In terms of foreign investment in France, 2007 was a year of changes.

First of all, there was change in the international macroeconomic climate. Following several years of rapid world economic growth, the financial crisis in the subprime housing market led to a slowing down of the US economy in the second half of 2007, resulting in the threat of recession which intensified at the beginning of 2008. The risk was compounded by factors affecting stability – high rate of exchange of the euro, weakness of the dollar, worsening of the deficit in the US balance of payments, increase in the price of petrol and raw materials, inflationary tension – which can lead to possibly severe readjustments at any time.

There was also change in terms of the global flows of foreign direct investment (FDI). Although the global flows of FDI increased significantly in 2007, led once again by an increase in the level of international mergers and acquisitions, there was, however, a distinct slowing down in the growth of international greenfield projects, particularly those from North America – almost as if companies, anticipating a possible reduction in their business opportunities, had become extremely cautious in 2007 in terms of physical investments abroad.

The third change concerns France in particular. The French elections in the middle of the year may have led to a certain level of caution among investors during the first half. However, investors welcomed the very strong messages of reform sent out by the new French Government at the start of the second half of the year. The relaxation of legislation concerning the legal working week and the possibility of overtime, and the new tax measures in favor of research and development, were welcomed as clear signs of the new President’s commitment to creating a favorable business and investment environment in our country. France’s economic image improved dramatically in the United States.

It appears that the number of jobs created in our country – 34,500 this year – shows a decline compared to the peak levels observed in 2006 (40,000 jobs created, an all-time record that had not been observed since the Review was established in 1993). However, this number follows in the globally positive trend observed over the past four years: it is, for example, 51% higher than in 2002.

In addition, we are starting to see in our Review, the favorable consequences of a certain number of measures that have been specifically introduced in favor of the economic attractiveness of France for innovation activities. The organization of clusters has raised the profile of French technological potential among investors. The success of an investment project such as the Tate & Lyle research center for nutrition, in the Lille area, is a direct result of the existence of the “Nutrition-Longevity-Health” cluster and also the new research tax credit.

It is this France, geared towards innovation and wanting to attract talent and expertise, that we invite you to discover in the following pages.

Philippe Favre
French Ambassador for International Investment,
Chairman and CEO of Invest in France Agency

Download 2007 Report on Foreign Direct Investment in France

PDF format, 6.4MB, 41 Pages.

2007 Report on Foreign Direct Investment in France

Invest in France Agency (IFA) is the national agency responsible for promoting, prospecting and facilitating international investment in France. It also coordinates initiatives promoting the appeal and image of France.

The IFA network operates worldwide, with offices in France, as well as in North America, Asia and Europe. In France, IFA works in partnership with regional development agencies to offer international investors outstanding business opportunities and customized services.

Information at www.investinfrance.org

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