IZMIR UNIVERSITY of ECONOMICS

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1 IZMIR UNIVERSITY of ECONOMICS Department of International Relations and the European Union TURKEY EU RELATIONS ( EU308) FOREIGN DIRECT INVESTMENT IN THE EUROPEAN UNION AND TURKEY Prepared By: Büke OŞAFOĞLU Derya GÖKÇE Noyan ÖZKAN Nil GÜLDEREN Burcu YAMAN Submitted To: Asst. Prof. Dr. Işık GÜRLEYEN Spring, 2008

2 THE DIFFERENCES IN FDI PERCENTAGES BETWEEN THE EUROPEAN UNION COUNTRIES AND TURKEY INTRODUCTION The European economy has been changed since the 1980s by the changing in the world trade. The most significant actor in the determining of the economies is the foreign direct investment in countries and also out of the countries. By becoming more integrated, the relations between the member states and also with other developed states has been improving. Foreign direct investment means the transfer of tangible and intangible assets. It has expanded rapidly and helped to capital movements by removing the national barriers. FDI can be in two ways; inward or outward. Globalization, innovations and privatization have important impacts on FDI in Europe. Moreover, the GDP levels, unemployment rates and economic performance of country like the export and import and the FDI are related issues and they are in interaction. Also, Turkey has an important role in Europe economy. And the concept of FDI is also the determinant of the Turkish economy. The European Union has been enlarged by years since it was established. Enlargement of European Union means the joining of new states and also it means the increasing of trade and new markets. This affects the whole world. The European Union has now 27 members. These member states are Luxembourg, Belgium, the Netherlands, Germany, Italy, France, Denmark, the United Kingdom, Spain, Portugal, Austria, Sweden, Finland, Ireland, Czech Republic, Slovakia, Slovenia, Hungary, Lithuania, Latvia, Estonia, Poland, Greece, Bulgaria, Cyprus, Malta and finally Romania. These members have different economic features and they are affected differently by the years. We collected the facts and figures about the FDI percentages and related indicators like unemployment rate, GDP levels and export and import levels in the European Union member states and in Turkey. The results will be interpreted through the light of the 1

3 differences between the countries by following years. Each member states were affected seriously by joining the EU. THE EUROPEAN UNION COUNTRIES, TURKEY AND FDI According the World Investment Report 2007 by the UNCTAD, the years from 2000 to 2006 will be taken as example years for comparing the countries. When we look at the percentages in general there is a decrease in FDI outflows and inflows since The main investors in the members are Germany, the United Kingdom, France and the Netherlands. The Netherlands average FDI inflow percentage in the periods is about Until 2006 there has been an increase in the percentages. In 2005 it was nearly But in 2006 there is a sudden decrease and the percentage is 3.3. The outflow is higher than the inflows in the period of In 2005, it rose to the highest degree, 117%; however, in 2006, it turned to normal and even under the year In contrast to the FDI levels, the GDP and the unemployment rates has increased between 2000 and Fortunately, the unemployment rates decreased in 2006 and 2007 and the final rate is 3.2. The export has increased from $233 million in 2000 to $462 million in 2006 and accordingly the there is an increase in import from $218 million to $416 million. The Netherlands is a founder member of the European Union. For that reason, it has been developed for years and the economic indicators are in good level although sometimes there are negativeness. Italy also another founding member of the EU but the FDI percentages is lower than the Netherlands. But there is increasing inflow from 2000 (2.2%) to 2006 (%10.2). The outflow has been increased from 3.7 to The GDP level is in the average and the unemployment rate has been declining year by year. The increasing investment level creates an employment area for people. Moreover, the export and import has been increasing rapidly by the more open market. The joining of the new member states affects this process significantly. 2

