Source
Source Contact person/organisation Contact person/organisation Data source(s) used Data source(s) usedSource:OECD International direct investment database
FDI Data are based on statistics provided by 34 OECD member countries.
Population & Scope Population & Scope Statistical population Statistical populationSubsidiaries, associates and branches
A direct investment enterprise may be an incorporated enterprise - a subsidiary or associate company - or an unincorporated enterprise (branch). Direct investors may have direct investment enterprises which have subsidiaries, associates and branches in one country or in several countries. The legal structures of groups of related enterprises are very complex and may bear no relationship to the management responsibilities. It can be argued that where enterprise A has a partly owned subsidiary B, which itself has a subsidiary C whose existence depends on B, not A, that C should not be included as part of A's foreign direct investment. However, in practice it is difficult to make this type of distinction as A may have complete control of its partly owned subsidiaries and may have decided to invest in C through B rather than through some other channel. For this reason OECD considers that inward and outward direct investment statistics should, as a matter of principle, cover all directly and indirectly owned subsidiaries, associates, and branches.
Geographic coverage Geographic coverage OECD recommends that direct investment statistics (FDI income and financial flows and FDI positions) be compiled in respect to the immediate host or investing country. However, it is also recommended to compile on a supplemental basis FDI positions according to ultimate investing and host country (currently most OECD countries do not compile such information).
Geographical allocation of FDI flows and positions is according to debtor/creditor principle. Countries which compile flow data according to transactor principle will have to reconcile their flow and position statistics.
Note on the partner country group 'OECD'
‘OECD' aggregate corresponds to member country composition of the reporting period. Data up to and including 2009 correspond to 30 member countries while Chile, Slovenia, Israel and Estonia which became members of the OECD in 2010 are not included. OECD aggregate will include 34 member countries for statistics as from 2010.
Sector coverage Sector coverageMethodology for industry allocation
The recommended industry classification is according to the industry of the direct investment enterprise. In other words for inward investment the industry of the resident enterprise and for outward investment the industry of the non-resident enterprise. Nevertheless, in practice most countries record industry classification of outward investment also according to the industry of the resident enterprise.
Broad categories:
- Primary Sector (Agriculture and Fishing, Mining and Quarrying)
- Manufacturing
- Electricity, Gas and Water
- Construction
- Total Services
Concepts & Classifications Concepts & Classifications Key statistical concept Key statistical conceptGeneral Note on Main concepts and definitions of foreign direct investment (FDI) and data presentation
Reference:Benchmark Definition of Foreign Direct Investment, 3rd edition
Foreign direct investment
Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (‘‘direct investor'') in an entity resident in an economy other than that of the investor (‘‘direct investment enterprise''). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated.
Foreign direct investor (outward investment for reporting country)
A foreign direct investor is an individual, an incorporated or unincorporated public or private enterprise, a government, a group of related individuals, or a group of related incorporated and/or unincorporated enterprises which has a direct investment enterprise - that is, a subsidiary, associate or branch - operating in a country other than the country or countries of residence of the foreign direct investor or investors.
Direct investment enterprise (inward investment for reporting country)
A direct investment enterprise is define as an incorporated or unincorporated enterprise in which a foreign investor owns 10 per cent or more of the ordinary shares or voting power of an incorporated enterprise or the equivalent of an unincorporated enterprise.
The numerical guideline of ownership of 10 per cent of ordinary shares or voting stock determines the existence of a direct investment relationship. An effective voice in the management, as evidenced by an ownership of at least 10 per cent, implies that the direct investor is able to influence or participate in the management of an enterprise; it does not require absolute control by the foreign investor.
Although not recommended by the OECD, some countries may still feel it necessary to treat the 10 per cent cut-off point in a flexible manner to fit the circumstances. In some cases, the ownership of 10 per cent of the ordinary shares or voting power may not lead to the exercise of any significant influence while, on the other hand, a direct investor may own less than 10 per cent but have an effective voice in the management. OECD does not recommend any qualifications to the 10 per cent rule. Consequently, countries that choose not to follow the 10 per cent rule in all cases should identify, where possible, the aggregate value of transactions not falling under the 10 per cent cut-off rule, so as to facilitate international comparability.
Some countries may consider that the existence of elements of a direct investment relationship may be indicated by a combination of factors such as:
- representation on the board of directors;
- participation in policy-making processes;
- material inter-company transactions;
- interchange of managerial personnel;
- provision of technical information;
- provision of long-term loans at lower than existing market rates.
