Europe as a region presents itself as a formidable candidate for the study of FDI competition. First of all, Europe is the most dynamic region in terms of FDI activity, both as a host as well as home destination to global FDI flows. Second, the European FDI competition framework is arguably the most comprehensive and sophisticated in the world, and sufficiently long established to draw preliminary conclusions about its effectiveness. Third, the current and future process of EU enlargement enhances the study by adding a dynamic element due to the ongoing harmonization efforts between old and new member countries. This chapter will examine the first two issues in detail, setting the stage for the discussion of the third issue in Chapter 4.


Foreign Direct Investment Sectoral Distribution Privatization Program Investment Promotion Incentive Package 
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  1. 282.
    See UNCTAD (2003). In addition to inflows to the European Union (US$374,380 million) this includes inflows into Other Western Europe (US$10,011 million) and Central and Eastern Europe (US$28,709 million). See Annex Table A-5 for details.Google Scholar
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    See UNCTAD (2003). In addition to outflows from the European Union (US$ 394,146 million) this includes outflows from Other Western Europe (US$17,519 million) and Central and Eastern Europe (US $4,205 million). See Annex Table A-7 for details.Google Scholar
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    Although Luxemburg/ Belgium is technically the world’s largest inward and outward investor these flows consist mostly of transshipped investment, i.e., large matching in-and outflows through holding companies and other special purpose entities located in this country. The example serves as a reminder that aggregate statistics need to be interpreted with due diligence (see also UNCTAD, 2003, p. 69).Google Scholar
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