How well FDI measures 'real economic attractiveness’ of an economy - Topias Leino - 2014 FDI Statistics Workshop
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How well FDI measures 'real economic attractiveness’ of an economy - Topias Leino - 2014 FDI Statistics Workshop

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Topias Leino's presentation at the FDI Statistics Workshop (20 March 2014) during the session on whether or not FDI statisics are still a useful metric when measuring investment globalisation.

Topias Leino's presentation at the FDI Statistics Workshop (20 March 2014) during the session on whether or not FDI statisics are still a useful metric when measuring investment globalisation.

Find out more at http://www.oecd.org/daf/inv/measuring-globalisation-fdi-statistics-workshop-2014.htm

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How well FDI measures 'real economic attractiveness’ of an economy - Topias Leino - 2014 FDI Statistics Workshop How well FDI measures 'real economic attractiveness’ of an economy - Topias Leino - 2014 FDI Statistics Workshop Presentation Transcript

  • How well FDI measures ’real economic attractiveness’ of an economy? FDI Statistics Workshop, OECD Topias Leino, Bank of Finland 1
  • Countries with high inward FDI…Luxembourg Ireland Iceland Netherlands Hungary Spain Norway France Finland UnitedStates 050100150200250300350 Inward FDI positions, % of GDP Source: OECD
  • …often record high outward FDILuxembourg Belgium Ireland Switzerland Iceland Estonia Netherlands Sweden Hungary UnitedKingdom Spain Denmark Norway Austria France Canada Finland Germany UnitedStates 050100150200250300350 Inward FDI positions, % of GDP Outward FDI positions, % of GDP Source: OECD To what extent are inward and outward FDI figures interconnected? FDI positions at the end of 2011 View slide
  • Pass-through funding of FDI Parent A Abroad Finland Subsidiary C Subsidiary B The problem: inward and outward FDI statistics get inflated by pass-through FDI (in real economic sense) The methods introduced in the revised statistical standards of FDI capture some type of pass-through FDI, but not all. View slide
  • Are the figures comparable from a ’real economic attractiveness’ point of view? Luxembourg Belgium Ireland Switzerland Iceland Estonia Netherlands Sweden Hungary UnitedKingdom Spain Denmark Norway Austria France Canada Finland Germany UnitedStates 050100150200250300350 Inward FDI positions, % of GDP Outward FDI positions, % of GDP Source: OECD FDI positions at the end of 2011
  • Finland vs. Sweden Finland Sweden 01020304050607080 Inward Outward Pass-through FDI (estimate*) *) Author’s estimate based on data on outward FDI positions that are controlled by non-resident enterprises** **) Underlying data on Sweden provided by Statistics Sweden Sources: OECD, Bank of Finland, Statistics Sweden, author’s calculations FDI positions at the end of 2011% of GDP
  • FDI and real investments* in Finland 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -6000000000 -1000000000 4000000000 FDI Real investment in immediate FDI enterprises Real investment in FDI subgroups Real Investment in FDI subgroups, excluding non-FDI-related units (estimate) EUR billion Source: Ali-Yrkkö & Leino (2014)*) Gross Fixed Capital Formation in Finnish-based foreign-owned companies
  • Points for the discussion • FDI is not a direct measure of ’real foreign investment’ – FDI is about finance – But this may also be its greatest strength! • FDI may not be a very good indicator on real economic attractiveness of an economy, but: – perhaps it could be… – Should it be?