Abstract

Eurostat has published foreign direct investment (FDI) statistics by immediate counterpart since 2008 and FDI is an important component of Balance of Payments (BOP) as well as Gross National Income (GNI). In recent years compiling FDI by Ultimate Investing Economy (UIE) has become a key topic at international level, reflected in the updates of the international statistical manuals. Extending the presentation of FDI by the economy of the ultimate investor offers more nuanced statistics that give further insights into economic relationships, providing a better understanding of the degree of layering of FDI and of the links to global production chains, improving the traceability of investments, and so forth. There is ample interest by policy makers in political, economic, and structural analysis to identify the locations of the ultimate investors in direct investment enterprises therefore FDI by UIE data accessibility is crucial for providing useful insights into economic developments, that is not necessarily captured in the FDI data by the immediate counterparty. This interest has grown in recent years, as ownership structures have become more complex and as it has become more common for direct investment enterprises to be owned through intermediate entities such as holding companies and special purpose entities. In addition an important piece of information provided by the UIE FDI presentation is the amount of round-tripping in the economy. In such cases, this means that the country becomes an inward investor in itself as a result of the chain of investment leading back to the home country.
Eurostat disseminates FDI statistics by immediate counterpart for stocks (positions) and flows (transactions and income) as well as inward FDI positions according to the ultimate investor collected on a voluntary basis from European Union (EU) Member States, European Free Trade Association and EU enlargement countries. With this paper we aim to show the difference between FDI statistics by immediate and ultimate investing economy, elaborate on the importance of compiling these statistics at global level, and to illustrate how users could benefit from FDI statistics in their economic analysis.