Foreign direct investments the success secrete of Eurozone

José Manuel Barroso, President of the EC (on the left), and Antonio Tajani, Vice-President of the EC in charge of Industry and Entrepreneurship, gave a joint press conference on the adoption of a Communication "For a European Industrial Renaissance". The EC was urging Member States to recognise the central importance of industry for creating jobs and growth and to mainstream industry-related competitiveness concerns across all policy areas. (EC Audiovisual Services, 22/01/2014).

José Manuel Barroso, President of the EC (on the left), and Antonio Tajani, Vice-President of the EC in charge of Industry and Entrepreneurship, gave a joint press conference on the adoption of a Communication “For a European Industrial Renaissance”. The EC was urging Member States to recognise the central importance of industry for creating jobs and growth and to mainstream industry-related competitiveness concerns across all policy areas. (EC Audiovisual Services, 22/01/2014).

Foreign Direct Investments (FDI) are long-term placements in real economy business, not right away tradable, realized by investors residing outside the country. They should be sharply distinguished from the highly volatile financial investments on stocks and bonds, which can depart from the country at any moment. The crisis years in the period 2009-2012 don’t seem to have damaged the ability of the European Union to both invest abroad and accept foreign direct investments in its soil. According to Eurostat, the EU statistical service, both inward and outward FDI in and out of the EU27 rose by 40% during this period.

It is also of interest to note that outward FDI have been traditionally much higher than inward coming investments in the EU. At the end of the last year of the period in question, investment stocks held by EU entities in the rest of the world reached the amazing figure €5,206.8 billion. On the same date FDI stocks held by the rest of the world in the EU27 totalled €3,947.4bn. At the beginning of this period that is at the end of 2009, the corresponding figures were €3,751.1bn and €2,783.4bn.

FDI within the EU

According to Eurostat “stocks held in the rest of the world represent about 40% of all EU27 FDI stocks, with 60% of the total held in another EU Member State”. This observation underlines the fact that the grandiose EU edifice has greatly helped growth within the borders of the Union through the creation of a level playing field for FDI. Understandably, the more advanced EU countries have taken advantage of the absolute protection of their FDI in other member states. Investments within the EU have flourished freely almost as if it was one seamless sovereign territory.

The existence of the EU then has not only eliminated the internal barriers to trade within the Union but it has also enhanced the growth potential by eliminating any impediments to direct investments from other member states. In this way the gains of the more advanced EU countries are much greater than their gains from the construction of the one seamless internal market.

This observation applies mainly to Germany, the largest and more advanced EU economy, which has based its growth and new job creation during the past fifty years on the unimpeded expansion of its business sector all over the EU. It’s not only the seamless internal EU market for good and services that helped Germany grow, but also the completely unobstructed and protected direct investments in other member states, including the acquisition of key assets like telecommunication and energy companies in other member states.

Only last week the Commission presented a ground-breaking communication for a “European Industrial Renaissance”. The target is to enhance the internal growth potential of industry, by, among other things, eliminating the last remaining bureaucratic obstacles. The Communication promotes a more “business friendly Europe through actions to simplify the legislative framework and improve the efficiency of public administration at EU, national and regional levels”.

US and Swiss

Returning to the international level, two countries, the US and Switzerland, are the major FDI partners of the EU. According to Eurostat, the main partners of the EU27 for FDI stocks held in the rest of the world at the end of 2012 were the “United States (€1,655bn or 32% of total stocks held by the EU27 in the rest of the world), Switzerland (€679bn or 13%), Canada (€258bn or 5%), Brazil (€247bn or 5%), Russia (€189bn or 4%), Australia (€142bn or 3%), Hong Kong (€133bn or 3%), Singapore (€119bn or 2%) and China (€118bn or 2%)”. The leading partners for FDI stocks held by the rest of the world in the EU27 were similar.

All in all, foreign direct investments very probably weigh more for the overall economic relations between two countries, than the flow of goods and services. Their long-term character and the necessary large initial disbursement demand much deeper and trusty relationships than the outright trade. This is probably the secret of the success of the European single money zone, the euro area. The introduction of the common currency offered the utmost protection to internal FDI within the Eurozone.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

This is how we can make a global green recovery – that also boosts the economy

Global Report on Food Crises reveals scope of food crises as COVID-19 poses new risks to vulnerable countries

The European Green Deal sets out how to make Europe the first climate-neutral continent by 2050, boosting the economy, improving people’s health and quality of life, caring for nature, and leaving no one behind

The dark side of Diwali, festival of lights

Crimea: The last bloodless secession of a Ukraine region?

