how well fdi measures 'real economic attractiveness’ of an economy - topias leino - 2014 fdi...
DESCRIPTION
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.htmTRANSCRIPT
1
How well FDI measures ’real economic attractiveness’ of an economy?
FDI Statistics Workshop, OECD
Topias Leino, Bank of Finland
2
Countries with high inward FDI…
Luxem
bourg
Belgiu
m
Irela
nd
Switz
erla
nd
Icel
and
Estonia
Nether
lands
Swed
en
Hungary
United K
ingdom
Spain
Denm
ark
Norway
Austria
France
Canad
a
Finla
nd
Ger
man
y
United S
tate
s0
50
100
150
200
250
300
350
Inward FDI positions, % of GDP
Source: OECD
3
…often record high outward FDI
Luxem
bourg
Belgiu
m
Irela
nd
Switz
erla
nd
Icel
and
Estonia
Nether
lands
Swed
en
Hungary
United K
ingdom
Spain
Denm
ark
Norway
Austria
France
Canad
a
Finla
nd
Ger
man
y
United S
tate
s0
50
100
150
200
250
300
350
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
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
Are the figures comparable from a ’real economic attractiveness’ point of view?
Luxem
bourg
Belgiu
m
Irela
nd
Switz
erla
nd
Icel
and
Estonia
Nether
lands
Swed
en
Hungary
United K
ingdom
Spain
Denm
ark
Norway
Austria
France
Canad
a
Finla
nd
Ger
man
y
United S
tate
s0
50
100
150
200
250
300
350
Inward FDI positions, % of GDP Outward FDI positions, % of GDP
Source: OECD
FDI positions at the end of 2011
6
Finland vs. Sweden
Finland Sweden0
10
20
30
40
50
60
70
80
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
FDI and real investments* in Finland
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-6000000000
-4000000000
-2000000000
0
2000000000
4000000000
6000000000
8000000000
FDIReal investment in immediate FDI enterprisesReal investment in FDI subgroupsReal Investment in FDI subgroups, excluding non-FDI-related units (es-timate)
EUR billion
Source: Ali-Yrkkö & Leino (2014)*) Gross Fixed Capital Formation in Finnish-based foreign-owned companies
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?