Foreign direct investment and trade patterns in the European Union : implications for competitiveness

Csontos, Tamás Tibor and Éltető, Andrea and Tölgyessy Péterné Sass, Magdolna (2026) Foreign direct investment and trade patterns in the European Union : implications for competitiveness. REGIONAL STATISTICS, 16 (2). pp. 388-420. ISSN 2063-9538

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Abstract

Competitiveness is a central concept in European Union (EU) policy discourse; however, recent reports on the single market and competitiveness frequently underestimate the pivotal role of foreign direct investment (FDI) and trade. This study addresses this gap by analysing EU-level FDI and trade trends between 2005 and 2023, incorporating comparative insights from the United States and China, as well as intra-EU dynamics. The analysis reveals a complex and uneven landscape: FDI flows are highly concentrated, with some member states primarily acting as intermediaries, thereby distorting resource allocation. In terms of trade, the European Union faces rising competitive pressure from China, persistent internal trade imbalances, and significant dependence on foreign value added. Although the EU performs strongly in services and medium-tech exports, it lags in high-tech and primary products. The study argues that addressing these challenges necessitates a differentiated and targeted EU competitiveness strategy aimed at strengthening strategic autonomy within an evolving global economic environment.

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