As a multinational enterprise (MNE), Acme is planning to establish a greenfield production facility overseas. The decision regarding which country to locate the facility in involves an analysis of numerous factors that could have a bearing on the success of the project. The two countries selected for consideration are Italy and Australia. Italy is a member of the European Union (EU) and subject to its rules and regulations, whereas Australia is not.
Both countries have land that qualifies for Greenfield development. This would have to be undeveloped land that has not been used for any type of industry except agricultural use. The selection between the two sites will be made based on their attractiveness from a trade perspective. In this regard, Italy holds great advantages. According to A.T. KearnyÆs FDI Confidence Index 2002, Italy has risen to 6th place in the survey, which ôtracks the impact of likely political, economic, and regulatory changes on the foreign direct investment intentions and preferences of the leaders of the world's largest corporationsö (ôInvest in Europe,ö 2002). Italy is being regarded as desirable by global investors within the non-financial services and wholesale and retail sectors. The survey also identified Italy as the 7th most competitive market in Europe. (ôInvest in Europe,ö 2002).
Among the reasons for ItalyÆs appeal to investors is the new business incentives it has introduced in recent years. These include tax credits given to support new investments and job creation, plus new initiatives in R&D. Grants of up to 50% of the sustained costs as well as soft loans up to 70% of the investment are also available. There are vocational training grants that cover up to 90% of sustained costs. And export credit supporting exports to non-EU countries is available. The most significant incentive for the purposes of our project is the grant contribution of up t
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