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Foreign Direct Investment or FDI is a kind of international investment made with the intention of acquiring an ever lasting financial interest in an economy. If done strategically then this kind of direct investment can really bring huge benefits to investors. The importance of liberalization has made many countries to open up their economies. Considering this in mind, one continent which has really banked on this is Europe and the formation of European Union only corroborates this fact. The integration of 27 countries in Europe has really made it one of the most preferred destinations in the world for investment.
The European Union views FDI not as a mere sense of investment but also a way of promoting economic and social growth and development. The investment policy of the European Union is tilted more towards providing investors with a kind of stability and legal certainty coupled with an environment conducive to carry out business and in accordance with the International rules. It has abolished all the trade barriers that were acting as a hindrance for free trade. Furthermore, the European Union has also adopted a common currency which has served as a major fillip towards increasing trade in the European Union.
Just as it has good legal policies which encourage foreign investment, in the same way the European Union is also gifted with large natural resources. It has huge reserves of oil and natural gas and coal. Thus, it has a good blending of resources that really work in the advantage of doing business than any other part in the world.
The other major thing that makes the European Union unique from other destinations is the diverse booming industries in various countries within the EU. There is no such sector in the EU where you can’t invest. Every industrial sector in EU has room for expansion and is in the need of foreign investment.
The services sector forms the core of the European Union as it accounts for a major chunk of the entire Economy of the EU. Some of the key sectors worth investing in the European Union are Aerospace and Defence, Automotive, Biotechnology, Information and Communication Technology (ICT), Nanotechnology, Nuclear, Logistics, Engineering, Real Estate and many others.
As the European Union is a host of comprehensive range of countries, it has really become one of the best destinations for investing in the Real estate sector. The diverse property opportunities across the Union and the well established rental markets have already attracted loads of foreign investors. Bulgaria, Croatia, Hungary, Czech Republic, Poland, Romania and Turkey are the hottest destinations for investing in Real Estate.
According to the International Monetary Fund (IMF), the EU is the largest economy in the world and has a total Gross Domestic Product (GDP) of $16,447.26 billion. The European Union has always been known for its investor-friendly policies since the early 80s. In the year 1992, the European Union alone accounted for more than 50% of the foreign investment worldwide. Such is the intensity of foreign investment in EU that the ratio of foreign investment to domestic investment also saw an increasing trend in the past two decades. The FDI inward inflows of the European Union accounted for a whooping 62.2 billion Euro in the year 2004 whereas the outward FDI flows of the EU accounted for a mammoth 114.9 Euro in the same year.
As far as trade is concerned, the various economic policies of the EU really make it one of the best trading destinations in the world. This is evident from the fact that the European Union is the largest exporter as well as largest importer in the entire world. The EU exports large amounts of Machinery followed by energy, Chemicals and Transport Equipment and textiles clothing. Other commodities that are exported by the EU include dairy products, meat, iron and steel, wood pulp, paper products, alcoholic beverages, pharmaceuticals, motor vehicles, air craft, plastics and paper products. Machineries also account for large number of imports of the EU followed by Transport equipment and chemicals, plastics, crude oil, textiles, metals, clothing, vehicles and aircraft.
Despite the global financial meltdown, European Union is showing a speedy recovery and EU’s economy has started showing an upward trend. According to the commissioner of the European Union, the GDP of the European Union is expected to grow twice as predicted in the year 2011. The GDP of the EU is expected to grow by a 1.8 percent than the predicted 1 percent with Germany having the largest jump of 3.4 percent.
The European Union Commission has come up with a proposal with a strategy known as the Europe-2020 Strategy to help the EU recover to economic growth at a faster rate. For this, the Directorate-General for Economic and Financial Affairs in its report has analysed the bottlenecks that may come against this growth and also highlighted the need to address the issues hindering the economic growth of the Commission. The monetary policy of the EU is no longer restrictive and businesses can once again gain free access to credit and other business activities.
To conclude, the European Union is really one of the most important destinations which should not be overlooked by investors who want to expand their reach across the world. Its exuberant natural resources and ever increasing sectors really make it one of the most preferred destinations for investment in the world today.
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