It takes far too long for a rare disease to be diagnosed. Here’s how that can change

More than one billion people do not have access to electricity. What will it take to get them connected?

GSMA head urges regulators to help Europe regain leadership

COVID-19 pandemic: The war inside our heads

Two shipwrecks add to ‘alarming increase’ in migrant deaths off Libya coast: IOM

CO2 emissions around the world

Guinea-Bissau spotlights threats of organized crime, Sahel terrorism in speech to UN Assembly

Drinking water: new plans to improve tap water quality and cut plastic litter

Climate finance for developing countries reached USD 71 billion in 2017

Coronavirus update: UN scales back major conference

How three US cities are using data to end homelessness

Here’s how we can rethink the way we eat meat

6 ways social innovators are responding to the COVID-19 pandemic

Bigotry makes politicians ‘complicit in the violence that follows’ : UN independent experts

Key economic forum in Russia: New technology a ‘vector of hope’ but also ‘a source of fear’ says Guterres

DR Congo: Ebola response resumes despite ‘risky environment’

‘Our concern now is the southern hemisphere’ – COVID Action Platform convenes leaders on the challenges ahead

COP21 Paris agreement: a non legally-binding climate pact won’t stop effectively global warming while EU’s Cañete throws hardest part to next Commission

Afghanistan: Civilian casualties exceed 10,000 for sixth straight year

Five ways individuals can help save the oceans

UN unveils global influenza strategy to prevent ‘real’ threat of pandemic

UN Envoy urges Burundi leaders to ‘seize opportunities for national unity and peace’

5 lessons for the future success of virtual and augmented reality

‘Concerted effort’ must be made to help 600 million-plus adolescent girls realize full potential: Guterres

How the coronavirus market turmoil compares to 2008 – and what we can do

UN policewoman recognized for ‘speaking up and speaking out’ on behalf of the vulnerable

Antitrust: Commission sends Statement of Objections to O2 CZ, CETIN and T-Mobile CZ for their network sharing agreement

The challenge to be a good healthcare professional

Long-term exposure to air pollution is like smoking a pack of cigarettes a day

Health without borders: How we can Improve International Collaboration in Health Care

GSMA Announces First Keynote Speakers for 2019 “MWC Los Angeles, in Partnership with CTIA”

The Parliament defies a politically biased Banking Union

Austerity lovers to put a break on Renzi’s growth vision for Europe? the Sting reports live from World Economic Forum 2015 in Davos

Amsterdam is getting a 3D-printed bridge

Historic first, as Tolstoy’s War and Peace lands in Geneva, to mark international centenary

Cross-border cooperation: the EU Interreg programme celebrates 30 years of bringing citizens closer together

Renewable energy can get India’s returned rural migrants back to work

Amazon fires: Health Effects, Near and Far

Trump: Hostile to Europe, voids Tillerson’s “ironclad” ally pledge

EU supports recovery and resilience in Nigeria with additional €50 million

Why we need a Paris Agreement for nature

How Sierra Leone is using 3D printing to become a model state

2020 Blue Economy Report: Blue sectors contribute to the recovery and pave way for EU Green Deal

Global Citizen-Volunteer Internships

How young entrepreneurs should be supported: what assistance should governments provide?

Pandemic versus fear

Terrorist content online: companies to be given just one hour to remove it

Why the Greeks forgave Tsipras’ pirouettes around austerity and voted again for SYRIZA

MFF: Commission’s plan “impossible to implement” with Finnish proposal

FROM THE FIELD: Crisis in Kassala FROM THE FIELD: Crisis in Kassala

UN rights chief calls for release of hundreds abducted and abused in South Sudan

5 technologies that will forever change global trade

‘We will not give up on looking for peace for South Sudan’: UN deputy chief

Doctors vs. Industry 4.0: who will win?

Central Mali: Top UN genocide prevention official sounds alarm over recent ethnically-targeted killings

More Stings?

Advertising

Comments

  1. Hi there friends, how is all, and what you want to say regarding this piece of writing, in my view its in fact amazing
    in support of me.

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s