Investing In Eu Member Countries

COUNTRIES INVESTING IN EU MEMBER COUNTRIES

Slide 1

Since the expansion of European Union, the opening up and transition to market

economies of Central and Eastern European countries resulted in a significant

increase in foreign investment in these economies. (World Investment Directory,

2003)

The opening up and the transition to market economies of Central and Eastern

European countries have been accompanied by a surge of FDI inflows in these

economies.

Main sources of Foreign Direct Investment (FDI) are developed countries.

The European Union (EU) - the largest host region, accounting for 45% of total FDI

inflows in 2006 with 80% and above shares in total FDI for Czech Republic, Estonia,

Hungary, Poland and Slovenia and Slovakia. (World Investment Directory, 2005)

Slide 2

Countries with the largest amount of FDI in EU member countries are:

Ð'* United States (10-20% FDI in most countries within Eastern and Central Europe

region)

Ð'* United Kingdom

Ð'* France

Ð'* Germany (10-20% FDI in most countries within Eastern and Central Europe region)

Ð'* Japan

Ð'* Netherlands

The United States and EU member countries are expected to be the leading sources of

FDI in European member countries but there are also newcomers of FDI providers such

as China and South Africa.

(UNCTAD, 2006)

Slide 3

Establishing bases in Europe allows companies to take advantage of benefits such as

skilled, low cost labour, physical capital available below market value. As well as

lowering the production costs it helps organisations to increase their global

presence.

Another factor that influenced the investment in EU was rather than facing external

trade barriers, companies such as Sony and Hitachi believed by locating production

in Europe would bypass all these barriers.

Governments in the new member states are eager to attract investment, often offering

rich incentives to manufacturers that will create jobs. Foxconn and Changhong, for

instance, have been granted 10-year tax holidays in the Czech Republic. And

producing in the EU lets companies avoid the 14% tariff Brussels slaps on

televisions made in China.

Slide 4

Some of the companies establishing manufacturing and production bases in EU member

countries:

Ð'* Toshiba -set out to manufacture 60% of their European laptop computers in Germany

Ð'* Sony and Hitachi Ð'- located production in Europe to bypass trade barriers Ð'* General

Motors Ð'- manufacturing plants located in several locations such as Poland, Czech

Republic and Slovak Republic.

References