How well FDI measures ’real economic
attractiveness’ of an economy?
FDI Statistics Workshop, OECD
Topias Leino, Bank of Fi...
Countries with high inward FDI…Luxembourg
Ireland
Iceland
Netherlands
Hungary
Spain
Norway
France
Finland
UnitedStates
050...
…often record high outward FDILuxembourg
Belgium
Ireland
Switzerland
Iceland
Estonia
Netherlands
Sweden
Hungary
UnitedKing...
Pass-through funding of FDI
Parent A
Abroad
Finland
Subsidiary C
Subsidiary B
The problem: inward and outward FDI statisti...
Are the figures comparable from
a ’real economic attractiveness’ point of view?
Luxembourg
Belgium
Ireland
Switzerland
Ice...
Finland vs. Sweden
Finland
Sweden
01020304050607080
Inward Outward Pass-through FDI (estimate*)
*) Author’s estimate based...
FDI and real investments* in Finland
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-6000000000
-1000000000
4000000000
...
Points for the discussion
• FDI is not a direct measure of ’real foreign
investment’
– FDI is about finance
– But this may...
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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.

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

Published in: News & Politics
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How well FDI measures 'real economic attractiveness’ of an economy - Topias Leino - 2014 FDI Statistics Workshop

  1. 1. How well FDI measures ’real economic attractiveness’ of an economy? FDI Statistics Workshop, OECD Topias Leino, Bank of Finland 1
  2. 2. Countries with high inward FDI…Luxembourg Ireland Iceland Netherlands Hungary Spain Norway France Finland UnitedStates 050100150200250300350 Inward FDI positions, % of GDP Source: OECD
  3. 3. …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
  4. 4. 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.
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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?

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