In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
Foreign direct investment in Iceland, which had been growing regularly during the pre 2008 years, fell that year essentially due to Iceland's over-exposure in the international markets combined to the general bankruptcy of the country's banking system. The FDI was mainly directed towards retail sales, biotechnology, geothermal science, information and communication technologies and health technologies. Franchising is in full-growth in Iceland, especially in the retail sector.
Iceland's main advantages to a company in terms of investment are: an English-speaking manpower, a positive economic environment and a high purchasing power. The main drawbacks of investing in Iceland are: high cost of living, a weak demography, a bankrupt financial system, and its long distance from the European continent. Due to the deep financial crisis that Iceland has gone through, FDI has strongly decreased. However, since 2011, the country has managed to meet the commitments made to the IMF which has sent a positive message to foreign investors in 2012 and 2013. The total of FDI influx in 2013 has been just over USD 500 million.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Index of Transaction Transparency*||7.0||6.0||7.0||5.0|
|Index of Manager’s Responsibility**||5.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||7.0||9.0||5.0|
|Index of Investor Protection****||6.0||6.1||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||1,108||1,025||348|
|FDI Stock (million USD)||12,656||10,367||10,719|
|Performance Index*, Ranking on 181 Economies||105||-||-|
|Potential Index**, Ranking on 177 Economies||74||-||-|
|Number of Greenfield Investments***||2||1||2|
|FDI Inwards (in % of GFCF****)||56.0||51.9||16.3|
|FDI Stock (in % of GDP)||90.1||76.3||73.1|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
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Last Updates: February 2015