Ernst & Young: FDI Up to Pre-Crisis Level, Job Creation Still Low
A recently published European Attractiveness Survey by Ernst & Young reveals that although Estonia last year was again as appealing to foreign investors as it was before the downturn, the number of jobs created through FDI projects remains low.
In total, 21 new projects shouldered by foreign direct investment were launched in Estonia in 2011. In Lithuania the figure was significantly higher – 29 – while in Latvia it was 14, the survey shows.
Ivar Kiigemägi, board member of the Ernst & Young Baltics, said that considering the population of the three Baltic States, the number of projects initiated per capita was the highest in Estonia.
Nevertheless, the number of jobs created through those projects in Estonia remains significantly low – 299 – compared to, for instance, Lithuania where the figure stood at around 1,500. The number of new jobs created in Latvia was even lower - 85, Kiigemägi said.
Kiigemägi, however, remains positive, saying the country has done well and the interest of foreign investors has significantly increased compared to the recent recession period.
Compared to other European countries, however, Estonia’s situation is not as rosy, said Kiigemägi. The survey shows that Estonia dropped three places to 29th for the number of new FDI projects initiated last year. In addition, the country went from 25th to 30th in the rankings for FDI job creation.
According to Kiigemägi, both Western Europe and the Central and Eastern Europe regions are still among the most attractive foreign investment destinations in the world, yet compared to 2006 their attractiveness has significantly dropped – 2.1 and 2.5 times, respectively.
"Central and Eastern Europe, including the Baltic States, have started to lose their shine. The main factors of influence have been the volatility of the Eastern Europe economic indicators, side effects of the Eurozone crisis and high debt level," said Kiigemägi, adding that the nations in that region not only compete with neighboring countries and Western Europe, but also nations such as Brazil, Russia, India and China.
The most popular destinations for foreign investors in Europe were England, Germany, France and Spain last year, while the main investments came from the US, Germany and England. The total number of inbound investment projects in Europe rose by 4 percent and FDI job creation was up 15 percent last year compared to 2010, said Lili Kirikal, senior consultant at Ernst & Young.
Ingrid Teesalu