4 Denmark joined the EU in The average inflow in periods was 21.5%. But there is an important decline in 2003 and In 2004, there is a downward and the percentages are in negative level, -21.5%. Also, the outflow is negative in this year. These years are the years of problems in the economy. Despite of these, there is recovery in 2005 and The GDP has not declined but it doesn t increase very much accordingly to trade and other economic factors. The unemployment rate firstly increased, and then it decreased to the 3.7% in The import level of this country is lower than the export level. And they are increasing in balance. These all factors affect the foreign direct investment in Denmark. But when we look at the previous countries the indicators are lower than the others. Czech Republic, Slovenia and Slovakia joined the EU in They are new members and they have tried to adjust the EU economic policies and they work to be adapted to the open market economy. Their FDI levels are lower than the other developed member states. The Czech Republic made $2 131million FDI inflows in and the outflow was $78million. After the joining to the EU, the proportions changed. In the beginning, it passed from a transition process so that the outflow level was bad. But now there is an increase. For example, in 2006 the FDI outflow is $1 556million. There are not more changes in inflow because it was a good market for investors. Only in 2005, there was a sudden increase and it reached to $11 658million. The reason was that the other countries have tried it as a new emerging market. The unemployment rate has decreased by being member state and GDP is in normal level. The Czech Republic has more than the world average of 15 percent of GDP, while Slovenia are near the world average. The export and import raised by more opening to the markets. Also the exchange rate affects the trade and investment in all countries. By the adopting the Euro, most of the countries began to use same currency and it makes the trade easier and more efficient. When we look at the Slovenia and Slovakia, Slovakia has higher levels in economic indicators than the Slovenia. But, in general, the levels are very low according to the others. The outflow has been increasing more than the FDI inflow. While it was in negative in 2000($5millions), the 2006 level is $36millions. It is an important change in 6 years. On the other hand, Slovenia has the worst inflow and outflow levels among the all member states. It is less developed than the others. The FDI inflow has not been seen above 3

5 the $827million and the outflow can reach to only $740million in Also, the GDP is not good like the others. The unemployment rate began to decrease nowadays. The export has come from the $8 770million to $23 257million in 6 years and the import has increased from $10 147million to $24 104million. Slovakia s situation is a bit better than Slovenia. But it is not perfect. These countries need some developments. If there is no more investment in one country, the other economic factors cannot be improved. To join to the union is not enough. There should be new policy areas, innovations. These countries are under the European Union FDI average and the resources must be used efficiently. Because the natural resources and FDI has strong correlation. The period between 2003 and 2004 are the year of highest decrease by the new emerging markets. This new markets like Far East Asia and Latin America cause to decrease in inflows but increase in outflows. Austria s average FDI inflow percentage in the periods is about 6.1. However, after its membership, both FDI inflows and outflows increased year by year. For example, in 2003 after eight years of membership, FDI inflows in Austria increased from $2 820 million to $7 144 million. Despite the decreasing in 2004, amount of FDI raised by $ million in The biggest amount of falling realized in 2006 with 0.4%. This situation was because of the implementation of effective pension reforms and lower taxes in that led to a small budget deficit in 2006 and On the contrast to FDI inflows, FDI outflows have always been more in Austria. For instance, from period to 2005 FDI outflows increased from $2 179 million to $ million. However, decreasing in 2006 was because of the different economic implementations. As for GDP rates, from 2000 to 2006 GDP rate has increased regularly. Changing was from $203 billion in 2000 to $279.5 billion in Thanks to economic growth, unemployment rate decreased in Austria year by year. For example, the biggest amount of unemployment rate was in 2000 with 5.2%. In addition, GDP rates were the same in 2003, 2004 and 2007 as 4.4%. Other determining factor is differences between exports and imports. Export rates have always been more than import rates in Austria. For instance, the biggest amount of export was in 2006 with $ million. The rise from 2000 to 2006 was $ million

