Editeur : Les notes bleues de Bercy, n°324, 19 mars 2007
Auteur : Fabrice Hatem
Main trends in international investment in Europe since 2002
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The year 2006 has been characterized by a new increase in international direct investment flows, which have reached 1230 billion dollars, coming close to the peak attained in 2000.
Despite the growing competition by emerging and transition economies, this increase has been especially beneficial to developed countries and especially to western Europe. The record level of international M&A, the major share of which involves target companies from developed countries, but also the increase in international Greenfield projects towards Western Europe, explain those good performances.
Inside Europe, the analysis of the data collected by the Invest in France Agency’s « European International Investment data base » leads to the following conclusions :
1. The mobile FDI market in Europe accounted for 2 800 development projects and a minimum of 180 000 jobs per year.[1] There was a significant increase in the number of projects from 2002 onwards, and the numbers of jobs created increased in 2005 and 2006 after three years of stability.
2. The biggest source of investment projects, again in numbers of jobs created, is by far Western Europe, followed by North America. The contribution in terms of job creation resulting from investment from Asia is more limited, but showed a significant increase since 2005. There is a certain amount of diversity in investment profiles according to the country of origin: the trend towards massive relocation to Eastern European countries by the German manufacturing industry, is in contrast for example to the sustained high levels of investment in Western Europe by American companies based in the services and high tech industries.
3. In terms of job creation, investment is dominated by development projects in manufacturing and production (68,0 % in total). However, the tertiary support services sector rates higher in terms of project numbers (64,9 %). The difference between the two figures can be explained by the much larger unit size of development projects in the production sectors.
4. The manufacturing sectors amount for the largest share of jobs creation (78,3 %), with the automotive and electric/electronic equipement sectors amounting alone for 37,3 % of the total. However, in recent years this contribution has declined in favour of the services sector and software industries.
4. The manufacturing sectors amount for the largest share of jobs creation (78,3 %), with the automotive and electric/electronic equipement sectors amounting alone for 37,3 % of the total. However, in recent years this contribution has declined in favour of the services sector and software industries.
5. Countries in Western Europe won more that three quarters of TNC investment projects in Europe between 2002 and 2006. These countries maintain a strong position with regards to high value added services and innovative sectors, as well as activities where location is dependent on geographical proximity to the market served.
6. Eastern European countries have benefited from increased numbers of manufacturing and production development projects, particularly in the automotive and other manpower-intense industries. Subsequently, these countries attracted more than half of the international jobs created by TNCs in Europe between 2002 and 2006. This high proportion should however be offset against the fact that the average content of these jobs in terms of qualifications and value added is significantly less than for jobs created in Western Europe (factory worker v. engineers, researchers and executives). A quick rise in the technological level of projects can nevertheless be noticed in such countries as Hungary and the Czech Republic.
[1] On the basis of partial accounting of jobs created per project. Surveys and evaluations carried out lead to an estimation of a 50% cover rate by the monitors in terms of jobs.