Market Mapping

A Locational SWOT analysis is a key tool for understanding the overall economic profile of a region and is often the first step in developing an investment promotion strategy.

A Locational SWOT refers to an assessment of the strengths, weaknesses, opportunities, and threats that face a region when seeking to attract FDI. It is particularly useful in identifying an initial list of target sectors that offer the greatest potential for investment. The results of this SWOT analysis provide the foundation from which regional clusters are identified. 


Conducting a Locational SWOT Analysis

At the level of the Locational SWOT it’s important to think about your ‘competition’ for investment. Mobile Investors have choices about where to invest, so locational strengths, weaknesses, opportunities and threats should also be in comparison to other locations that an investor would consider while considering neighboring regions.

Key considerations when conducting a Locational SWOT Analysis

Incorporate the Perspective of Local Operating Companies.

One of the best sources of input on the key constraints to investment is the private companies operating locally. They are best placed to say where the pain points are in terms of operating conditions for businesses. These insights can be invaluable in identifying what reforms at the local, regional and national level would improve the productive capacity of the business environment.

Create a Public Private Dialogue (PPD).

A PPD is a structured interaction between public- and private-sector stakeholders focused around promoting the right conditions for private sector development, improvements to the business climate, and economic development. It is about stakeholders coming together to define and analyze problems, to discuss and agree on specific reforms, and to work to ensure that the suggested solutions are implemented.

Identifying Target Sectors & Business Activities

When drawing up a list of potential sectors to target for inward investment, it is important that an IPA not only target industries but also business activities. The location of FDI projects is often driven by its business activity rather than its industry. For example, call centers, logistics, IT support, and regional headquarters functions are all business activities; the same activity can be established by companies operating in many different industries.

4 methods for identifying target sectors and activities:

Leading Regional Sectors

The SWOT analysis should identify the major sectors in a region and the most promising sectors for investment based on the opinion of current investors and experts. In addition, data research should be conducted.

Regional Strength Alignment

The SWOT analysis should also identify the main “supply-side” strengths of a region (e.g. size of labor force or good ICT infrastructure) that can be matched against sectors in which these supply-side factors are very important.

Sectors Predisposed to FDI

When identifying target sectors, it is essential to consider which sectors have the highest volume of FDI that your region could compete for. There’s little point in targeting a sector, even if it’s strong, with a low level of FDI growth potential.

Contribution to Local Economy

When selecting sectors, it is important to consider which sectors have the highest positive impact on a region’s economy. The impact of FDI depends on the sector and type of project an investor has. 

    SEA provides Investment Promotion Agencies(IPAs) with tools and processes for analyzing, aligning and promoting public investment opportunities to foreign direct investors.


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