The power shift to the east... is Europe really set to decline?

Much has been said about the decline of the West -in terms of weight in the global economy this is. Undoubtedly the weight of the West will decline, provided that its economic growth is below that of the emerging markets. I think Looking at the latest projection of Price Waterhouse Coopers, the top 10 economies worldwide  would count only 2 European countries by 2050, there are 4 today.

Nevertheless, all is not bad. Looking at the Ernst&Young report on global Foreign Direct Investments (FDI), Europe still shows as the second most attractive destination for FDI, and in terms of size the European countries combined are still will above the US when in comes to attracting FDI's.No guarantee for the future, obviously, but still pretty far from a doom scenario, especially if you consider the growing importance if Chinese and Indian investments in Europe...

(From the report:)
Global conclusions:

• Though China is rated the world’s most attractive investment region with a score of 38%, Europe ranks second in 2011 — awarded a score of 35% by investors.
• In 2010, emerging markets collectively harvested more than half of global inward FDI for the first time, though their performances varied: while the value of FDI into Brazil grew 16.3% on the back of commodities and consumption, the value India’s inward investment fell 31.5%, slowed by strong competition for investment projects. China’s FDI inflows grew steadily, underpinned by stable returns on investment.
• When considering where to invest in 2010, companies view transport and logistics infrastructure (63%), telecommunications infrastructure (62%) and stability and transparency of the political, legal and regulatory environment (62%) as the most critical factors.

Major charts:

• The attractiveness of Europe as FDI destination is declining but still ranks second next to China:

• The majority of FDI inflow still originates from the US, but outside of Europe China and India start taking major positions:

• The 4 major European FDI inflow countries (UK, Germany, France and Belgium) together still account for more than US FDI inflow:

(Click here to access the full E&Y report)