Why is the UK the TOP Destination for Foreign Direct Investment (FDI) Essay

Why is the UK the TOP Destination for Foreign Direct Investment (FDI) in the European Union - Essay Example The United States yet maintains to be the forerunner amongst the investors into the UK alongside Germany, Japan, India and France. The recently published World Investment Report, nowadays by the â€Å"UNCTAD† (Green 2011) illustrates that the UK is one of the most favored nations for FDI in European Union and third globally. According to the report published by UNCTAD, the stock of FDI in the United Kingdom is $US 1,086 billion of FDI stock. This report strengthens the position of the UK as one of the most attractive business destinations of the world. Susan Haird, acting CEO of UK Trade & Investment talking about this report said that this report strengthens the attractiveness of UK’s Foreign Direct Investment. Significant potential future Foreign Direct Investment gains are likely from further incorporation, particularly subsequent successful liberalization of services organizations. The long-term FDI cost of withdrawal would be significant. EU Impact on UK FDI: UK ha s been capable to attract comparatively more FDI than a number of other European financial systems as a consequence of market incorporation. As a percentage of GDP the UK also catch the attentions of more FDI than the United State. UK Trade & Investment has played a significant role in promoting UK as an attractive FDI location to the overseas investors and to come them to the UK for investment. â€Å"Worldwide, most FDI is between Organization for Economic Co-operation and Development (OECD) countries. The USA accounts for just under a quarter of global FDI, outward and inward† (Milne 1999). Worldwide, the United Kingdom is the second largest outward depositor and the third largest receiver of inward investment. In the year of1998 and 1999 outward British Foreign Direct Investment was alike in value to outward United State Foreign Direct Investment. The UK, with stretchy labor marketplaces and a tradition of physically powerful incorporation into worldwide FDI flows would be well-placed to catch the attention of an important share of future FDI flows, mainly in high- efficiency knowledge- rigorous businesses. The World Investment Report demonstrates that, the UK has outperformed a declining European marketplace, the share of UK’s FDI stock enlarged â€Å"while the overall stock of FDI in Europe declined to $7,614 billion from $7,951 billion† (UK is Europe’s Top Destination for Foreign Direct Inward Investment 2011) in the year of 2009 and that in the European Union fell to $6,890 from $7,296 in the year of 2009. According to the report, 46% of the investors are faithful to the United Kingdom, which helped attracting repeat business. Now, it is very much necessary for the government of UK to focus more on attracting new shareholders from BRICs. Infrastructure and Technology, quality of life and constant financial environment, customs and language are cited as the key characteristics that made the UK more attractive for the investors . â€Å"The UK attracted 728 FDI projects in 2010, up 7% on 2009, compared with 562 projects in France and 560 in Germany — whose projects rose by 34%, bolstered by its position as the number one location for Chinese investment.† (Destination UK: Sustaining Success in the New Economy 2011). This denotes that since in the year of 2004, the UK has been chosen as the site of choice for around one in five of every investment announcements crossways Europe. Why UK has been Successful in FDI: FDI brings various advantages to the UK financial system such as rising employment and productivity, inspiring competition, and rising efficiency.