The World Economic Forum in Davos ended with a general consensus that although the worst of the global economic crisis is behind us, signs of recovery are fragile and collective action is still essential. The primary concern in 2010 is employment. According to Larry Summers, the United States is experiencing a “statistical recovery and a human recession.”
French Finance Minister Christine Lagarde was the keynote speaker at the Davos luncheon co-sponsored by the IFA and Deloitte
“Statistical recovery” ? Certainly not for foreign direct investment (FDI). According to UNCTAD estimates, global FDI flows plunged 39% in 2009, following a 14% decline in 2008. Merger and acquisition activity appears to have taken an even harder hit, with a 66% decrease in 2009, after a 35% drop in 2008.
Productive investments remain steady
Statistics relating to international financial flows fail, however, to depict how well productive foreign investments have held up. These are job-creating projects identified, supported and recorded by foreign investment promotion agencies.
Numbers of productive foreign investment projects have remained high over the past two years. France secured 12 new investment projects each week in 2008, a figure which remained unchanged from 2007. In 2009, the IFA identified more than 1,000 potential new foreign investment projects in France, which is on par with figures for 2008.
The French economy is holding up well
Will France emerge from the recent turbulence as an even more attractive investment location? According to the Ernst & Young report on foreign investment published last Spring, foreign investors see Europe as a safe destination. The report also noted that France, Europe’s second leading recipient of foreign direct investment, had proved itself to be dynamic and responsive over the last two years, and that the country has what it takes to turn the attractiveness of the European market to its advantage.
Joseph Stiglitz at the IFA / Deloitte luncheon in Davos
During a discussion with executives from North American, European and Asian companies based in France, Joseph Stiglitz pointed out that the French economy’s ability to weather the global economic crisis was a strong point in favor of its attractiveness to investors in the current climate.
Stability and visibility are their central concerns. On this note, French reforms to bolster economic and corporate competitiveness, and a forward-looking national investment strategy, are giving France a head-start at a time of geographic and industry restructuring.
The IFA’s “2009 Report on Foreign Direct Investment in France”, to appear in early March, will provide an assessment of France’s position in the increasingly fierce competition between European countries and regions to attract investments, jobs and expertise.
