Direct investment abroad

Greater investment in equipment tends
to coincide with greater direct investment, as trends
go. More formal econometric investigations by the
German Bundesbank come to the same conclusion
(Deutsche Bundesbank 2006a, 2014).

This is because companies invest abroad not primarily to save costs but
to open up new markets and locate distribution and
customer service operations closer to foreign purchasers.

This is confirmed by regular business surveys conducted
by the Deutsche Industrie- und Handelskammertag
(DIHK) (DIHK 2014) (Figure 8b).

Companies planning to expand production generally
increase both foreign and domestic investment.