Interesting times are coming regarding the shifting of foreign direct investment project directions in Europe, since the UK is leaving the EU, CEE countries will have to ensure the demand of highly educated specialist and new countries are standing on the EU threshold.
According to the database “fDi Markets”, in 2017 foreign direct investment (FDI) projects and the number of jobs created decreased world widely. FDI projects fell by 1 percent (to 13.200) and were at the lowest since 2013. The number of planned workplaces dropped significantly – even by 9 percent.
Meanwhile, favorable investment trends prevailed in the EU, with both – projects and planned jobs growing. FDI projects grew by 5% and planned jobs increased by 17 percent (to 460 thousand). These results indicate that investors appreciated the positive signs of the EU economic recovery and confidence in the EU as the market grew. As usual, most Western European countries – the UK, Germany and France – attracted the most attention of investors, bringing together almost half of all FDI projects in the EU.
Taking into account the planned jobs of FDI, in the first place was Poland with 87 thousand job places. Romania was in second place with 61 thousand and the United Kingdom ranked third (planned 60 thousand job places). However, having in mind the size of the country, Luxembourg and Ireland were leading the way in the number of FDI projects per million inhabitants of the country.
At the same time, the states of Central and Eastern Europe (CEE) climbed on the heels of these countries, meaning that the volume of FDI projects in this region was higher than in Western Europe. Lithuania has been a leader among the Central and Eastern European Countries for several years in a row. Moreover, Lithuania is in top 5 EU countries in attracting foreign investments.
In general, success of CEE countries can be explained very simply: investors in this region usually choose to implement labor-intensive projects (especially in the manufacturing sector) and Western European countries are more attractive to develop complex FDI projects, which usually requires much smaller employment. This trend when CEE region in the EU stands out as a competitive advantage for small cost of employment in the near future may become an inadequate motive for investing in these countries. The main reason – the growing use of new technologies (robotization, artificial intelligence, the Internet of Things, etc.) in different sectors. The competitive aspect for FDI will be: skills and competences required for development and application of new technologies.
Despite excellent UK performance in attracting FDI projects, it was possible to notice the first signs of the impact of the Brexit process, weakening the United Kingdom, especially London’s position as an FDI megapole. Since the official announcement of leaving the EU membership, companies suspended their planned relocation or development in UK. Some companies (like Citigroup, JP Morgan, BMW, and Ford) important for the UK economy have already announced about considerations to switch UK to another EU countries.
*Prepared according to “Invest Lithuania” information.