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Single Market Scoreboard

Foreign Direct Investments (FDI)

Foreign direct investment (FDI) is a category of cross-border investment in which an investor resident in one EU country establishes a lasting interest in and significant degree of influence over (ownership of 10% or more of the voting power), a business resident in another country.

FDI is a driver of competitiveness and economic development. Information on its evolution over time provides an indication of an EU Member State’s external competitiveness and the effectiveness of economic, trade and investment policies.

Flows of foreign direct investment can exhibit a very high degree of volatility from one year to the next. These changes may be linked to global economic fortunes, sector-specific developments, or the individual situations of enterprises considering foreign investments. Foreign direct investment stocks (or positions) measure the total value of direct investment at a given point in time

FDI and Single Market – why does it matter?

FDIs are a component of the investments made into an economy. As such, they can play a role in spurring economic growth and the creation of jobs in the receiving economy. Moreover, the level of FDI may indicate – among many other factors – a particular attractiveness or competitiveness of an economy. Measuring the levels and trends of FDIs in the EU’s Single Market is thus a relevant exercise in order to assess the latter’s performance and attractiveness.

Key messages

Overall, the 2019 data presented below show that FDIs are unevenly distributed across EU Member States. Some small countries exhibit very high stocks of both intra-EU and extra-EUFDIs. On the contrary, certain large western European economies present comparatively lower figures, and most eastern European countries lie in the lower part of the distribution of FDI stocks.

Note: When the 2021 edition of the Scoreboard was being drawn up, 2019 was the latest year covering all EU Member States. Data sources: Eurostat, EU direct investment positions, flows and income, breakdown by partner countries (BPM6) [bop_fdi6_geo], Last update: 19-02-2021

Facts and figures

All indicators are based on official statistics from Eurostat.

Inward and Outward EUFDIchanges 2018-2019

The following indicators measure changes* in FDI flows and stocks between 2018 and 2019.

(*Calculated according to formula: (FDI2019-FDI2018)/absolute value of FDI2018)

Change in inward intra-EUFDI flows

Change in the level of inward intra-EUFDI flows between 2018 and 2019, for each EU Member States. The figure presents a change in the value of foreign direct investments that flow to a given Member State from other EU Member States.

 

Increases or decreases may indicate - among other factors - changes in a country’s relative attractiveness for investors.

Change in outward intra-EU FDI flows

Change in the level of outward intra-EUFDI flows between 2018 and 2019, for each EU Member States. The figure presents a change in the value of foreign direct investments that flow from a given Member State to other EU Member States.

 

Increases or decreases may reflect – among other factors – policy measures taken abroad that modified incentives or barriers to investment.

Change in inward intra-EUFDI stocks

Change in the level of inward intra-EUFDI stocks between 2018 and 2019, for each EU Member States. The figure presents a change in value of the total stock of foreign direct investments in a given Member State coming from other EU Member States.

 

Change in outward intra-EUFDI stocks

Change in the level of outward intra-EUFDI stocks between 2018 and 2019, for each EU Member States. The figure presents a change in value of the total stock of foreign direct investments of a given Member State in other EU Member States.

 

Change in inward extra-EUFDI flows

Change in the level of inward extra-EUFDI flows between 2018 and 2019, for each EU Member States.The figure presents a change in the value of foreign direct investments that flow to a given Member State from countries outside the EU.

 

Increases or decreases may indicate – among other factors – changes in a country’s relative attractiveness for investors.

Change in outward extra-EUFDI flows

Change in the level of outward extra-EUFDI flows between 2018 and 2019, for each EU Member States. The figure presents a change in the value of foreign direct investments that flow from a given Member State to countries outside the EU.

 

Increases or decreases may reflect – among other factors – policy measures taken abroad that modified incentives or barriers to investment.

Change in inward extra-EUFDI stocks

Change in the level of inward extra-EUFDI stocks between 2018 and 2019, for each EU Member States. The figure presents a change in value of the total stock of foreign direct investments in a given Member State coming from countries outside the EU.

 

Change in outward extra-EUFDI stocks

Change in the level of outward extra-EUFDI stocks between 2018 and 2019, for each EU Member States. The figure presents a change in value of the total stock of foreign direct investments of a given Member State in countries outside the EU.

 

Inward and Outward EUFDIlevels

Inward intra-EUFDI flows – levels

This indicator measures the level of inward intra-EU FDI flows, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents value of foreign direct investments that flow to a given Member State from other EU Member States.

 

The indicator, which reflects flow data, is volatile and may change significantly from one year to the next.

Outward intra-EUFDI flows – levels

This indicator measures the level of outward intra-EU FDI flows, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents the value of foreign direct investments that flow from a given Member State to other EU Member States.

 

The indicator, which reflects flow data, is volatile and may change significantly from one year to the next.

