Despite grappling with major economic issues in 2010, not least the sovereign debt crisis, Europe still attracted 35% of global FDI projects in 2010 – more than the Asia-Pacific region. Western Europe attracted 21% of global FDI, while the 'Rest of Europe' region increased its market share from 11% of global FDI projects in 2009 to 14% in 2010.
In 2010, western Europe attracted 21% of global FDI projects, with 2514 projects investing an estimated $87.6bn of capital and resulting in the creation of an estimated 172,407 jobs. Greenfield FDI into western Europe declined across all indicators, with projects down 15%, capital investment down 28% and job creation figures down 25% in 2010.
The average project in western Europe was less capital- and labour-intensive in comparison with FDI in other regions of the world. The average project in 2010 had capital investment of $35m and created 69 jobs.
UK leading location
The UK, Germany and France remained the top three destination countries in Western Europe together attracting 55% of all FDI projects in 2010. However, FDI into these three countries fell, with projects into the UK down 11%, Germany down 39% and France down 17%. The UK attracted 748 FDI projects investing an estimated $20bn of capital investment and creating an estimated 49,856 jobs.
Despite the economic problems faced by Ireland in 2010, investors were still confident enough to invest in the country. The number of FDI projects into Ireland increased by 18%, with 147 projects in 2010. This made 2010 the best year for FDI projects into Ireland since fDi Markets records began in 2003. Ireland achieved a market share of 6% of FDI projects into western Europe in 2010. Dublin was the key location within Ireland, recording a 27% increase in FDI projects in 2010.
London and Paris the leading cities
Despite a decline in FDI into the UK and France, FDI into their capital cities increased in 2010 with the number of FDI projects in London up 8% and in Paris up 14%. London attracted a total of 241 projects in 2010, almost three times the number of its nearest rival, Paris. FDI into the UK’s capital involved a total capital investment of an estimated $3.9bn and the creation of an estimated 7496 jobs.
Zurich in Switzerland achieved a rapid increase in FDI in 2010, with the number of projects increasing by 64%. In contrast, the German cities of Frankfurt, Berlin and Düsseldorf experienced the largest nominal declines of all western European cities, with project numbers down 37%, 42% and 39%, respectively.
India involvement increases
In 2010, almost half of inward FDI projects in western Europe were by companies headquartered in the region. The US was the single biggest source country for FDI, accounting for 31% of FDI projects in western Europe in 2010.
While most countries invested in fewer projects in western Europe in 2010, a key exception was India, with Indian companies announcing 37% more projects in western Europe in 2010 than in 2009. India was the 11th leading source country for FDI projects in the region in 2010.
Rest of Europe partially recovers
After a 40% decline in FDI projects in 2009, FDI into the Rest of Europe region rebounded in 2010, with a 23% increase in projects, equivalent to 14% of global FDI in 2010. However, the 1662 projects attracted in 2010 is at pre-2005 levels. Furthermore, the average size of project fell in 2010, resulting in a 15% decline in capital investment figures and a 3% decline in job creation in the Rest of Europe.
Russia extended its lead as the top destination country for FDI in the Rest of Europe in 2010. Russian projects increased by 13%, with 366 projects, and accounted for 22% of FDI into the Rest of Europe. Overall, Russia ranked as the sixth leading destination country globally for FDI projects in 2010.
Last year was a positive year for most countries in the Rest of Europe, as FDI levels across the region started to recover after the major decline in 2009. Poland, the second leading FDI location in the region, had the highest absolute increase in FDI project numbers, with projects increasing by 34% in 2010. The leading sector for FDI in Poland in 2010 was the transportation sector.
FDI into Czech Republic grew even faster than in Poland (but smaller in absolute terms), rising 70% in 2010. Hungary and Lithuania also performed well with project numbers up 52% in both countries. Bulgaria witnessed the biggest decline in the Rest of Europe, with project numbers falling by 15% in 2010.
Moscow keeps top spot
Moscow remained the leading city for FDI in the Rest of Europe region, despite a 10% decline in project numbers in 2010. Warsaw in Poland and Budapest in Hungary became new entrants in the top five cities taking second and third place with project numbers increasing 115% and 81%, respectively, in 2010. The increase in projects into Warsaw accounted for 47% of the overall increase in projects into Poland in 2010. Brno in Czech Republic and Istanbul in Turkey also achieved rapid growth in FDI, with the number of projects up 367% and 37%, respectively.
Other than Moscow, other cities that had a decline in projects in 2010 included Kiev in Ukraine and Timisoara in Romania, with the number of projects falling by 33% and 60%, respectively.
While the majority of projects into the rest of Europe involved establishing new greenfield operations, the number of expansions of existing investments increased by 69% in 2010. As a proportion of total projects into the region, the share of expansions grew from 15% in 2009 to 21% in 2010.
The majority of FDI into the Rest of Europe was sourced from neighbouring countries in western Europe, which accounted for 60% of FDI projects in the Rest of Europe in 2010. Overall project numbers were up by 11%. However, the US overtook Germany as the world's leading source country with a 43% increase in FDI projects in the region. Turkey and South Korea also became more important source markets, with projects from these countries in the region increasing by 288% and 217%, respectively, in 2010.