FDI Effects in Bulgaria

5.0%6.6% 6.2% 6.5% 6.4% 6.2%

-5.5%

0.2%

Macroeconomic indicators show consistent growth in the years leading up

to the global financial crisis

2003 2004 2005 2006 2007 2008 2009 2010

Real GDP Growth

6.1%5.0%

7.3%8.4%

12.3%

2.8% 2.4%

5.2%

2004 2005 2006 2007 2008 2009

Inflation

12.2%10.7%

9.1%6.9% 6.3%

9.1% 9.2% 9.8%

Unemployment

2004 2005 2006 2007 2008 2009

2,736 3,152

6,222

9,052

6,728

2,4121,639

FDI Inflow

2004 2005 2006 2007 2008 2009 2010

€ mln.

Source: Bulgarian National Bank

2010

2010

2011

* February 2011

2011

* February 2011

FDI in Bulgaria comes mostly from EU countries and is concentrated in sectors

Source: Bulgarian National Bank

FDI by host country, 1996-2010 (€ mln.)

FDI flows by industry, 1996-2010 (€ mln.)

Telecom 1,955

Energy 2,492

Construction

2,608

Trade 6,425

Manufacturing 6,552

Finance 7,422

Real Estate 8,419

Other 2,376Italy 1,221

Russia

1,229

USA 1,337

Hungary 1,362

Cyprus

2,229

Germany 2,646

UK 2,948

Greece

3,763

Austria

5,183

Netherlands 5,740

Educated and skilled workforce is among the main advantages of

BulgariaAlmost 60,000 students

graduate every year from over 50 universities

Source: National Institute of Statistics, Bulgaria

833

860

12,684Other

19,480Business

8,372Social

sciences

7,178Engineering

3,677Education

3,166Health

1,553LawArchitectur

eAgriculture

Bulgaria has one of the highest proportions of students abroad

from all European countries

8.3%

5.8%

4.7%

3.1%

2.8%

2.2%

2.1%

17.8%Iceland

14.2%Ireland

10.2%Slovakia

Bulgaria

Greece

AustriaGerman

yEU-27 average

Czech RepublicStudents in another EU / EEA country, % of all

Why invest in Bulgaria?

Political and business

stability

EU and NATO member

Currency board

Low budget deficit and

government debt Low cost of doing business

10% corporate tax rate

Lowest cost of labor within

EU Access to markets

European Union / EFTA

Russia

Turkey / Middle East Educated and skilled

workforce Government incentives

Nestle Hewlett-Packard Diversification of

the sweets market Over 1000 jobs

within the factory Loyal brand No threat of

competing with the local market

• 1000 existing jobs, adding at least 1000 more •Bulgaria wins over

30 countries •Higher standard of

living, greater skills, education put to use

FDI Effects in Croatia

Macroeconomic Indicators

Who is investing in Croatia?FDI Stock by country through 2005

Equity inflows and earnings reinvested into newly established FIEs

1993-2005

Croatians are highly educated!

Accession to the EU

Applied for membership in 2003Completed 29 out of 33 “chapters”

Public support is low due to EU financial situation and harsh sentencing of Croat generals in the Hague

Possible accession by 2013

Bulgaria/Croatia Comparison

•Former Soviet history •Delay in Reforms •Expansion of the service sector •Should expand manufacturing •Greenfield investments predominant •Does the service sector lead to economic growth? •Trading between the EU member states •Economic recession in 2008

Global Competitiveness Index - Ranking SEE and CEE countries according to performance in education and

innovation

Country Overall ranking Higher education and training ranking

Innovation ranking

2007-08 2009-10 2007-08 2009-10 2007-08 2009-10

Albania 109 96 103 90 131 126

Bosnia and Herzegovina 106 109 98 86 121 131

Croatia 57 72 46 56 50 61

Macedonia, FYR 94 84 75 70 92 92

Montenegro 82 62 79 57 104 56

Serbia 91 93 82 76 78 80

Bulgaria 79 76 66 60 88 91

Romania 74 64 54 52 76 70

Slovenia 39 37 24 19 30 29

Source: The Global Competitiveness Report 2009-2010, and 2007-2008, World Economic ForumNote: Global Competitiveness Report 2007-2008 is based on survey and data of 131countries, while for 2009-2010, N=133.