6 Luxembourg, one of the founding members of the EU, is known with its high-income economy. FDI inflows in Luxembourg began to rise after The biggest amount of FDI inflows was in 2006 with $ million. Generally, FDI outflows were fewer than inflows in Luxembourg. For example, FDI outflow was $2 248 million in Difference between inflow and outflow is $ million in As for GDP rates, they have increased $16.7 billion from 2000 to For a small country, this rise is more than expected value. In Luxembourg, imports have always more than exports because they cannot produce or have all required stuffs. Biggest amount of both export and import was in Export was $ million and import was $ million. Spain became a member of the European Union in 1986 and its economic growth began to increase by 1990 s. According to statistics, FDI inflows in Spain were few before However, the biggest amount of FDI inflows was in 2003 with $ million. In contrast to inflows, FDI outflows have always been more in Spain. From 2003 to 2006 FDI outflows raised about $ million. As for GDP rates, from 2000 to 2006 there has been a regular increase. In 2000, GDP rate was $720.8 billion. Unemployment rate is higher than Luxembourg and Austria in Spain. In 2000, unemployment rate was 14% but it declined to 8.3% in Relation between export and import was always positive and proportional in Spain. As one of the founding members of the EU, France has always more amounts of FDI outflows especially with its trademarks. FDI inflows were $ million in periods. On the other hand, FDI outflows were $ million. In other words, FDI outflows were two times more than FDI inflows in the ten years period. The biggest rise in the FDI outflows was realized in 2005 with $ million. Difference between 2004 and 2005 was $ million. This rise was because of the investments to new members in the EU. France has the second biggest GDP amounts after Germany in the EU. In 2000, GDP was 1.45K and in 2007, this amount raised to 1.87K. However, unemployment rate was high in France in contrast to other founding members. For example, unemployment rate was 9.7% in 2000 and it was 8.3% in Decreasing was 1.4% so it was very few. As for import and export rates, 5

7 they were parallel and near to each other in the six-year period. For instance, increase in the export rate between 2000 and 2006 was $ million. In the same way, rise in the import rate between 2000 and 2006 was $ million. Namely, difference between export and import rates was not very big in the six-year period. In Belgium, FDI inflows and outflows were not change in huge amounts. For example, FDI inflows were $ million in 2003 and $ million in On the one hand, FDI outflows were $ million in 2003 and $ million in GDP rates were very near in the six-year period. For example, GDP rate in 2004 was $316.2 billion and it was $322.3 billion in Unemployment rates were also very near. Difference between 2000 and 2007 was 0.9%. Biggest decrease was between 2006 and 2007 that realized from 8.1% to 7.5%. Export and import rates in Belgium began to increase after the enlargement in For instance, export was $ million in 2003 and it increased to $ million in According to export rates, import rates have always been fewer. Portugal joined the EU in 1986 with Spain. FDI inflows and outflows were not parallel in Portugal. For example, when FDI inflows were $2 327 million in 2004, FDI outflows were $7 845 million. This unparallel situation also continued in 2006 because FDI inflows were $7 321 million and outflows were $3 505 million. GDP rates increased year by year between 2000 and 2007 in Portugal. Difference between 2000 and 2007 was $49.1 billion. On the other hand, unemployment rates did not decrease in the same years. For example, unemployment rate was 4.3% in 2000 and 8.0% in 2007 and it shows that rise in seven years is very high. As for import and export rates in Portugal, they did not increase very much in six-year period. For example, export rate was $ million in 2003 and $ million in Import rate was $ million in 2003 and $ million in Germany is one of the states which have highest FDI inflow and outflow rates among the member states of EU. The inflow in was $29.354million and it was $32.369million in 2003, however there has been a sharp decrease in 2004 that the rates became The reason of this decline was probably large drop in the equity capital 6

