Some interesting data regarding the European Commission member states' investments patterns were revealed this week. The figures, published by Eurostat, the statistical office of the European communities, come from foreign direct investment results for 2007 and revised data for 2006. Foreign direct investment (FDI) is the category of international investment that reflects the objective of obtaining a lasting interest by an investor in one economy in an enterprise resident in another economy. The lasting interest implies that a long-term relationship exists between the investor and the enterprise, and that the investor has a significant influence on the way the enterprise is managed. Such an interest is formally deemed to exist when a direct investor owns 10 percent or more of the voting power on the board of directors (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise). FDI flows presented here include reinvested earnings. In comparing 2007 and 2006 data, it should be kept in mind that 2007 data are preliminary estimates, while data for 2006 are semi-final. To begin with, European investment in the world was up 50% in 2007, while investment inside Europe was up 90%. FDI in non-EU countries (outflows) was â‚¬420 billion in 2007, up 53% from â‚¬275b. in 2006. FDI into the EU from the rest of the world (inflows) was â‚¬319b. in 2007, up 89% from â‚¬169b. in 2006. Foreign direct investment within the EU by its member states rose by 13% in 2007 compared with 2006. It is noteworthy that there is a statistical discrepancy between intra-EU inflows and outflows for both 2006 and 2007. The annual rate of change has been calculated based on the average of inflows and outflows. In 2007, the EU invested â‚¬113b. in the United States and â‚¬58b. in Canada, compared with â‚¬79b. and â‚¬30b., respectively, in 2006. EU investments in offshore financial centers (OFC) rose from â‚¬50b. to â‚¬84b. OFC is an aggregate of 38 countries used in Eurostat FDI data. It includes, among others, Liechtenstein, Guernsey, Jersey, Isle of Man, Faroe Islands, Andorra, Gibraltar, Panama, Bermuda, Bahamas, Cayman Islands, Virgin Islands, Bahrain, Hong-Kong, Singapore and Philippines. Investments grew in Switzerland (from â‚¬23b. to â‚¬34b.), Russia (from â‚¬11b. to â‚¬17b.) and India (from â‚¬3b. to â‚¬11b.). The US invested â‚¬145b. in the EU in 2007, up from â‚¬74b. in 2006. Investments in the EU from offshore financial centers also increased (from â‚¬30b. to â‚¬98b.), as they did from Switzerland (from â‚¬18b. to â‚¬29b.), Japan (from â‚¬14b. to â‚¬18b.) and India (from â‚¬1b. to â‚¬10b.), while Canadian investment remained stable at â‚¬9b. European foreign direct investment flows with China (excluding Hong Kong) remained modest in 2007, with EU investment of â‚¬2b. in China and Chinese investment of â‚¬1b. in the EU. UK main actor in extra-European FDI The United Kingdom, with outflows of â‚¬121b. (a 29% share of the EU total) was the largest investor outside the EU in 2007, followed by Luxembourg (â‚¬78b., or 19%) and Germany (â‚¬52b., or 12%). Regarding inflows from outside Europe, the UK, with â‚¬87b. (27% of the EU total), was the main recipient of foreign direct investment, ahead of Luxembourg (â‚¬50b., or 16%) and France (â‚¬23b., or 7%). The role of Luxembourg in EU foreign direct investment is mainly explained by the importance of its financial intermediary activity. In 2007, the EU was a net investor in the rest of the world, with outflows higher than inflows by â‚¬101b. (0.8% of GDP). In 2006 outflows were also higher than inflows by â‚¬106b. (0.9% of GDP). Among the member states, Germany was the highest net investor outside the EU in 2007, with a difference of â‚¬50b. Ireland, with inflows higher than outflows by â‚¬15b., was the largest net recipient of foreign direct investment from outside the EU. France main investor inside EU France (â‚¬125b.), Germany (â‚¬71b.) and Italy (â‚¬64b.) were the main investors inside the EU in 2007. The main recipients of investments from other member states were France (â‚¬86b.), the Netherlands (â‚¬67b.) and the UK (â‚¬49b.). [email protected] Ari Syrquin is the head of GSCB Law Firm's International Department.