For a long time remaining behind the foreign direct investment scene, the Mediterranean caught up its lag at the beginning of the 2000s and until 2006, year during which it attracted a share of global Foreign Direct Investment (FDI) corresponding to its demographic weight (4%), that is EUR 48 billion according to the United Nations Conference on Trade and Development (UNCTAD). The very marked progress of FDI flows into the MED-11 region* (multiplied by 6 in 6 years) and announcements of investment projects and partnerships (see figures below) as measured by the ANIMA- MIPO Observatory (see page 106) can be attributed to several factors, essentially linked to the economic reforms aimed at reinforcing the attractiveness of the MED countries vis-à-vis foreign investors, to the wave of privatisation in telecoms and banking (peaking in 2005-2006), to the increased availability of petrodollars from the Gulf States and a strong boom in real estate.

The economic and financial crisis which broke out in 2008 interrupted this phase of continued growth, and the Mediterranean share of global FDI went to around 3% from 2007, with a little less than EUR 22 billion in 2009 according to UNCTAD’s estimates. As for the ANIMA-MIPO Observatory’s figures, available in real time, the announcements of investment nevertheless went on the up again from 2010 in the MED countries, which are less exposed to the ups and downs of the financial world and carried by a rising domestic demand. The Arab revolutions of 2011 interrupted this rise because of the short term negative economic impact: businesses have suffered from problems of supply and temporary shutdowns, jobs have been destroyed and certain investment projects have been postponed, so much so that FDI announcements have dropped abruptly (-25% for the first six months 2011), tending to suggest a rather mediocre result in 2011. The latest forecasts of GDP growth from the World Bank are around 1.9 % in 2011 for the MENA (Middle East North Africa) region and only 1.5% in Tunisia, 1% in Egypt and probably less for Libya; but with a more marked take-off from 2012 and 4% expected in 2013.

Introduced in 2009 in the ANIMA-MIPO Observatory thanks to the Invest in Med project, the partnerships are defined as modes of entry of foreign operators into the Mediterranean market limiting their commitment and thus their financial risk: getting closer to a domestic market either through an identified partner or by opening a local representation. The considerable rise in the number of partnerships in 2010 (+73%) illustrates the effect of the Invest in Med project, which is devoted to these partnerships and detects them better. It represents a strong signal of the commitment of foreign investors in the Mediterranean who adapt themselves to the crisis conditions which prevail since 2008 without renouncing their projects to locate in the region. These projects often represent a first step prior to an investment project and mark the transition towards more equitable modes of cooperation and sharing added value between foreign and Mediterranean economic operators. The 2011 political context however has significantly slowed the implementation of such projects (-39% for the first six months of the year).

Europe leads in the investment intentions and partnerships in the MED countries, with projects which are not slackening off despite the crisis. As regards FDI, European businesses have been at the origin of 50% of the total of the announcements since 2003. The European presence is characterised by its stability (never less than 40% of the total number of projects), investments of a relatively modest size (EUR 50 million per project against an average of 56) but involving more SMEs (24% of the projects against an average of 20%) and logically creating more jobs (52% of the total jobs created since 2003 by foreign investors, a greater proportion than the European share of the total amount invested: 44%).

European businesses are creating an even greater gap with the other regions of the world for partnership projects with 52% of the projects announced since 2003. The first place of the Europeans in the hall of fame of invest-ment and partnership projects in the Mediterranean is not however an acquired right. The Gulf States are very active in the MED countries, and have even overtaken the Europeans in terms of amounts of FDI announced in 2006. The United States and Canada keep a preponderant place in Israel and in certain strategic sectors in the other countries. Finally, while intra-MED investments still have not lifted off (around 5% of the total in number of projects and in amounts), those of the “other countries”, essentially the emerging nations, are experiencing continued growth and could disrupt the situation, by competing with the offers from “historic” investors from the region. It is up to Europe to seize the opportunity of a stronger economic partnership with the players from the MED countries, without waiting and risking being left behind by new, increasingly influential players in the region. The MED countries, their human resources, their growing markets represent more than ever an opportunity for development and economic partnership essential in the global economy of the 21st century.

_{*The MED-11 region includes the 9 countries of the Invest in Med project plus Libya and Turkey.
** Projection made for information purposes on the basis of the results recorded up until 30th June 2011. This projection is obviously subject to caution, notably because of the current political context.}