8 component of FDI and by a net repayment of cross-border intra-company loans by foreign affiliates in Germany. But, in 2005 the percentages increased again to $35.867million and then it has been $42.870million again. On the other hand, the outflow FDI rates also have started from the $44.323million in but it sharply declined to $5.882million in From the beginning of 2004 with the recovery of economy, the rates started to increase again with percentages of $14.828million and reached to $79.427million in However, while FDI percentages were experiencing some fluctuations, the GDP of Germany has regularly increased from 1.94K in 2000 to 2.59K in 2006.Also export rates has had a stable increase starting with 578 and end with 1.113K like import rates started with 505 in 2000 and finished with in Beside this, the high unemployment rates has been seen between 2000 and 2005 with the percentages of %9.9 and % 10.7, Among the most important reasons for Germany's high unemployment during these years were macroeconomic stagnation, flat domestic consumption, lack of competition in the service sector, and high interest rates. But the unemployment percentages decreased to %8.4 in It should be remembered that Germany is one of the founding states of EU. The Hungary which became a member of EU in 2004, have instable FDI rates. The average FDI inflows between 1990 and 2000 were $3.224million and $2.137million in 2003 but the numbers increased to $4.506million in 2004 probably with the effect of accession to EU. In 2005, there has been a high increase that it reached to $7.619million but lived a slight decline of in On the other hand, the outflow rates, $177million, were very low between 1990 and However with the changes of economic system totally the rates went to $1.640million in 2003, and the year of accession to EU, 2004, it decreased a little but then it started to rise rapidly. The GDP rates of Hungary between 2000 and 2006 have a regular increase starting with $113.9billion and finished with $172.7billion. The unemployment rates were very high in 2000 but it sharply decreased to %5.9 in 2003 and 2004 with accession but it again increase a little to about %7.Both export and import of Hungary has experienced a steady increase between the years of 2000 and

9 Lithuania is also another state which entered to EU in Between 1990 and 2000 years the rates of FDI inflows were $272million and $179million in 2003 but as a result of accession to EU, the numbers peaked to $773million in 2004 and reached to $1.812million in The outflow percentages were only $9million between 1990 and 2000 but after 2004 it dramatically increased to $276million in 2006.The GDP of Lithuania has increased very regularly between 2000 and The unemployment rates were about %10 and %12 in 2000 and 2003 but now in 2007 it decreased to %4.3 so it can be said that Lithuania has achieved a successful development about unemployment. The export and import rates of Lithuania doubled in the year of 2003 because of integration to EU. In 2006 the export rates reached to $14.640million and import rates reached to $18.250million. When we look at the Latvia's FDI inflow percentages, it is seen that it is about $276 million between the years of 1990 and However the numbers have increased year by year. In 2003 it only raised from $276million to $304million but in 2004 it doubled and became $637million because 2004 is the year when Latvia became a member of EU. In 2005 there was not a big increase but in 2006 the FDI inflows peaked by million dollars. The FDI outflows of was minus between 1990 and 2000 but it started to develop after 2003 by 49 million dollars and it became $146million in the year of Latvia has one of the lowest GDP among the EU member states. It was 17.3 billion dollars in 2000 and it increased to in The unemployment rates were about %9.6 in 2000, but it increased a little in the years of accession to EU and peaked to %10.5 and %10.4 but it has started to decline then and it was only %5.9 in On the other hand, the import and export of Latvia were very regular that the export was $2.100million in 2000 and slowly reached to $6.980million in The import has also showed a stable development that it started by $2.800million in the year of 2000 and became millions of dollars in The Poland which also became a member in 2004 had millions of dollars FDI inflow stocks between 1990 and The numbers have started to increase then and it reached to $12.890million in 2004 it was probably caused by the accession of Poland to EU. However in 2005 it showed a decline to the $9.602million but fortunately it again get better in 8

