One would not generally associate Bahrain being among the top 20 destinations for Foreign Direct Investment (FDI) in the world. But the country has attracted three times the amount of greenfield FDI that might be expected given the size of its economy, reveals a new report.
The country is among the world’s top 20 locations in attracting FDI, ranking 15th among 84 countries analyzed by the fDi Intelligence Greenfield FDI Performance Index 2021.
The Financial Times Group publication has ranked Bahrain second in the Gulf and third in the Middle East and North Africa, with the kingdom climbing 12 positions from its previous global rating of 27.
The world’s top five FDI attractors as per the index are Costa Rica, Lithuania, the UAE, Singapore, and Estonia.
Bahrain obtained 3.23 points, which reflects the relatively large contribution of foreign investments to the economy, the report says.
A score of 1 indicates that a country’s share of global inward greenfield FDI in 2020 matches its relative share of global gross domestic product (GDP), while a score greater than this indicates a larger share and a score of less than 1 indicates a smaller share.
The report compares the size of the economies and the investments that were attracted by them in 2020.
Bahrain’s high ranking regionally and globally in attracting direct investments reflects the effectiveness of the strategic plan adopted by the Economic Development Board (EDB) and its efforts alongside Team Bahrain partners to attract direct investments and create jobs despite the pandemic.
The EDB, which is the national investment promotion agency, says it also gives an indication of the extent of development and openness of the business environment in the kingdom and its competitive advantages that attract the attention of investors from all over the world.
Greenfield FDI data used in the index is derived from fDi Markets and excludes retail investments.
To be included in the index, a country must have received at least 10 greenfield FDI projects in 2020.
The index uses a methodology devised by UN Conference of Trade and Development (Unctad) for overall FDI, and applies it to only greenfield FDI, excluding mergers and acquisitions, intra-company loans and other forms of cross-border investment.
According to experts, greenfield investing is when a company builds its own, brand-new facilities from the ground up, whereas investment when a company purchases or leases an existing facility is called brownfield.
Quoting the latest World Investment Report (WIR 2021) from the Unctad, the GDN reported last month that Bahrain’s saw FDI inflows of $1.007 billion in 2020.
Despite global trends, the country reported a 3.3pc increase in inward FDI stocks, reaching $31.7bn in 2020.
Also highlighted by Unctad was Bahrain’s stock to GDP ratio, where inward FDI stocks relative to GDP reached 92pc, the highest ranking in the GCC and surpassing the global average of 49pc.