Analysis of developments in the field of direct investment and M&A - 2013 final report : Part II: Foreign firms' contributions to EU economic performance

In the years up to the onset of the global financial crisis in 2008, financial globalisation accelerated and eventually peaked. Among other measures, inward foreign direct investment flows into the EU27 increased over sevenfold from close to €60bn in 2004 to over €430bn in 2007. Over the following three years, these trends went into sharp reverse. Foreign firms play a key role as conduits for foreign direct investment. Through receipt of these investments, foreign firms are enabled to undertake activities that benefit the host economies in which they reside. These benefits arise particularly in the form of investment, employment generation and the creation of value. However, foreign firms can equally be conduits for disinvestments and reductions in these economic indicators in the face of challenging economic circumstances. The goal of Analysis of developments in the fields of direct investment and M&A - 2013 (Part II) is to assess, empirically, how resilient foreign firms have been in the EU over the global financial crisis; and, how they have fared relative to domestic companies with similar attributes, in reaction to the economic contraction.