10 2006 that it was millions of dollars in that year. The outflow stocks of Poland have experienced an important development since 1990s because the average of 1990s was only 51 but in 2006 it dramatically became millions of dollars. The GDP of Poland has a regular increase between the years of 2000 and 2006 that it raised from $327.5billion to However when we look at the unemployment rates of Poland, it is seen that it was very high until the 2005, it was about %20 but it sharply decreased to %9.6 at the end of the Moreover in 2000, the export of Poland was $28.400million and the import was millions of dollar at the same year but both of them increased regularly that the export reached to and import reached to $ million in The United Kingdom s average FDI inflow percentage in the periods is about Until 2006 there has been an increase in the percentages. In 2005 it was nearly 52, 9. But in 2006 there is a sudden decrease and the percentage is 33, 9%. The outflow is higher than the inflows in the period of In , it has to the highest degree, 32,5% and it has to lowest degree 19,3% in In contrast to the FDI levels, the GDP rates has increased between 2000 and 2005 but there is a sudden decrease which is 1, 9 percentage in Fortunately, the unemployment rate has decreased between 2000 and 2005 but there is an increase 2006 and The final rate is 5,2%. The export has increased from $285 million in 2000 to $448million in 2006 and accordingly there is an increase in import from $348 million to $619 million. The United Kingdom is a founder member of the European Union and it has the fifth largest economy in the world in terms of market exchange rates and the sixth largest by purchasing power parity. It has the second largest economy in Europe after Germany. Estonia is currently member of the EU since 1 May The Estonia the FDI percentages have increased between 1990 and 2005 but there is a sudden increase which is 30.1% percentage in In outflows percentage there has been an increase until 2006.The outflow has been increased from 2.8% to 19.9%. The GDP level has advance of its percentage but unemployment rate has decreased until Estonia has a market-based economy and its strong trade ties with Germany, Finland and Sweden profits the economy so that the imports and exports have been increasing year by year. 9

11 Sweden joined the EU in The average inflow has decreased between and in 2005 its percentage is 16.7 but then the percentage is changed and increased which is 39.5% percentage in On the other hand, the outflow percentage has increased year by year but in 2006 there is decline in outflow which is 35.7% percentage. The GDP has increased in Sweden because of trading and good economy. The unemployment rates increased and then it has decreased 6.1%. Imports and exports rates have increased but there is a much decrease of export rate in It is $ million in 2005 but in 2006 it decreased 34%. Sweden is an export-oriented market economy which has a modern distribution system, excellent internal and external communications, and a skilled labor force. Sweden's output and exports have accounted for 50% by engineering sector. Telecommunications, the automotive industry and the pharmaceutical industries are also of great importance. GDP and employment have accounted for 2% by agriculture. Sweden is known with its large public sector and high taxes. Sweden has the second highest total tax revenue behind Denmark as a share of the country's income. Ireland joined the EU in The average inflow in periods was 21.5%. But there is an important decline in 2004 and In 2004, there is a downward and the percentages are in negative level, -23.6%. On the other hand, the outflow has much increased 40.2% in 2004, other years outflow rates hasn t been regular in the economy. The GDP has increased year by year and it is 177.2% percentage in 2006 and the unemployment rates are equal between 2004 and 2006 which is 4.3% percentage. Ireland s imports and exports have increased year by year because imports and exports play a fundamental role in Ireland's growth. However; the economy profits from the accompanying rise in consumer spending, construction, and business investment. The Ireland of economy transformed from the agriculture to modern economy and it has largest exporters of goods and services in the world. Finland joined the EU in The average inflow there isn t a regular and it has increased and decreased between In 2006, it is 9.2% percentage. The outflow average has much decreased in 2004 which is -3.1% percentages and it is 12.1% in

