FDI in France and Germany

John Snow obviously had had sight of the document ( and here pdf ) when he went round lecturing us that Europe may become a non-favoured environment for US FDI:

Foreign investment in France and Germany fell sharply in 2004, reinforcing concerns that inflexible labour practices and weak domestic demand are driving investors elsewhere.

In France, inward investment almost halved from $43bn (?35.44bn) to $24bn, according to figures released yesterday by the Organisation for Economic Cooperation and Development, the group representing the world?s most industrialised countries“.

But as much as the facts, the reasons behind the facts are interesting.

Mark Zandi, chief strategist at Economy.com, the consultants group, said the data showed US companies the main source of direct investment funds in 2004 were spending their cash piles mainly on Asian investments.

?US companies are attracted to Asia partly because the currencies remain competitive, but also as low cost bases for production destination and as growing markets in their own right,? he said.

Actually there is little realistic way that the EU or the US can reasonably expect to compete with China for FDI on China’s own terms, we both have to find another way.

This entry was posted in A Few Euros More, Economics and tagged , by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

2 thoughts on “FDI in France and Germany

  1. scary.
    we’ve got a problem, what about our “comparative advantage” if our investment and technology (as soon as invented) are going away ? i have some real difficulties with Rocado’s theory in this world without frontiers.

    Edward, Do you know why there are more FDi in china than in India ? because it’s look like we outsource in India and invest in china .

    democraty is bad for business ? is it cultural ?
    I really enjoyed your theory about the reason why India is a IT giant, very clever.

  2. Physical production cost more in investment than outsourcing. Atleast according to the accountant.

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