Germany - Foreign investment

All foreign investment must be reported to the Bundesbank, but there are no restrictions on the repatriation of capital or profits. Until the 1998 deregulation of Deutsche Telekom, telecommunications remained closed to foreign investment. There is no special treatment for foreign investors. Incentives for investment in the former GDR deemed to be desirable include accelerated depreciation and cash investment grants and subsidies.

Although few formal barriers exist, high labor costs have discouraged foreign companies from setting up manufacturing plants in Germany. Nevertheless, across the 10-year period 1991 to 2001, total foreign direct investment (FDI) totaled $393 billion, the third highest total in the world. Half of this came in 2000, when FDI inflow reached over $195 billion. Annual FDI inflow had been $12 in 1997, rising to $24.5 billion in 1998, to $54.7 billion in 1999. With the bursting of the dot.com bubble in 2001, FDI inflow to Germany fell to about $32 billion in 2001 and was estimated at $38.1 billion in 2002.

FDI outflows from Germany peaked at almost $110 billion in1999. FDI outflows were about $52 billion in 2000 and $42 billion in 2001.