12 Largest trade flows are with Germany, Russia, Sweden, United Kingdom, USA, Netherlands and China. The GDP has increased year by year in Finland and it has integrated in the global economy. Its international trade is a third of GDP. European Union makes 60 percent of the total trade. The unemployment rates are 6.9% percentage in The imports and exports have increased year by year in Finland. Finland has an industrialized and free-market economy. In the foreign trade, the main sector is manufacturing and the largest industries are electronics, machinery, vehicles and other engineered metal products, forest industry and chemicals. Finland s trade policy is administrated by European Union and its economy is 9 th in the free market in Europe. Greece joined the EU in 1981 with the second enlargement process. According to the International Trade Statistics 2007 by WTO, the number inflow in the years between 1990 and 2000 was 916 millions of US $. In the year 2003, it increased to 1,275 millions of $ and in 2004 the number was 2,101 millions $. In the same years the number in outflows increased from 237 million of $ to 1,029 millions of $. The GDP of Greece has increased gradually in the years between 2000 to 2006 from billions of $ to 251,7 billions of $. But this increase did not affect the unemployment rate because it decreased 2.1% in 2000 to Also the trade deficit increased regularly which was an important obstacle for foreign direct investment. Cyprus and Malta joined the European Union in They both are the new members and their economies would not affect the union s market economy. The FDI levels are not as competitive as its brothers. Malta s FDI inflow percentages increased from 29.4% to 145.4% in 1990 to 2006.Just like inflow the outflow percentages also raised in during 2004 and 2006 from -0.2% to 0.3%. Cyprus s FDI inflow percentages in 1990 to 2000 was about 20.9% and in 2006 it reached to the highest percentage as 42.5%.In 1990 to 2000 the FDI outflow percentage was about 3.0% while in 2004, it was about 23.5% and 20.9% in After Cyprus became full member, unemployment rate decreased from 5.6% to 3.9% while GDP increased from 91,5 billions of $ to 93,4 billions of $ in the years between 2003 to Malta also benefited from EU membership like Cyprus. The GDP per capita was 78,89 11

13 billions of $ in 2004 and 96,35 billions of $ in The unemployment rate decreased a little as 0.4% after its membership until Malta s export numbers are 3 times higher than Cyprus s from 2000 to 2006 although import numbers of Cyprus are higher than Malta. Bulgaria and Romania are the youngest members of the Union that joined in Both states FDI inflow levels increased sharply as Bulgaria from 18,4 millions of $ to 62,6 millions of $ and Romania as 9,4 to 37,9 millions of $. In 2005 while Bulgaria have reached its highest FDI outflow percentage 5.0%, Romania have reached its lowest percentage as - 0.1%. Bulgaria increased its GDP about 29 billions of $ in 2000 to Romania reached the highest level in 2006 with billions of $.Both states unemployment rates decreased parallel to their success in economy. From last 6 years we see a rapid increase in export and import levels of both states. Finally, Turkey has not joined the EU yet; however, Turkey officially applied to the Union in In 1990 to 2000 Turkey s FDI inflow percentage was about 1.91%. Until 2006 it increased through 23.7%. Outflow percentages were 0.6% in the same decade and in 2004 it was 1.6% which was the highest during the last six years. Turkeys GDP increased from 444 billions of $ to 627,2 billions of $ since In 2003 Turkeys one of the biggest problems was unemployment which was about 10.5% but it gradually decreased to 6.3% for the last four years. The export level has grown from 27,775 millions of $ to 85,479 millions of $ in six years and import levels also increased from 54,503 millions of $ to 138,290 millions of $. Turkey s trade with European countries increased year by year because of being member of Customs Union. Turkey is in a transition process for EU. For this reason, it should make its economy better in all aspects. By being a member in the future, there will be a lot of changes in FDI and other trade issues. Because of removing exchange rates among the EU members, Turkey s attraction for other members increased and these provide big amount of investment in Turkey and also abroad from Turkey. 12

14 CONCLUSION Foreign Direct Investment is an important economic indicator for Europe and also Turkey. By each enlargement of the European Union, each member has been affected by the increasing FDI. More members mean more investment and trade. Unemployment and trade are also important indicators that related to the FDI. It is significant determinant of the development. Also, globalization, innovation and privatization have important effects on this process. *The charts of the data about the FDI, GDP, the unemployment rate and the amount of export and import that mentioned above are at the end of the paper. FDI INFLOWS FDI INFLOWS by millions of $ 5000 Amounts CZECH REPUBLIC DENMARK ITALY NETHERLANDS SLOVAKIA SLOVENIA FDI INFLOWS by millions of $ Amounts AUSTRIA LUXEMBOURG SPAIN FRANCE BELGIUM PORTUGAL GERMANY 13

