FDI in Italy

Overview by Globlatrade.net:

FDI in Figures

In relation to its European neighbors, Italy does not attract but a small amount of  foreign direct investment (FDI).  After their fall in 2008, under the effect of the global crisis, the FDI flows started to revive in 2009. The privatization program led by the country, the liberalization of the energy and the markets of telecommunications offer interesting opportunities to investors.  However, a strict labor law, high taxes, inefficient public services, corruption and the activities linked to organized crime are some of the hindrances to investment.

Foreign Direct Investment 200720082009
FDI Inward Flow (million USD) 40,20217,03130,538
FDI Stock (million USD) 364,839339,927393,990
Performance Index*, Ranking on 141 Economies 11712696
Potential Index**, Ranking on 141 Economies 3132-
Number of Greenfield Investments*** 178223166
FDI Inwards (in % of GFCF****) 9.03.628.0
FDI Stock (in % of GDP) 17.214.818.6

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.


FDI Inflows By Countries and Industry

Main Investing Countries 2007, in %
Holland 25.3
France 14.1
United Kingdom 11.0
Luxembourg 10.2
Switzerland 7.5
United States 7.3
Spain 6.0
Germany 3.9
Main Invested Sectors 2007, in %
Manufacturing sector 35.7
Financial intermediation 24.8
Electricity, water, gas 6.0
Transport, storage and communications 5.2
Trade and repairs 5.1
Mining 3.5

Source: OECD Stats Extracts

Main Foreign Companies
In 2004, the UNCTAD counted 1 843 foreign companies in Italy (i.e. companies, at least 10% of whose capital is held by a foreign entity).
Sources of Statistics
Invitalia (Italian agency for investment promotion)

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Why You Should Choose to Invest in Italy

Strong Points
Thanks to the State withdrawal, the market is opening up to competition in several sectors (energy, telephone, etc.). The SME grouping allows for great capacity for adaptation. Italy also has a qualified work force (technical knowledge and high quality production).
Entrepreneurs are creative and innovative.
Weak Points
The procedural costs, slow administration processes, red tape and financial scandals do not encourage investments. In some regions, infrastructures are poor, especially in the south of the country.
Government Measures to Motivate or Restrict FDI
There is hardly any assistance in Italy for promoting foreign investment. This trend is reinforced by the European Union which wants Italy to harmonize its tax incentives with the Community regulations. Italy only promotes the development of its regions which are in difficulty, in order to facilitate SME activity and job creation. The defense sector and other sectors likely to compromise public safety are not open to foreign investors.
The Italian Institute for Foreign Trade lists and makes available a guide to aids for setting up business in Italy.

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