Every country in the world strives to attract as much foreign investment as possible. And when it comes to foreign investment, greenfield foreign direct investments are where it’s at.
“Ah, yes, greenfield investments…yup, they’re great…nice…and green…like dollars…alright, I’ve no idea, enlighten me! someone may say.
Greenfield investments (GI) refer to a type of foreign direct investment (FDI) where a parent company establishes a subsidiary in a foreign country, building its operations and facilities from the ground up, which includes the building of new distribution hubs, offices and living quarters.
This kind of investment is riskier and calls for a heavy commitment of time and capital when compared to other types of foreign direct investment. That said, it gives the sponsoring company full rein over operations- employees are trained to company standards and all construction is carried out to company specifications.
The term “greenfield investment” itself derives from the fact that the company, usually a multinational corporation (MNC), is launching a venture from the ground up: literally plowing and prepping a green field.
In the year-long match on the international market, we have gone to extra time, waiting for a “golden goal”[1] which will decide the winner between two neighbors, Serbia and Montenegro.
And Serbia scores!
By grabbing 107 FDI projects and 11.92 GFDI PI (Greenfield Foreign Direct Investment Performance Index) points in 2019, Serbia trumps the Greenfield FDI Performance Index for the second time in the past few years, after 2016.
These figures are even more impressive considering that 107 FDI projects is 12 times the amount that might be expected given the size of Serbia’s economy.
The annual study conducted by the FDI Intelligence, which is the largest FDI center of excellence globally, ranks Serbia as No. 1, meaning that Serbia take poll position on the index. This prestigious ranking was awarded following an assessment of infrastructure, incentives and capabilities of cities and regions for attracting future inward investment.
Serbia’s leading FDI sectors are automotive components, food and tobacco, textiles and real estate. These sectors combined accounted for more than half (54%) of total inbound FDI projects in 2018. If we were to turn back to 2016 and glance at how Serbia performed then, we would find a similar situation.
Similar to this year’s achievements, back in 2016 the country’s most important sectors for greenfield FDI were electronic and automotive components, followed by real estate and textiles. Encouragingly, greenfield foreign investors announced 77 FDI projects in Serbia in 2016, however, 2019 was lurking just around the corner to top that with 107 FDI projects.
So, if we stick with the football lingo, we can say that Serbia is on a good run with two goals – one in 2016 and one in 2019.
And we all know every player’s wish – to score a hat-trick[2]. One more goal to go then, see you next season.
[1] A rule used in football and some other sports. Under this rule, if the result is draw after normal time, the winner will be the team that scores first during extra time.
[2] When a player scores three goals in a single match.
Authors: Miluša Okiljević, Nikola Nikodinović and Nadja Kosić
