ANALYZING THE CONTRIBUTION OF FOREIGN DIRECT INVESTMENT TO THE FORMATION OF INVESTMENT POTENTIAL OF EUROPEAN COUNTRIES

Abstract

The paper analyzes the importance of foreign direct investment in the formation of investment potential of European countries. It describes the changes in the volume of foreign direct investment in many European countries, such as Ireland, Switzerland, Germany, Spain, the Visegrad Group countries (Czech Republic, Hungary, Poland and Slovakia). The paper includes analysis of the inflow and outflow of intra-regional foreign direct investment within the EU during the period 2016-2018. The authors divided the inflow of European foreign direct investment during the period 2003-2015 into four main stages, which have their own characteristics and differ significantly due to the financial crisis of 2007‑2009. The paper highlights a clear tendency for non-European FDI to flow to large and economically mature countries. The top five countries in terms of GDP (Germany, the United Kingdom, France, Italy and Spain) account for almost 60 percent of total extra-European FDI flows to Europe between 2003 and 2015 (51 percent of Greenfield and 61 percent of M&A). The study shows that there are common factors increasing the attractiveness of European countries to foreign investors.