Germany profits greatly from international economic integration. One expression of these strong ties is German direct investment abroad, which has increased sixfold since 1990 to about €0.9 trillion (2013) (the comparison with 1990 can only be estimated, after the statistical method was modified in 2015). Via investments in almost 35,000 companies, German industry is responsible for about 6.7 million jobs abroad. The foreign turnover this generates (2013: €2.4 trillion) is more than double the value of German exports (2013: €1.1 trillion) (source: Deutsche Bundesbank). Direct investments by German companies abroad open up new markets and thus ensure that German industry remains competitive. Foreign direct investment also helps to establish high social standards and health and safety norms in less developed countries.
Foreign investment in Germany: Driver of employment and prosperity
In Germany, foreign investments are a driving force for growth, prosperity, and jobs. Through such investments, foreign companies operate production facilities and strengthen their business relationships with German partners. These investments create and secure jobs. For example in 2012, a Chinese engineering firm took over a financially troubled German company. This preserved jobs in Germany and the Chinese company was able to expand its presence in the German market.
Figures from the German Bundesbank demonstrate the importance of FDI for the German economy. In 2013, cumulative foreign direct investment in Germany amounted to €458 billion. These investments involve about 15,000 companies in Germany and responsible for about 2.8 million jobs. In 2013, foreign investors produced a turnover of €1.5 trillion on Germany.
However, globally, the volume of direct investment flowing into the industrialized countries is declining, while the growth markets in the major emerging economies are growing ever more attractive. In 2000, about 19 percent of global investment went to developing countries and emerging economies; by 2014, the figure had risen to 56 percent.
Securing freedom of investment and open markets with International Investment Agreements (IIAs)
Foreign investments by German companies need to be secured against political risks. BDI therefore wants to see a high level of protection in future IIAs. The object is to guarantee freedom of investment and secure open markets. At the same time, such agreements must safeguard the state’s right to regulate in the public interest.
For an explanation of IIAs and how exactly they protect foreign direct investments, please read the article: IIAs for Effective Protection of Foreign Direct Investment.