15 FDI INFLOWS by millions of $ Amounts HUNGARY LITHUANIA LATVIA POLAND UNITED KINGDOM ESTONIA SWEDEN FDI INFLOWS by millions of $ Amounts IRELAND FINLAND GREECE BULGARIA CYPRUS MALTA ROMANIA TURKEY FDI OUTFLOWS FDI OUTFLOWS by millions of $ 5000 Amounts CZECH REPUBLIC DENMARK ITALY NETHERLANDS SLOVAKIA SLOVENIA 14

16 FDI OUTFLOWS by millions of $ Amounts AUSTRIA LUXEMBOURG SPAIN FRANCE BELGIUM PORTUGAL GERMANY FDI OUTFLOWS Amounts HUNGARY LITHUANIA LATVIA POLAND UNITED KINGDAM ESTONIA SWEDEN EUROPEAN UNION IN GENERAL EUROPEAN UNION BILLIONS OF $ (average) FDI INWARD FDI OUTWARD 15

17 16 EXPORTS EXPORTS AMOUNTS CZECH REPUBLIC DENMARK ITALY NETHERLANDS SLOVAKIA SLOVENIA EXPORTS AMOUNTS AUSTRIA LUXEMBOURG SPAIN FRANCE BELGIUM PORTUGAL GERMANY EXPORTS AMOUNTS HUNGARY LITHUANIA LATVIA POLAND UNITED KINGDAM ESTONIA SWEDEN

18 17 EXPORTS AMOUNTS IRELAND FINLAND GREECE BULGARIA CYPRUS MALTA ROMANIA TURKEY IMPORTS IMPORTS AMOUNTS CZECH REPUBLIC DENMARK ITALY NETHERLANDS SLOVAKIA SLOVENIA IMPORTS AMOUNTS AUSTRIA LUXEMBOURG SPAIN FRANCE BELGIUM PORTUGAL GERMANY

19 IMPORTS AMOUNT HUNGARY LITHUANIA LATVIA POLAND UNITED KINGDAM ESTONIA SWEDEN IMPORTS AMOUNT IRELAND FINLAND GREECE BULGARIA CYPRUS MALTA ROMANIA TURKEY GDP GDP by billions of $ GDP by billions of $ Amounts CZECH REPUBLIC DENMARK ITALY NETHERLANDS SLOVAKIA SLOVENIA Amounts AUSTRIA LUXEMBOURG SPAIN FRANCE BELGIUM PORTUGAL GERMANY GDP by billions of $ GDP by billions of $ Amounts HUNGARY LITHUANIA LATVIA POLAND UNITED KINGDAM ESTONIA SWEDEN Amounts IRELAND FINLAND GREECE BULGARIA CYPRUS MALTA ROMANIA TURKEY 18

20 UNEMPLOYMENT RATES UNEMPLOYMENT RATES , ,00 2 SLOVENIA SLOVAKIA NETHERLANDS ITALY DENMARK CZECH REPUBLIC PERCENTAGES UNEMPLOYMENT RATES , ,00 PERCENTAGES GERMANY PORTUGAL BELGIUM FRANCE SPAIN LUXEMBOURG AUSTRIA UNEMPLOYMENT RATES , ,00 PERCENTAGES SWEDEN ESTONIA UNITED KINGDAM POLAND LATVIA LITHUANIA HUNGARY UNEMPLOYMENT RATES , ,00 2 PERCENTAGES TURKEY ROMANIA MALTA CYPRUS BULGARIA GREECE FINLAND IRELAND 19

21 REFERENCES - Barrell, Ray and Pain, Nigel; Foreign Direct Investment, Technological Change, and Economic Growth Within Europe; The Economic Journal, Vol 107, No. 445, Nov. 1997, pp CIA World Factbook - Grigoiadis, Ioannis N. And Kamaras, Antonis; Foreign Direct Investment in Turkey: Historical Constraints and the AKP Success Story; Middle Eastern Studies, Vol.44, No.1,53-68, January International Trade Statistics 2007 by WTO - The World Investment Report 2007 by the UNCTAD - World Bank web site historical data graphs 20