In previous article we analysed the current leaders in foreign direct investments (FDI) in Europe and focused on key 2 pillars - «Сapital and lifestyle» and «Сonnectivity».
In this article we describe some instrumental factors the cities can influence, through their day-to-day city policy- Cost effectiveness, Business friendliness, Economic potential.
For investors it is pivotal to calculate the possible costs of doing business. This index is named «Cost effectiveness». Among 14 factors of the pillar the fDi-intelligence agency name Average salaries for skilled and semi-skilled workers, Cost of electricity, Petrol prices, Corporation and Indirect tax rate, Total tax rate and etc.
No doubt that among leaders in cost effectiveness there are no counties from Western and Northern Europe. It is also no surprise to see Tbilisi (1), Ankara (2), Sofia (3) as all-over Europe leaders. Zagreb is the only city from Euro-zone in the short-list and it takes only the 10’th place.
It is remarkable that Central European Budapest (7) and Praha (8) manage to provide remarkable cost-effectiveness. This cities also have a great logistical access to inner-EU market, especially to Austria and Germany. That’s why this cities are an excellent choice for new foreign investments.
«Business friendliness» pillar analyses the medium-term results and sustainability of urban economic policy. This block reflects if cities were able to expand their hi-tech, IT and knowledge-based sectors. Also the researches count jobs created by all inward FDI in 5 years and number of expanded and collocated projects. No doubt that London leads the European race for hi-tech and knowledge-based sectors. Among top-5 cities are Warsaw (2), Amsterdam (3), Dublin (4) and Paris (5).
«Economic potential» pillar shows the results of long-term city policy – it analyses how the demography, economy factors improved, foreign investments grew during the last decade. No doubt in 2023 Dublin wins inter-pillar-race, attracting 652 projects science December 2017 to November 2022. London, Paris and Amsterdam are also among the leaders.
The secret ingredient for success is the quality of cities’ FDI strategies. The investment promotion agencies (IPAs) present their strategies for attracting, retaining and expanding foreign investment, and the fDi-intellegence agency experts award marks on everything from aftercare initiatives to energy resilience.
Barcelona takes the lead in 2023 strategy ranking, showing the most complex and sustainable approach to attracting investments. Spanish city aims to attract hi-tech (Barcelona Supercomputing Center), develops startup hubs, sustainable transport and energy projects. Last year Spain introduced digital nomad visas, inviting digital professionals to relocate. It is remarkable, that fDi-intelligence agency for at least 5 years names Barcelona’s city FDI strategy the best. And in 2023 the city finally got in overall European ranking in top-10.
Also in top-5 best city strategies ranking are Dublin (2), Berlin (3), Munich (4) and Milan (5).
This is an example how the cities may achieve great results. And the only question is how consistent they are in their path to the goal.
The investment promotion needs a long-term strategic approach and it takes a very long time and hard work to improve the situation, especially in such spheres as human capital and education.
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