Divergence is the name of the game around the globe, the audit firm claims in its latest report, and the CEE is no exception.
“Poland was again voted the most attractive CEE country, by 31 percent of the respondents this year,” wrote analysts in EY’s European Attractiveness survey 2014.
The 2008 financial crisis has had a significant impact on foreign direct investment, even in countries which managed to report growth during the period.
As the crisis developed “and underlying weaknesses in some CEE countries came to the fore, the momentum of FDI slowed in some countries, including Poland, the Czech Republic, Hungary, Slovakia, Romania and Bulgaria,” the report said.
Poland, for instance, experienced a 22 percent drop in FDI projects during the crisis years, and “lost its leading position in the CEE region to Russia and slipped to fifth position in terms of FDI job creation in Europe between 2009 and 2013.”
With the lack of investment, many companies opted for layoffs in order to keep afloat. Employment in CEE countries such as Poland, Romania and the Czech Republic fell by more than 50 percent. These countries’ losses were another’s gain, however, with Turkey and Serbia increased job creation by 143 percent and 147 percent respectively.
Drivers of Change
There were a few areas where investment in Europe was on the rise. The star here was the automotive industry which was responsible for 26.5 percent of job creation in the 2009-2013 period, as opposed to 22 percent in the 2004-2008 period.
Other job creators over the last four years were the business services industry (7.6 percent), machinery and equipment (6.7 percent), software (5 percent) and the electronics industry (4.7 percent).
Poland was fortunate in this matter as it had previously developed a strong foothold in these markets. In the automotive industry, for example, Poland attracted 14 FDI projects in 2013 alone. This put the country firmly in fifth place in Europe, after Germany (50), UK (41), Czech Republic (19), and Russia (16). (rg/jb)