June 29, 2006 | posted by Michael Baxter in Uncategorized |

In France it’s a one-way street, but the Brits are just trying to be friendly. Last year, the UK topped the charts for the receipt of Direct Foreign Investment, says the OECD. In all, the UK was on the receiving end of 165 billion of FDI from OECD countries in 2005; that’s a massive jump from the mere $56bn the UK enjoyed in 2004.

Meanwhile, France, sat as it is behind its new Maginot line of business defence, was the world’s most active outward investor in 2005, with aggregate flows totalling 116 billion.

According to the OECD, the rise in FDI in the UK was due in part to the restructuring of multi-national firms, such as Royal Dutch Shell, and in part due to several large cross-border mergers and acquisitions, such as the takeover of Peninsular Oriental Steam Navigation Company by Dubai Ports World of the United Arab Emirates for USD 8.2 billion.

Actually then, considering some of the UK performance was down to restructuring of Royal Dutch Shell, then at least some of the UK performance was artificial. Even so, removing the Shell shenanigans, the UK was still top.

The OECD report also said that “outside the OECD area, China continues to hit new records. In 2005 its total FDI inflows reached USD 72 billion - their highest level ever, and world wide exceeded only by the United Kingdom and United States. Outward investment from China is also rising. Chinese official figures estimate the 2005 outflows at close to USD 7 billion. Outward investors appear to have broadened their interests from previously targeting the resource and raw materials sectors to investing in a range of high-tech activities as well.”

The UK and France might be neighbours but the channel separating them in terms of attitude to overseas takeovers is more like an ocean. The UK is now a paragon of openness, while France likes to play football on pitches with no goalposts in the French half; a tactic they have no doubt discussed as a possible winner against Brazil. From a national selfishness point of view, it’s debatable which approach is right. The French, with their mass unemployment and their love of CAP-style protectionism, obviously think their way works. The Brits, on the other hand, with the star economy of the Eurozone, believe that their openness, which brings with it a business culture more likely to learn from other ideas, is equally effective.

For further information

FDI into OECD countries jumps 27% in 2005 OECD