FDI Inflow in $

1995

1997

1999

2001

2003

2005

2007

0100020003000400050006000700080009000

10000

Bulgaria Croatia

Bulgaria Croatia

How FDI Impacts Development in Egypt

Education

Currently combating low levels of education and illiteracy.

Business firms are required to combat illiteracy among their employees.

As of 1999, public expenditure on education was estimated at 4.7% of GDP.

Education and Coca-Cola

Has been investing in the region for 50 years.

Partnered with UNICEF to help get rid of terminal diseases such as Polio, HIV, and Hepatitis C.

The goal of this partnership was to shed light on the issue of AIDS by providing adequate education and prevention.

Coke is promoting education, the development of information, and communication materials all in an effort to help promote AIDS awareness.

Technology

Egypt mostly specializes in information technology, tourism and travel, consumer goods and Telecom companies.

Bringing development through the Information Technology Industry Development Agency (ITIDA).

Develops infrastructure and helps existing companies.

Creation of more jobs and encourages international business.

Up to 50,000 new job opportunities.

Technology and IBM

IBM developed The Service Delivery Center, which promised it would employ up to 100 people in the beginning and then increase up to 1,000 being employed within the company.

Assumed to bring about more growth in Egypt as well as develop technology, education, and industry.

IBM is just one of many companies that has invested in Egypt. Other examples would be: Intel, Coca-Cola, and Microsoft.

Egypt’s Future

Because of the demonstrations that took place earlier this year, Egypt’s GDP is estimated to take a 2 to 3 percent nosedive.

The reasoning behind this assumption is due to the fact that tourism drastically came to a stand still and many businesses closed down.

This could cause potentially significant damage to Egypt’s future development in many sectors.

Currently the government to already devising strategies for Egypt to withstand the latest economic blow.

Impact on FDI

Egypt went from a closed market economy to more liberalized and open.

Technology has further helped develop initiative in Egypt by creating education opportunities.

How FDI Helps

Develop Morocco

Impact of Education on FDI

Chemonics educated the ministry of tourism and development and they were better able to tap into the rural tourism market and bring in more inflow of FDI from a more diversified international clientele.

The Moroccan government has also funded training for the staff that would be needed for the Plan Azur, which has enhanced human capital.

Impact of Capital on FDI

Capital has had a positive impact on the attraction of FDI, especially when it came to building infrastructure in Morocco.

Ex. Plan Azur

Plan Azur-Impact on Morocco’s FDI

Impact of Technology on FDIAll sectors in the economy are turning

to the new technologies which will lead to increased potential for development in the telecom sector, of which Morocco is a regional leader.

This technology has allowed the largest Multinational Telecommunication operator, Maroc Telecom to operated in various other North West African countries.

Maroc Telecom and Vivendi Agreement -- Impact on FDI

Table 4.3: Africa’s share of FDI inflows (millions of US dollars)

Year Africa World Percentage 91–96 4,606 254,326 1.8 1997 10,667 481,911 2.2 1998 8,928 686,028 1.3 1999 12,231 1,079,083 1.1 2000 8,489 1,392,957 0.6 2001 18,769 823,825 2.2 2002 10,998 651,188 1.6 Source: United Nations, World Investment

Report 2003.

Africa’s share of FDI inflows (millions of US dollars)

Source: United Nations, World Investment Report 2003.

1991-1996

1998

2000

2002

PercentageAfrica

Maroc Telecom and Vivendi Agreement -- Impact on FDI

The similarities found between Morocco and Egypt is the countries’ openness to MNC investments because the policymakers see a direct correlation between the increase in skilled human capital and the creation of jobs that leads to an amplification of FDI amounts and more pervasive country developments. Egypt and Morocco are the most integral North African countries because of their prime geographical location, openness to FDI and trade relations with the United States and other advanced economies such as France from the EU.