ABSTRACT
This chapter focuses on two channels through which emerging and developing countries may provide finance to Europe: foreign exchange reserves and foreign direct investments. It presents the role of foreign exchange reserves accumulation as supply of finance to the European financial markets. The chapter provides an overview of foreign direct investment to European Union (EU)-member countries. It examines the foreign direct investments (FDI) from Brazil, Russia, India and China (BRIC) countries to Europe. FDI to Europe by emerging and developing countries on the other hand has not attracted the same level of attention. BRIC countries, like all foreign investors, tend to invest in bigger and more productive firms than those domestically owned by the recipient countries. China has the lowest allocation to Europe across the BRICs, and the sectoral allocation and structural features of its FDI are very much in line with the global FDI to EU figures.
