While net optimism levels for emerging markets are lower than for their developed market counterparts, investors are becoming more optimistic about emerging markets such as the Dominican Republic, according to the 2024 version of the Kearney FDI Confidence Index.
Based on surveys applied in January of this year to C-level executives and regional and business leaders in 30 countries, although it dropped four positions, the Dominican Republic remains within the top 25 of the ranking of emerging markets with more confidence to invest. The list is topped by China, the United Arab Emirates and Saudi Arabia.
Eighty-four percent of respondents indicated that they plan to maintain or seek new investments in emerging markets, 3% more than last year.
The Dominican Republic is among nine countries in the Americas that make up the emerging markets ranking conducted for the second time in the 26-year history of the FID Confidence Index by global consulting firm Kearney. It is accompanied by Brazil, Mexico, Argentina, Chile, Costa Rica, Peru, Colombia and Uruguay among the most attractive countries to invest in now and in the next three years.
Optimism despite everything
In the new edition of the global index, the United States ranks first for the twelfth consecutive year, followed by Canada and China, which climbs to third place. “The strength of the U.S. economy (the fastest growing in the G7) and the recovery in consumer confidence likely underpinned this score,” it notes.
At an overall level, the survey applied to compile the index found that business leaders show signs of increased optimism in the outlook for investment and artificial intelligence over the next three years, although concerns about geopolitical risks, the climate crisis, and high levels of technological disruption persist.
The results suggest that investor optimism is high and has the potential to grow further over the next three years. Eighty-eight percent said they planned to increase their foreign direct investment (FDI) in the next three years, up 6% from last year.
Another notable finding is investors’ lack of prioritization of transparency, and lack of corruption, and tax rates and ease of paying taxes among the top factors they consider when deciding where to invest. These fell respectively from first and third place last year to fourth and seventh place this year. Instead, technological and innovation capabilities, efficient legal and regulatory processes, and ease of moving capital in and out of the country are among the top three factors.
However, key risks related to geopolitical tensions and a restrictive regulatory environment loom large. Eighty-five percent believe that increased geopolitical tensions will affect investment decisions, and companies are making nearshore or friendshore decisions in reaction to these persistent pressures.
Artificial intelligence
Companies participating in the survey have annual revenues of $500 million or more. Those in the service sector accounted for 46% of respondents and industrials for 45%. The fieldwork yielded a rapidity of the proliferation of artificial intelligence in this business world.
Seventy-two percent of investors say they are making significant or moderate use of artificial intelligence in their business operations. They anticipate their companies will use it for customer service and chatbots, automation of manual processes ,and supply chain improvement.
Sixty-three percent of investors say their organization will make significant or moderate increases in the use of artificial intelligence to guide their investment decisions. Investors cite cost savings or efficiency and accuracy in decision making as the main benefits they derive from using it in their decision making.
Sixty-four percent say they anticipate their organization will expand its use of artificial intelligence in investment decision making over the next three years, and 41% anticipate a “significant” or “moderate” increase. However, 82% agree that AI policies and regulations will influence the extent of their AI investment.
Translated with DeepL.com (free version)
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