Europe Drew Most Foreign Ventures in ’93

The North American Free Trade Agreement apparently prompted U.S. manufacturers to invest more in Mexico in 1993, but favorable exchange rates helped keep Europe the most popular venue for new foreign ventures, according to data released Monday.

Of more than 700 projects announced by publicly held companies in the United States, nearly two-thirds were in Europe--particularly Britain--Ernst & Young reported. Among them were chemical and pharmaceutical ventures, food and beverage processing and electronic goods.

Investment in Mexico, Italy and India jumped significantly in 1993, while Canada and Pacific Rim countries saw fewer U.S. companies coming to call.

Britain, for the second consecutive year, attracted the most foreign capital with 136 of the 434 European projects. The dollar’s strength relative to the pound made British markets attractive, said Barry Barovick, director of Ernst & Young’s Corporate Real Estate Consulting Services.

France was second, with 71 new ventures, or 34% more than in 1992.

Canada saw a 45% drop in new U.S. projects, the steepest decline among the 10 top nations. Still, it finished third, with 47 new foreign ventures.

As expected, NAFTA and the lure of 86 million consumers gave a boost to U.S. investment in Mexico, which came in fourth, with 38 U.S. manufacturers. Mexico was in seventh place for 1992.

India jumped into fifth place, with 34 projects, after its government relaxed foreign investment restrictions. India’s vast potential customer base--15% of the world’s population--make it an attractive market, Barovick said. Germany tied in fifth place.

China was seventh, followed by Ireland, Japan and Italy, which climbed into the top 10 for the first time in the study, thanks to fluctuations in the lira’s value. Investment in Italy nearly doubled, to 21 projects from 11 in 1992.

In Eastern Europe, Poland demonstrated new potential with a 33% increase in investment.

Many of the European Free Trade Area countries--Norway, Finland, Austria and Sweden--attracted significant interest from U.S. companies for the first time, said Richard Greene of Ernst & Young’s International Location Advisory Services.

Investment in Asia-Pacific Rim nations fell slightly, to 21% from 22% in 1992. The new focus on Mexico and Latin American markets drew attention from the Pacific Rim, said Ken Goldstein, an economist with the Conference Board.

The third annual study of overseas investment projects of publicly held companies counted 709 new projects involving 380 companies in nearly 60 countries.