The Israeli economy is still one of the world's most attractive targets for foreign direct investment (FDI), according to the annual OECD report on the subject. According to the report's figures, Israel is in fourth place in the world as a target for foreign investment in proportion to GDP, with FDI totaling 4% of GDP in 2013, trailing Luxembourg, Ireland, and Chile.
Israel's ratio of FDI to GDP was significantly higher than the OECD aggregate ratio of 1.4%, the euro bloc's aggregate ratio of 1.4%, and the 20 most important countries' aggregate ratio of 1.6%. Furthermore, Israel's ratio of incoming FDI was higher than the aggregate ratio for emerging markets, including the aggregate ratio for the BRICs countries (Brazil, Russia, India, and China), which attracted most of the FDI over the past decade.
In contrast to financial investments, i.e. the purchase of Israeli shares, which are by nature temporary and short-term, FDI is by nature long-term, reflecting great confidence in an economy, particularly the causes of increased employment and economic growth. These investments are of decisive importance for sustainable long-term economic growth.
According to OECD figures, FDI inflows to Israel soared to 24% to $11.8 billion in 2013, after plunging 14% from $10.8 billion in 2011 to $9.5 billion in 2012, 2011 being an exception in FDI inflows.
Note that investments in Israeli companies from Luxembourg in 2012 totaled $1.06 billion in 2012, while companies from Italy withdrew $815 million from Israel. Although the sectors for half of the FDI inflows are unknown, a third of FDI inflows were invested in services, including financial services.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2014
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