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.
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.
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.