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Compact and
Complementary —
Europe's Continued FDI Appeal

by Julia Cox


urope enjoyed a return to high levels of foreign direct investment in 2004 (over US$250 billion, including non-EU figures) and remains the most attractive global zone. According to Ernst & Young's European Investment Monitor (EIM),
researched and powered by Oxford Intelligence, FDI is increasingly driven by European cross-border investment, with the U.K. remaining the dominant location in 2004, followed by France, Germany and Poland.
      Fears that the inclusion of Central Eastern European Countries (CEE) into the European Union (EU) would provoke a dramatic shift from West to East have not materialized, as both have followed the investment strategies that best suit their strengths.
      Marc Lhermitte, a partner in Ernst & Young's International Location Advisory team, believes that Eastern and Western Europe combine to make a focused geographical area — which makes the region as a whole an extremely attractive investment location.
      "Europe is compact and complementary when you look at the whole — from the Atlantic Ocean to the western part of Russia," he says. "The longest flight only takes three hours, compared to the U.S., where you would only get from New York to Dallas or Denver. This is very important when considering access to capital and centers of innovation."He also says Europe remains a viable zone for investment because of its market size and a diversity that cannot be found anywhere else in the world.
      "Companies can produce goods in CEE for Western Europe — one of the richest markets in the world, and they are only two hours' flight away from this market."

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