2015-03 Foreign Direct Investment per capita in Europe

European countries are listed by the European Chamber according to Foreign Direct Investment (FDI) inflows per capita, based on the 2013 data published by the World Bank. The rate considers the capital used to acquire an ownership of at least 10%, in an enterprise of a country other than the one where the investors reside in.

According to “Doing Business”, there is a strong correlation between FDI inflow and the degree of ease of doing business in a specific country. EuCham analyzes FDI per capita to highlight its relevance to business success.

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EuCham – European Chamber lists the European countries according to Foreign Direct Investment (FDI) inflows per capita based on the 2013 data published by the World Bank. The rate considers the capital used to acquire an ownership of at least 10%, in an enterprise of a country other than the one where the investors reside in. According to “Doing Business”, there is a strong correlation between FDI inflow and the degree of ease of doing business in a specific country. EuCham analyzes FDI per capita to highlight its relevance to business success.

Luxembourg is ranked top with USD 55,366.8 FDI inflow per capita, which are mainly concentrated in the banking and insurance sectors. The countries following in the top 5 are Ireland, Netherlands, Austria and Iceland. Surprisingly, Malta, which could count on an English-proficient labour force and privileged geographical position, facilitating trade in the Mediterranean area, occupies the bottom of the chart with a negative USD 4,414.4 per capita. This is due to the decline in tourism resulted from the 2008 worldwide crisis and the Libyan war.

In conclusion, EuCham focused this month Chart on FDI inflow figures to highlight its relevance to a country’s economic growth and its impact on society welfare. Benefits for the local population include increased employment opportunities and improved infrastructures.

Methodology

A positive value of FDI per capita represents an inflow of foreign investment in a country’s economy distributed among its residents, whereas negative values indicate withdrawn investments.

Table 1 has been created based on the values of the “Total Population” and “Foreign Direct Investment, net inflows” 2013 databases of World Bank (2014). For San Marino, Monaco and Liechtenstein data were not available.

Business focus: Foreign Investment in Europe

Migration has overflowed the political and economic debate over the past decades as the globalization of the job markets expands. However, its benefits, costs, issues and advantages are generally overlooked from a business perspective.

Undoubtedly, immigration has proven to be highly beneficial for businesses and for SMEs. Yet, a lack of governmental intervention on a global and national scale cause the frequent occurrence of some issues, of which illegal immigration is the most severe. It puts businesses at risk and make ethical enterprises be outcompeted by unethical organization, which can benefit by hiring illegal immigrants at lower costs thus unfairly providing cheaper services. Other issues include the difficulty to assimilate immigrants into the work culture and language barriers.

When considering a global expansion, countries with high immigration may be preferred due to their favourable conditions such as the provision of language and cultural knowledge that current staff might not possess. Moreover, the diversification of the workforce might foster innovation and protect from anti-discrimination laws.

Furthermore, skilled immigrants represent an under-tapped talent pool of highly flexible, adaptable and loyal workers, ideal for expanding businesses. Unskilled immigration can also be beneficial for the national economy and enterprises, by providing a steady supply of candidates to fill job openings often neglected by native people.

EuCham – European Chamber listed the European countries according to the migration rates, which indicates the difference between immigrants and emigrants of a country in a given year per 1,000 persons, based on data from Central Intelligence Agency (2014). As seen here by these metrics, SMEs could take advantage of the high migration inflows occurring in Cyprus, Luxembourg, Norway which by providing advantageous tax and bureaucratic laws attracting with immigration a stream of inflow capital which can ultimately stimulate the economy.

Table 1: FDI Net Inflows per capita USD

Rank	Country	FDI in USD	Population	FDI per capita
1	Luxembourg	30,075,373,593	543,202	55366.8
2	Ireland	49,960,134,752	4,595,281	10872.1
3	Netherlands	32,109,654,413	16,804,224	1910.8
4	Austria	13,843,770,472	8,473,786	1633.7
5	Iceland	468,688,707	323,002	1451.0
6	Spain	44,917,006,387	46,647,421	962.9
7	Portugal	7,881,591,922	10,459,806	753.5
8	Estonia	964,588,953	1,324,612	728.2
9	Montenegro	446,490,330	621,383	718.5
10	Germany	51,266,993,711	80,621,788	635.9
11	Cyprus	607,038,885	1,141,166	531.9
12	Norway	2,627,258,488	5,084,190	516.8
13	Russia	70,653,718,709	143,499,861	492.4
14	Czech Republic	5,006,911,507	10,521,468	475.9
15	Albania	1,253,783,309	2,773,620	452.0
16	Latvia	880,800,000	2,013,385	437.5
17	Slovakia	2,148,266,702	5,414,095	396.8
18	Denmark	1,597,210,042	5,613,706	284.5
19	Azerbaijan	2,619,437,000	9,416,598	278.2
20	Serbia	1,974,338,182	7,613,976	275.6
21	Greece	2,945,417,938	11,032,328	267.0
22	Bulgaria	1,887,670,064	7,265,115	259.8
23	Lithuania	712,435,949	2,956,121	241.0
24	Belarus	2,246,100,000	9,466,900	237.3
25	Italy	13,126,395,561	59,831,093	219.4
26	Georgia	949,335,750	4,476,900	212.1
27	Romania	4,108,000,000	19,963,581	205.8
28	Macedonia	376,454,351	2,107,158	178.7
29	Turkey	12,918,000,000	74,932,641	172.4
30	Croatia	588,376,068	4,252,700	138.4
31	Armenia	370,196,773	2,976,566	124.4
32	Ukraine	4,509,000,000	45,489,600	99.1
33	France	6,480,400,817	66,028,467	98.1
34	Bosnia & Herzegovina	315,018,539	3,829,307	82.3
35	United Kingdom	4,831,445,402	64,097,085	75.4
36	Moldova	249,040,000	3,559,000	70.0
37	Poland	-4,586,000,000	38,530,725	-119.0
38	Slovenia	-418,664,939	2,060,484	-203.2
39	Belgium	-3,268,505,983	11,195,138	-292.0
40	Hungary	-4,301,988,209	9,592,247	-434.7
41	Sweden	-5,119,205,196	9,592,552	-533.7
42	Finland	-5,296,740,409	5,439,407	-973.8
43	Switzerland	-8,179,472,592	8,081,482	-1012.1
44	Malta	-1,868,526,810	423,282	-4414.4

Sources: World Bank (2014)
EuCham Research Department – Compiled by Ms Mitsuko Takagi and Mr Luca Nazzicone 2015-02-27