1. Fabrice Hatem, Invest in France Agency, La Baule, World investment Conference 30 June 2005 How European countries are competing to attract business support functions

2. © AFII 2005 2, avenue Vélasquez 75008 Paris The stakes are high Businesses operate using different functions, not just production, but also logistics, R&D, etc. Multinationals structure their international networks to capture the specific advantages of different host areas This strategy extends to all functions, which have thus become internationally mobile… … with the result that countries are competing to host these functions

3. © AFII 2005 2, avenue Vélasquez 75008 Paris The source data : the AFII data base FDI data have a limited usefulnessy : they mix up MA/greenfields, give no information on the business function involved, etc. Necessity to collect new types of data : informations on individual international projects carried out by multinationals companies Sources : international press, the web, promotion agencies, companies… Ex : Ernst and Young (EIM), IBM/PLI (Gild), Invest in France (AFII) AFII Data base : each project is described by about 20 parameters One possible use : analyze the investment trends for a specific corporate function (e.g : R&D, logistics, call centres, headquarters, etc.)

4. © AFII 2005 2, avenue Vélasquez 75008 Paris Business support functions : already a big market in Europe 58% of projects, 25% of jobs between 2002 and 2004 Smaller average size in terms of jobs than plant-related projects Major structural impact on the host country Per worker skills and wages higher than in production jobs Do not confuse business support or tertiary functions such as R&D or call centers with tertiary sectors like banking – another area where international investment is growing

5. © AFII 2005 2, avenue Vélasquez 75008 Paris Projects, average number of jobs, 2002-2004

6. © AFII 2005 2, avenue Vélasquez 75008 Paris Functions, by number of projects 2002-2004

7. © AFII 2005 2, avenue Vélasquez 75008 Paris Functions, by number of jobs created 2002-2004

8. © AFII 2005 2, avenue Vélasquez 75008 Paris Every sector of activity is affected Large overall proportion of service sectors (because of outsourcing, nature of activities) R&D: pharma and electronics Logistics: manufacturers, distributors, service providers Call centres: importance of service sectors SSCs, HQs: broad sector diversity

9. © AFII 2005 2, avenue Vélasquez 75008 Paris Aggregate job creation in support functions in Europe by sector, 2002-2004

10. © AFII 2005 2, avenue Vélasquez 75008 Paris Proportion of jobs created in support functions by sector, 2002-2004

11. © AFII 2005 2, avenue Vélasquez 75008 Paris Proportion of jobs created in R&D by sector, 2002-2004

12. © AFII 2005 2, avenue Vélasquez 75008 Paris Proportion of jobs created in call centres by sector, 2002-2004

13. © AFII 2005 2, avenue Vélasquez 75008 Paris Proportion of jobs created in HQs and CSPs by sector, 2002-2004

14. © AFII 2005 2, avenue Vélasquez 75008 Paris Proportion of jobs created in logistics by sector, 2002-2004

15. © AFII 2005 2, avenue Vélasquez 75008 Paris US and UK firms play a prominent role US and UK firms enjoy a large share of projects Role of service sectors in home economies These companies played a lead role in managerial and commercial developments linked to support functions (development of SSCs and call centres) US firms currently restructuring support functions (R&D, HQs) in Europe

16. © AFII 2005 2, avenue Vélasquez 75008 Paris Jobs created in support functions by source region, 2002-2004

17. © AFII 2005 2, avenue Vélasquez 75008 Paris Could Western Europe lose its shine? Western Europe accounts for most of the job creation in support functions Support functions in turn account for a high proportion of job creation in Western Europe The British Isles boast especially strong appeal Reasons: stand-out business environment, location near production sites and existing markets But a shift has begun towards the east (development centres) and even towards the Mediterranean (call centres)

18. © AFII 2005 2, avenue Vélasquez 75008 Paris Job creation, by function and host region, 2002-2004

19. © AFII 2005 2, avenue Vélasquez 75008 Paris Job creation, by host country and function 2002-2004

20. © AFII 2005 2, avenue Vélasquez 75008 Paris Business location criteria and country advantages R&D: the west offers the best sites for research, but the east can provide a high-quality workforce for development-side projects Call centres: an eastward, even southward, shift is now underway HQs, SSCs: new cities are emerging as business locations in western Europe, e.g. Barcelona as a base for regional HQs covering southern Europe Logistics: European markets still exert a pull in terms of downstream activities, but upstream components are beginning to follow the production networks eastward