a tool for direct investors
The Baseline Profitability Index (BPI) is a benchmark for returns from foreign direct investment – not just profits, but proceeds that can actually be returned to the investor's country of origin. The BPI uses a five-year time horizon for roughly 100 countries around the world, taking into account their levels of security, financial stability, corruption, property rights, capital controls, and exchange rates.
A foundation of economic growth
The starting point for the BPI is the five-year forecast of economic growth offered by the International Monetary Fund's World Economic Outlook database. The forecast is taken from the version of the database published in the month of October before the reference year. The forecast is adjusted for inflation. It offers a macro-level view on how much business activity might grow over a five-year period. Naturally, foreign direct investors seek growth that outpaces the overall economy; this is just a baseline.
Critical determinants of returns
The figures on which the BPI is based come from broad estimates using publicly available subject-matter indices and macroeconomic variables. Within each economy, factors eroding the repatriated principal and returns of foreign direct investment will vary by industry and company.
