Mercury Advisory Group consultants consult frequently on healthcare projects around the world that are either initiated to attract foreign direct investment (FDI) or as experts on projects that have been initiated as a result of the foreign direct investment in a region.
Global foreign direct investment is undergoing a seismic shift as emerging markets countries are seeing both inflows and outflows rise dramatically. This is especially true where it relates to the building of healthcare institutions to benefit the people of a nation.
When FDI enters a region, it brings with it new skilled jobs and capacity training, or supports other growth in the region such as a new steel plant construction, mining or drilling operations, or other manufacturing activity that will bring thousands of new workers to a location.
These things may happen in locations where there is inadequate healthcare supply, which can add to the challenges that may already exist in the area. In other instances, FDI is encouraged to build within free trade zone (FTZ) developments, and often we see healthcare facilities from outside a nation may be invited to extend their brand into the FTZ to offer exportation of medical services in the form of medical tourism.
FDI is tightly correlated to economic growth. The United Nations Conference on Trade and Development (UNCTAD) monitors the rise, fall and stalling of cross-border investment activity and reports that “subpar FDI flows reflect continued sluggishness of the world economy.” This has created an unprecedented opening for developing and transitioning economies, which are receiving the bulk of global cross-border investment, (approximately 60% of all FDI). These nations have also established themselves as a growing source of outward FDI: generating nearly 35% of all global outflows.
This rapid shift in global investment activity is changing the rules of engagement. On one hand, the total amount of the FDI is not getting bigger, and more competitors are vying for a larger share as the competition for FDI intensifies. Also, as investor sources become more diversified (conglomerates that own health facilities, or manufacture health and biomedical technologies,for example) the nature of the FDI is being altered. In medical tourism, another dimension is added into the field of focus as mega-hospitality companies build new hotels and resorts with lavish spas and health retreats at a destination.