Inward intra-EUFDI stocks – levels

This indicator measures the level of inward intra-EU FDI stocks, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents the value of the total stock of foreign direct investments in a given Member State coming from other EU Member States.

 

The indicator is relatively stable and less volatile than indicators of flow data.

Outward intra-EUFDI stocks – levels

This indicator measures the level of outward intra-EU FDI stocks, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents the value of the total stock of foreign direct investments of a given Member State in other EU Member States.

 

The indicator is relatively stable and less volatile than indicators of flow data.

Inward extra-EUFDI flows – levels

This indicator measures the level of inward extra-EUFDI flows, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents the value of foreign direct investments that flow to a given Member State from countries outside the EU.

 

The indicator, which reflects flow data, is volatile and may change significantly from one year to the next.

Outward extra-EUFDI flows – levels

This indicator measures the level of outward extra-EUFDI flows, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents the value of foreign direct investments that flow from a given Member State to countries outside the EU.

 

The indicator, which reflects flow data, is volatile and may change significantly from one year to the next.

Inward extra-EUFDI stocks – levels

This indicator measures the level of inward extra-EUFDI stocks, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents the value of the total stock of foreign direct investments in a given Member State coming from countries outside the EU.

 

The indicator is relatively stable and less volatile than indicators of flow data.

Outward extra-EUFDI stocks – levels

This indicator measures the level of outward extra-EUFDI stocks, for each EU Member State, in the years 2017, 2018 and 2019. The figure presents the value of the total stock of foreign direct investments of a given Member State in countries outside the EU.

 

The indicator is relatively stable and less volatile than indicators of flow data.

Priorities

To improve investment performance in the EU, 3 obstacles need to be tackled:

  1. Regulatory stability needs to be stre ngthened and unnecessary administrative burdens need to be reduced.
  2. The remaining obstacles to access to finance, especially for small and medium-sized firms and start-ups, need to be tackled and access to equity and venture capital improved.
  3. Single market barriers that restrict firms seeking to open branches or buy up companies in other EU countries may limit opportunities involving more than one EU country, expansion of new business models and investment.

The EU seeks to boost investment using the following instruments:

  • European Semester – providing economic surveillance of EU countries to promote structural reforms at national level and across the euro area, to improve investment conditions and foster positive spillovers. The Semester will also play a key role for what concerns investments under the new Recovery and Resilience Facility.
  • Single market strategy – removing unnecessary barriers to the free movement of goods and services. This will deepen the Single Market and support investment and innovation.
  • Renewed industrial policy strategy – promoting industrial competitiveness, production and employment, developing strategic value chains and fostering technology adoption, modernisation and the transformation of industry.
  • Capital Markets Union – reducing fragmentation in financial markets, diversifying financing sources, boosting flows of capital between countries and improving access to finance for businesses, particularly small and medium-sized firms.
  • Better Regulation agenda – making EU-level regulation leaner and more consistent.
  • EU framework for FDI screening – ensuring that FDI remains a source of growth in the EU while protecting the EU’s essential interests.

More information on FDI – detail and analysis

Foreign direct investment (FDI) is key to internationalisation and integration in Europe. It is also one of the main components of total investment as measured by Gross Fixed Capital Formation.

The indicators show the volume of:

  • inward and outward intra- and extra-EUFDIflows during a given year
  • inward and outward intra- and extra-EUFDIstock at a given point in time.

They reflect:

  • the relative attractiveness of investment in the country
  • the relative investment position of the country
  • the size of the economy
  • overall levels of openness, competition and integration in international value chains.

Data on FDI flows are on a net basis (credits less debits between direct investors and their foreign affiliates).

Negative FDI flow data indicate reverse investment or disinvestment in which at least 1 of the 3 components of FDI (equity capital, reinvested earnings or intra-company loans) is negative and not offset by positive amounts of the remaining components.

Changes in flow and stock data over time could reflect changes in the framework and investment conditions in the country and/or abroad due to policy measures taken to strengthen incentives for or reduce barriers to investment.

FDI positions between the beginning and the end of a given year (n) may change due to factors as:

  • transactions that occurred during year n,
  • other valuation changes (exchange rate changes or price valuation changes occurring when trying to value at market prices), or
  • other volume changes.

However, changes in the volume of FDI can be misleading. What can happen is that an economic entity’s “portfolio positions” for a particular year can be reclassified as “direct investment” if it acquires additional shares pushing its ownership above the 10% threshold.

FDI Glossary

FDI flows

FDI flows record the value of cross-border transactions related to direct investment during a given period of time. Financial flows consist of equity transactions, reinvestment of earnings, and intercompany debt transactions.

FDI stocks

FDI stocks measure total direct investment at a given point in time. The outward FDI stock is the value of the resident investors' equity in and net loans to enterprises in foreign economies. The inward FDI stock is the value of foreign investors’ equity in and net loans to businesses resident in the reporting economy.

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