After a big rise in FDI¹ between 1996 and 1997, 1998 brought further EU growth in this dynamic element of globalisation of international capital flows.

EU inward FDI flows more than doubled, reaching 94.3 bn ECU. And EU investment abroad reached a commanding 192 bn as European investors sought new opportunities.

These figures include flows of equity capital and inter-company loans but exclude reinvested earnings.

Data come in a report²  from Eurostat, Statistical Office of the European Communities in Luxembourg.

The inward rise was broadly based among Member States. In particular the UK attracted spiralling amounts of foreign investment – after 23 bn ECU in 1997, figures more than doubled to 49 bn in 1998. Substantial amounts also found their way into the Netherlands (28 bn) and France (25 bn).

FDI boost driven by links with USA

EU investors also stepped up their search for direct investment opportunities abroad. Most Member States targeted rising amounts of investment capital at foreign companies. This was particularly the case for German and UK investors. These countries saw foreign investment outflows soar respectively from around 32 and 34 bn ECU in 1997 to some 74 and 79 bn in 1998. France (34 bn) and the Netherlands (34 bn) also injected big sums into foreign enterprises.

The EU as a reporting entity vis-à-vis the rest of the world (ie excluding flows between Member States) recorded unprecedented high FDI activity. While 1997 was already marked by exceptional figures, the benchmark rose further in 1998. EU FDI flows to third countries more than doubled from around 94 bn in 1997 to a commanding 192 bn in 1998. One undoubted driving force was investment links with the US economy.