Flanders attracted a record 5.4 billion euros in foreign investments in 2024, creating over 5 000 new jobs across the region.
While this is a good success for Flanders, it should be seen that 2023, the total Belgian FDI inflow (including Brussels and Wallonia) was 19,4 bill. US$, at an outflow of 29,9 bil. US$. Countries like Austria (11,8 bil.), Denmark (10,5 bil.), Sweden (50,9 bil.) or Israel (7,9 bil. US$) achieved better results, Flanders is on a level with Greece, Hungary or Turkey and ahead of Argentina (3,0 bil.) or South Africa (2.8) according to an OECD statistic.
Also note that not every FDI has the same structure. An equity increase in a bank, an investment in a mine or the creation of a new factory are all FDI, but the same amount of money might have different consequences on labor, exports, taxes or else. An investment in a logistic facility may be low, but create a lot of employment, while an equity increase in a bank or a machinery-heavy factory might be very costly but create relatively little employment.
Concerning statistics, it should also be noted that the announcement of an investment and the realisation of the finance flow can diverge by years, and that specifically for small economies the annual variation can be high.
Why should governments create a good climate for Foreign Direct Investment?
FDI can bring numerous positive effects to a host country, including
- 1. Economic Growth and Development
- FDI injects capital into the economy, boosting GDP growth. It enhances infrastructure development, including roads, energy, and communication networks.
- 2. Job Creation and Higher Wages
- Multinational companies create direct employment opportunities.Higher wages and better working conditions are often introduced due to foreign competition.
- 3. Technology and Knowledge Transfer
- FDI brings different, often new technologies, improving productivity and efficiency. It fosters skills development through training and knowledge-sharing.
- 4. Increased Exports and Trade Expansion
- Foreign firms often integrate local businesses into global supply chains. Export-oriented FDI helps improve the country’s trade balance.
- 5. Improved Business Environment and Competition
- The presence of foreign investors pushes domestic firms to be more competitive. It encourages innovation and efficiency in local industries.
- 6. Higher Government Revenues
- Increased business activities lead to higher tax revenues. Governments can use these funds for public services and infrastructure.
- 7. Strengthened Financial Sector
- FDI improves access to international financial markets. It enhances investor confidence and attracts further investment.
Find the full article about Flanders here: Flanders attracts record 5.4bn euros in foreign investments in 2024
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