European Economy. Economic Papers. Germany's growth performance in the 1990's

Table 3.6: The importance of FDI of major industrial countries
Direct investment abroad
USD Billion
% of exports
% of GDP
1984-89
1990-95
1984-89
1990-95
1984-89
1990-95
France
52.5
101.8
4.9
5.5
1.1
1.3
Germany
56.9
138.1
3.2
4.6
1.0
1.2
Japan
192.6
262.2
13.0
11.0
1.5
1.1
UK
145.2
149.7
15.1
9.7
3.8
2.4
USA
126.5
330.1
5.9
8.5
0.5
0.9
Source : Deutsche Bundesbank (1997b), p.67.
The geographical distribution of the origins of flows to Germany has been broad, but only a
handful of countries hosted investors making significant direct investment in Germany (see
Table 3.7). Among these origins were the UK, France, the Netherlands and Belgium-
Luxembourg in Europe and the US in the rest of the world. Important flows in a number of
consecutive years were reported especially from France in the first half of the 1990s and from
the UK in the second half. Flows from the US were subject to major shifts in size with positive
inflows of more than 1 billion euro only displayed in three years (1995-6, 1998) in the 1990-98
period covered by the OECD data.
A look at Table 3.7 of the countries of origin in selected years highlights the importance of
flows from the UK, Belgium-Luxembourg and the Netherlands in the chosen years. While the
latter could suggest that vicinity matters a lot, the rather tiny flows from Austria and
Switzerland provide counter-evidence.
Among the countries outside the EU it is mainly the U.S. economy from which FDI flows
originated. As Table 3.8 indicates substantially more than half of the direct investments received
by the EU from the rest of the world came from the USA. However, the German share in these
inflows has been relatively small with regard to the sheer size of the German economy.
Although the sharp shifts in shares displayed in the table advises not to put too much emphasis
on the figures, it appears astonishing that Germany attracted such a small share in the total, but
such a large share in flows from neighbouring Switzerland. Again, this could suggest that apart
from other motivation vicinity plays a key role in direct investment decisions.
In terms of sectors services related investment dominated the flows, accounting for the major
part of the allocated flows (see Table 3.9). While flows from abroad to the primary sector were
negligible, manufacturing reports only modest inflows, but strong changes in sectors displaying
positive inbound flows. Within the service sector real estate and business activities have
recorded the largest inflows, whereas financial institutions report substantial inflows only in few
selected years suggesting that single transactions matter a lot for these time series.

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