing jobs were mostly in Electronics. Mexico and Eastern Europe scored higher than average on Transportation Equipment jobs.
On the services front, India and the Philippines dominate the global shared services activity, with 32 percent and 16 percent of such jobs respectively. Brazil also is a strong regional shared services location. New headquarters locations on the other hand are located mostly in traditional regional hubs (U.S.A., the UK, Netherlands, Singapore) and in growing markets (China, Mexico).
While India and China dominate the global ranking in terms of R&D jobs created through inward investment with 54 percent and 12 percent respectively, other emerging economies such as Romania and Vietnam increasingly are viewed as attractive locations for R&D investment. The authors note that although companies have traditionally been cautious about globalizing R&D activity, firms increasingly are looking for opportunities to expand R&D activities in other countries to exploit talent pools available across the world. Singapore, Israel and Ireland, for example, all ranked high in attracting new R&D jobs in relation to their populations.
"As global companies continue to seek ways to optimize their operating models, they are increasingly establishing individual business components in locations that offer the best quality match for a specific unit," said Gene DePrez, Co-Global Leader, IBM PLI-Global Location Strategies service. "The strong showing of emerging markets in this year's study and the momentum of mature economies attracting high numbers of projects reflect the ongoing evolution of the globally integrated enterprise as a business model."
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The Global Location Trends 2006 report is derived from the IBM Global Investment Locations Database (GILD), which is a unique database of IBM's PLI-Global Location Strategies unit. The GILD records investment project announcements around the world on an ongoing basis, with the objective to monitor the location decisions that corporate executives are making. It monitors corporate investments at the project level. GILD records announcements of new and expansion projects by companies globally. Mergers & Acquisitions and other forms of investment are not included, unless they lead to a new or expansion project.
IBM uses GILD to inform corporate investor clients where recent investment is going, and as such provides key input for identifying location options. GILD allows very detailed analysis of recent investment trends by geography, sub-sector and activity -- identifying a location's market share in attracting cross border investment, monitoring target countries, and so forth.