What Is Real and What Is Not in the Global FDI Network?
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Summary:
Macro statistics on foreign direct investment (FDI) are blurred by offshore centers with enormous inward and outward investment positions. This paper uses several new data sources, both macro and micro, to estimate the global FDI network while disentangling real investment and phantom investment and allocating real investment to ultimate investor economies. We find that phantom investment into corporate shells with no substance and no real links to the local economy may account for almost 40 percent of global FDI. Ignoring phantom investment and allocating real investment to ultimate investors increases the explanatory power of standard gravity variables by around 25 percent.
Series:
Working Paper No. 2019/274
Subject:
Asset and liability management Balance of payments Business enterprises Economic sectors Financial services Foreign direct investment Offshore financial centers Revenue administration Special purpose vehicle Tax avoidance
English
Publication Date:
December 11, 2019
ISBN/ISSN:
9781513521527/1018-5941
Stock No:
WPIEA2019274
Pages:
54
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