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The ESPON 2013 Operational Programme
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World FDI flows, 2011

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data source and more Map: ESPON Atlas; LLTK
Data sources: ESPON Database
 

  • Worldwide Foreign Direct Investment (FDI) flows are an important aspect of increasing economic interdependencies across nations and continents.
  • Most FDI from European countries is invested in Europe itself, North America or Africa. However, European FDIs are increasingly concentrated in neighbourhood areas. Proximity and history play a major role in global FDI flows.
  • A regional pattern can also be distinguished regarding foreign issuers on stock markets. Most firms whom wish to issue shares abroad select a stock exchange on the same continent. This holds true for Europe as well as for North America and most for Asian countries. However there are some exceptions, due to specialised industries or historical relations.

Observations for policy

FDI has been the motor of growth for many developing countries, especially for Central and Eastern European countries after 1990.

World FDI flows illustrate increasing interdependencies of global regions and put European countries in a global perspective. Globalisation has different impacts on European regions, due to the regional division of labour and economic specialisation of regions.

The map represents a global perspective on FDI. FDI facilitates the international division of labour. Transnational firms dominate these flows, positioning production activities in regions with the best available combination of available competences, regulatory and financial framework conditions and access to production inputs and markets. Major firms act on a global scale through the integration of global production networks. These firms shape their territorial relations through their location choices and their offshore strategies have important impacts on the development process at a regional level. The challenge for most regions is in most cases to reinforce the territorial embeddedness of large enterprises controlled by transnational companies.

These effects of globalisation do not merely happen on a global scale. Proximity, regional relations and history play a role as well. In relation to the FDI flows in terms of issuers who list their share on foreign stock markets, confirms the map the regional pattern of capital-raising globalisation. Most foreign firms issue their shares within their continent. To a large extent, European issuers prefer to get their shares listed on European markets. Especially firms from Northern and Eastern European countries issue their shares in other European countries. For instance, more than 75% of Scandinavian issuers who list their shares abroad have chosen a European stock market. As far as world-wide scale is concerned, the attractiveness of European stock markets prevails also for most Russian and African issuers. The large number of Indian subcontinent issuers who list their shares in Europe can be explained by large issuers on Luxembourg鈥檚 stock exchange, mainly in steel and mining industry. German stock markets have the most active foreign issuers.

Policy context

Globalisation and the heterogeneous impact on European regions is a major concern in European policies. The economic and financial crisis has made differences between regions in levels of global integration more clear. The Europe 2020 strategy was adopted to reinforce and enhance Europe鈥檚 position in the global economy. The strategy suggests that the European Union should focus on high technology and knowledge economy industries recognising the growing power of emerging economies in low and medium levels of technology.

The Territorial Agenda 2020 promotes the relation between global competitiveness and local economies. Economic competitiveness can be enhanced by the development of globally integrated economic sectors and strong local economies. The use of social capital, territorial assets, and the development of innovation and smart specialisation strategies in a place-based approach can play a key role. The global and local strands are mutually reinforcing and interlinked, and should therefore be developed in parallel to each other. Strengthening research, human capital, the capacity for innovation and bringing ideas to the market are essential.

Map interpretation

Different indicators illustrate world FDI flows. The map illustrates outward flows of Foreign Direct Investment (FDI) from Europe as share in the total FDI of other countries. Furthermore the main destinations of shares going abroad are illustrated by the main destinations. The flows of FDI show the position of Europe in the world, its attractiveness and the competitiveness of European stock markets.

Europe has a strong position in world FDI flows due to the size of its economy and its specialisation in both medium and high technological goods and knowledge intensive services. Most FDI flows are inter-European and North American countries remain the most important partners.

Europe has a central position in world FDI flows;

  • Europe accounts for 31% of inter-continental in or out flows of FDI;
  • 79% of all FDI are made between European countries;
  • European countries interact most with North American countries in terms of FDI, 15.5% of the European FDI flows goes to Northern America;
  • Japan and countries from the former USSR rank far below with 2%.

Concepts and methods

The map shows three elements related to world Foreign Direct Investments flows (FDI). First, the share of FDI from Europe as percentage of total FDI is illustrated per country in green. Second, this map points out the main listing regions of the issuers who list their shares abroad, according to their main headquarters, in other words the destinations of foreign firms listed in stock markets, which are illustrated in red. This is done per trade bloc; besides Europe, the NAFTA in North America is shown and the ASEAN in Southeast Asia plus China, South Korea and Japan. Third, the number of active issuers in stock markets is illustrated by the size of the circles. The circles are a proxy for incoming FDI, highlighting the percentage of European stock markets chosen by firms in their selection of places to list their shares.


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