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News : Irish Economy Last Updated: May 26, 2014 - 11:04 AM


FDI 2013: Greenfield investment projects in Europe fell - Ireland in top 10
By Michael Hennigan, Finfacts founder and editor
May 23, 2014 - 8:29 AM

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FDI 2013: The number greenfield investment projects in Europe fell in the year and Ireland remained in the top 10.

The term 'greenfield' covers new projects in a country and new investments such as an extension to a factory or significant new investment such as at Intel Ireland.

fDi Intelligence, a unit of the Financial Times, tracks foreign direct investment projects that are announced and doesn't include mergers and acquisitions or other equity-based or nonequity investments.

For example, the American Chamber of Commerce in Ireland issued a report that claimed: "In the past half decade, US firms have invested more capital in Ireland than in the previous half century."

Despite a claim of new investment of $129.5bn in the period 2008-2012, only 3,300 permanent net jobs were added by US firms in Ireland - -  so there is a lot of opportunity for fairytales.

Reuters reported last year that at a conference in Dublin the head of Ireland's largest bank gave small business leaders the "15-second elevator pitch" he gives to US executives when he is in New York or Boston.

"I've mentioned to US investors that US companies have more capital invested in Ireland than they do in Brazil, Russia, India and China put together," said
Richie Boucher, chief executive of Bank of Ireland.

Richie Boucher should get his facts from Finfacts!

The chart here shows that jobs in FDI exporting firms in Ireland in 2013 were below the level in 2000 -- 13 years ago -- despite a 22% rise in the overall size of the workforce.

'The fDi Report 2014' [pdf; available free after registration] shows that inward investment projects to Ireland in 2013 were valued at $4.2bn and updating project count data from 2012, the total number of projects was at 157.

The report says that the interesting story may be that while FDI in most emerging economies fell slightly in 2013, the greater part of the increase in foreign direct investment in the same year originated from the medium and small sized emerging and frontier markets.

fDi says that FDI into Europe declined in 2013, falling 12.08% to $137.26bn on the back of a 6% decline in project numbers to 4,166. The UK remains the leading destination for FDI in Europe, with 796 projects recorded at a total value of $26.51bn, accounting for almost 20% of FDI in the region. Turkey continues to increase its market share, accounting for 6.69% of total FDI in Europe with $9.19bn-worth of projects announced in 2013. This increase has pushed Turkey up the European rankings table to fourth from seventh in 2012.

Western Europe was the top source (outward) region for FDI in 2013. It accounted for 34.94% of all announced outward FDI in the year and also experienced a 10.38% increase on 2012. However, fDi says the number  of FDI projects from the region decreased in 2013, by 3.48% to 5,269. Total estimated FDI from western Europe, excluding intra-western Europe FDI, increased 13% on 2012 to $176.4bn.

In terms of European FDI projects, none of the top 10 countries recorded a growth in project numbers in 2013, with the exception of Ireland (0.68%). Germany climbed three places to fifth position in regards to the number of jobs created in Europe with FDI in the country creating 23,836 jobs in 2013, an increase of 33.62%.

The headline global finding of the report is that greenfield FDI started to recover in 2013 with a 10.94% growth in FDI from $557.58bn in 2012 to $618.62bn. The growth in greenfield capital investment by foreign investors in 2013 exactly matches the growth in official FDI flows, with the UN Council on Trade and Development (Unctad) recording 11% growth in FDI flows in 2013 with $1460bn of FDI.

While the report says data on greenfield FDI and general FDI flows (which include M&A and other types of investment) are methodologically quite different, the 11% growth recorded in both measures of FDI indicates a high level of confidence that growth has resumed in both longterm capital flows and productive investment by foreign investors.

The growth in FDI in 2013 was, however, unevenly distributed across regions of the world. Latin America and the Caribbean was the best performing region when it comes to growth in FDI, with a doubling in 2013 to $139.81bn. More than half of the absolute increase in FDI in Latin America and the Caribbean was accounted for by a $40bn infrastructure project announced in Nicaragua by a Hong Kong-led consortium. The Middle East recorded the second largest increase in FDI in 2013 with $46.8bn of greenfield FDI, 43.68% higher than in 2012. Africa also recorded growth in FDI of 10.76%, reaching $51.98bn in 2013. North America recorded a slight decline in FDI in 2013 (a 1.36% fall) while FDI in Asia-Pacific fell by 4.67% and in Europe declined by 12.08%. Overall, Asia-Pacific and Latin America and the Caribbean attracted the highest volume of FDI in 2013.

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