The importance of outbound investment for the EU: how the European economy benefits from foreign direct investments outside of the EU

There is a long-standing debate in Europe about the security risks associated with incoming foreign direct investment (FDI), but there is currently also a nascent debate concerning legitimate security problems related to investments leaving the EU (outbound foreign direct investment, or OFDI). However, this debate is sometimes expanded beyond security to encompass a broader and more negative approach, based on the notion that ‘capital invested abroad is capital not invested at home’, which would imply that European firms should not engage in such activities.

The idea that investments made in countries outside the EU constitute a loss for the European economy is based on a flawed zero-sum view of the economy. The EU needs both incoming and outgoing investments, just as we need both exports and imports.

This report specifies the economic benefits gained from outbound investment for European firms and the overall EU economy. Data show that outbound investments strengthen our economy in multiple ways and that European businesses need them to be competitive. The report’s focus is on illustrating what is at stake if the EU were to move towards restricting such investments in the interest of coercing companies to invest in Europe.