A recent study commissioned by the international accounting firm Ernst and Young, the "European Attractiveness Survey 2007," highlights Germany's advantages as an outstanding investment location. Investors see Germany's infrastructure, quality of research and development, workforce education, and political stability as major advantages.

The study asked over 800 active managers from many industries in European, American, and Asian firms between February and March 2007. On a worldwide scale the Federal Republic fell short only to China, the United States, and India. Investors find Germany to be an attractive location for R & D centers and for corporate headquarters. In both cases Germany is second place to the United States.

Important criteria for decision makers are those where Germany excels: Logistics and infrastructure, potential increases in productivity, telecommunication infrastructure, and the transparency and stability of the political system were all ranked in the top five among factors investors look for in taking decisions.

Germany saw an increase of 57% in total FDI projects last year in comparison with 2005. This data is especially encouraging when viewed versus other European countries. Poland, the Czech Republic, Hungary, and Russia all saw reductions in projects on an annual basis. France only realized a modest increase. The results of the study reflect the reasons that foreign investors are looking to Germany in emerging industries such as renewable energies. Foreign companies are, rather than turning to low cost countries, relocating, or "inshoring," to Germany for the country's expertise in engineering, research, and logistics. Labor costs are not as the only factor in location decisions, but rather productivity, where Germany is strong, is also important.

44% of investors expressed the belief that ecologically responsible environmental policies stimulate innovation and 30% considered environmental issues to play a strong role in investment decision making processes. Germany's forward thinking environmental policy, that aims to reduce carbon emissions and develop sustainable sources of energy, could therefore serve as an impetus for future investments.