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27-05-2012 "Investing in Europe" - newspaper NEW EUROPE
Investing in Europe
Europe needs to become more attractive for investments, both foreign and local
Growth is today at the heart of the EU and global concern. Nevertheless, in order for this objective to gain substance it has to be directly linked to investment which is vital for growth and job creation and a necessary precondition for securing a competitive EU economy and laying the foundations for a sustainable economic recovery and economic cohesion. My own-initiative report "Attractiveness of investing in Europe" aims to put forward innovative methods and coordinating instruments targeted at attracting investments in Europe, taking advantage of the benefits the euro, the structural funds and the internal market offer, and exploiting the comparative advantages of the EU regions to attract foreign direct investment (FDI) and encourage domestic investments. The report urges for an integrated and coherent strategy at both national and European level in parallel with ensuring fiscal consolidation and restoring confidence in international markets. This strategy will strengthen the efforts of the EU towards achieving sustainable growth especially in countries that face weak growth or recession as is the case in Greece.
The EU remains the first investment destination globally but it faces growing competition from emerging countries while the prolonged sovereign debt crisis is weakening this position. I have proposed the creation of an ad hoc European Observatory for foreign direct investments, to strengthen the coordination of policies in this field and, simultaneously, provide a better monitoring of the policies applied, evaluate the progress achieved and provide the appropriate elements to promote Europe as an investment destination. That observatory, established within the European Commission and operating in close cooperation with Eurostat, could constitute a complementary mechanism to the scoreboard (designed in the framework of the new economic governance package) in order to better assess macroeconomic, commercial and regional imbalances among Member States, focusing particularly on indicators that affect attractiveness of foreign direct investment and their impact on the real economy and employment in the EU regions.
Towards that direction, I have stressed the importance of negotiating and concluding free trade agreements (FTAs) with major partners as a key to opening new markets for goods and services and increasing investment opportunities. Europe must also play a key role in driving forward the global agenda, on open and free trade, international financial regulation, coordination in the fields of taxation and monetary stability in order to protect its competitiveness.
The report calls on the Commission to prepare a communication on the attractiveness of investing in Europe, in comparison with our main partners and competitors, identifying the advantages as well as the weaknesses of the EU and develop an integrated strategy and specific policies and recommendations, to improve the EU's investment environment. The report also highlights the important role that innovative financial instruments can play, such as project bonds and the ones based on public-private partnerships and sovereign wealth funds. I also advocate a greater role for the European Central Bank in the secondary debt markets in order to inject liquidity and reduce excessive financing costs that many countries face, as well as the European Investment Bank for national or cross-border investment. At the same time, the report is calling for greater fiscal coordination on both the revenue and expenditure sides, including coordination of tax systems and social imbalances between Member Sates and strengthening cooperation of economic actors and complementarities between EU economies.
Making Europe an attractive place to invest and work requires ensuring that businesses can compete openly and fairly. The Single market is one of the EU's most significant advantages in developing a friendly and motivational environment for businesses and consumers. Moreover, the report highlights the importance of the completion of the internal market given its added value in all EU and Member States' policies, such as encouraging institutional investors to participate in European venture capital funds that can particularly benefit start-up companies, and hence boost entrepreneurship and job creation.
Fully exploiting EU structural funds, by reducing bureaucracy and increasing efficiency, can contribute significantly to a friendly investment environment in different regions. The EU and Member States should also invest more on education, research and innovation, highlighting their comparative advantages, given Europe's significant unexploited growth potential in those fields.
It is time for Europe to set "investing" at the core of the EU2020 Strategy.
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