January 18, 2011
After two years of cutting back on their overseas investments, businesses are starting to see the glass half full, and putting more capital into their foreign operations.
But there is one region in particular that is missing out: the euro zone. And that provides the clearest indication yet that the longer-term cost of the currency area's sovereign debt problems will exceed the sums involved in bailing out its weaker members.
If foreign investors continue to give the euro zone a body swerve, the result will be a weakened capital base, sluggish productivity growth, and a long-term reduction in its potential growth rate.
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