Competitiveness, trade and investment flows

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This area is concerned with the likely impacts of policy measures and initiatives on the pursuit of the following economic objectives: improving the ability of EU economies to produce and commercialise abroad goods and services which meet the test of international markets, and to participate to international exchanges of goods, capital and knowledge under free and fair competition, while simultaneously maintaining and expanding employment and real income of EU population over the long term; gradually increasing the economic integration with enlargement countries by expanding international exchanges with them; extracting the highest economic rents from international exchanges of goods, capital and knowledge and minimising the costs of international operations for the EU economy as a whole.[1]

Foreign direct investments (FDIs) reflect EU participation to international production. They include outward FDIs, that is the acquisition of foreign assets by EU firms, involving the ownership of equity shares in foreign firms and/or the set up of production facilities abroad; and inward FDIs, that is the acquisition of assets by foreign firms, involving the foreign ownership of equity shares in domestic firms and/or the set-up of new production facilities owned by foreign firms and institutions.

EU policies aimed at supporting the international economic performance of the Union are manifold. The main actions taken through a number of recent directives, regulatory documents and decisions include: research activity and promotion of immaterial investments and information technology utilisation; standards harmonisation and protection of intellectual property; enterprise policy; company law.[1]

According to the Impact Assessment Guidelines of the European Commission, the following key questions are of particular importance when examining the impacts of policy initiatives on competitiveness, trade and investment flows:

Does the option have an impact on the competitive position of EU firms in comparison with their non-EU rivals?

Does it provoke cross-border investment flows (including relocation of economic activity)?

Evaluating market processes[1]


  1. 1.0 1.1 1.2 JRC: IA TOOLS. Supporting inpact assessment in the European Commission.[1]

European Commission