ABSTRACT
This chapter addresses three questions regarding the competition for foreign direct investment between European governments. It analyses the extent of policy competition in Europe, particularly how competition has influenced the development of policy approaches to attracting foreign direct investments—in terms of the importance given to the objective, the variety of policy instruments used and the resources allocated to it, insofar as this can be measured. The chapter considers whether such competition had been rising as well as the factors behind any intensification of inter-governmental rivalry. It explains the effects of policy competition to determine whether competition has led to a 'positive-sum game'—by which competition has encouraged an overall rise in Foreign direct investment and resulted in more open national markets and a more secure legal environment—or if competition has led to incentives 'bidding wars' between governments and degradation of labour and environmental standards.