Other relationships may exist between enterprises in different economies which exhibit the characteristics set out above, although there is no formal link with regard to shareholding. For example, two enterprises, each operating in different economies, may have a common board and common policy making and may share resources including funds but with neither having a shareholding in the other of 10 per cent or more. In such cases where neither is a direct investment enterprise of the other, the transactions could be treated as between related subsidiaries. These are not regarded as direct investment.
Breakdowns
FDI flows and positions are broken down separately as followed:
1. FDI flows
1.1 FDI inflows
a) country or economic zone
b) industry sector based ISIC3 (and NACE)
1.2 FDI outflows
a) country or economic zone
b) industry scetor based ISIC3 (and NACE)
2. FDI Positions
2.1 Inward FDI position
a) country or economic zone
b) industry sector based ISIC3 (and NACE)
2.2 Outward FDI position
a) country or economic zone
b) industry sector based ISIC3 (and NACE)
Estimation Estimation Valuation
The OECD Benchmark Definition recommends market value as the conceptual basis for valuation. Market valuation places all assets at current prices rather than when purchased or last revalued, and allows comparability of assets of different vintages. It allows for consistency between flows and stocks of assets of different enterprises, industries, and countries, as well as over time. However, in practice book values from the balance sheets of direct investment enterprises (or investors) are generally utilised to determine the value of the stocks of direct investment. This approach reflects the fact that enterprise balance sheet values - whether they are regularly revalued on a current market value basis, reported on a historical cost basis, or are based on some interim but not current revaluation - represent the only source of valuation of assets and liabilities readily available in most countries. (In the first case, the balance sheet value is, in fact, the market value). The collection of data from enterprises on a current market value basis is to be encouraged, to narrow the gap between principle and practice.
Source:OECD International direct investment database
FDI Data are based on statistics provided by 34 OECD member countries.
Subsidiaries, associates and branches
A direct investment enterprise may be an incorporated enterprise - a subsidiary or associate company - or an unincorporated enterprise (branch). Direct investors may have direct investment enterprises which have subsidiaries, associates and branches in one country or in several countries. The legal structures of groups of related enterprises are very complex and may bear no relationship to the management responsibilities. It can be argued that where enterprise A has a partly owned subsidiary B, which itself has a subsidiary C whose existence depends on B, not A, that C should not be included as part of A's foreign direct investment. However, in practice it is difficult to make this type of distinction as A may have complete control of its partly owned subsidiaries and may have decided to invest in C through B rather than through some other channel. For this reason OECD considers that inward and outward direct investment statistics should, as a matter of principle, cover all directly and indirectly owned subsidiaries, associates, and branches.
OECD recommends that direct investment statistics (FDI income and financial flows and FDI positions) be compiled in respect to the immediate host or investing country. However, it is also recommended to compile on a supplemental basis FDI positions according to ultimate investing and host country (currently most OECD countries do not compile such information).
Geographical allocation of FDI flows and positions is according to debtor/creditor principle. Countries which compile flow data according to transactor principle will have to reconcile their flow and position statistics.
Note on the partner country group 'OECD'
‘OECD' aggregate corresponds to member country composition of the reporting period. Data up to and including 2009 correspond to 30 member countries while Chile, Slovenia, Israel and Estonia which became members of the OECD in 2010 are not included. OECD aggregate will include 34 member countries for statistics as from 2010.
Methodology for industry allocation
The recommended industry classification is according to the industry of the direct investment enterprise. In other words for inward investment the industry of the resident enterprise and for outward investment the industry of the non-resident enterprise. Nevertheless, in practice most countries record industry classification of outward investment also according to the industry of the resident enterprise.
Broad categories:
- Primary Sector (Agriculture and Fishing, Mining and Quarrying)
- Manufacturing
- Electricity, Gas and Water
- Construction
- Total Services
General Note on Main concepts and definitions of foreign direct investment (FDI) and data presentation
Reference:Benchmark Definition of Foreign Direct Investment, 3rd edition
Foreign direct investment
Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (‘‘direct investor'') in an entity resident in an economy other than that of the investor (‘‘direct investment enterprise''). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated.
Foreign direct investor (outward investment for reporting country)
A foreign direct investor is an individual, an incorporated or unincorporated public or private enterprise, a government, a group of related individuals, or a group of related incorporated and/or unincorporated enterprises which has a direct investment enterprise - that is, a subsidiary, associate or branch - operating in a country other than the country or countries of residence of the foreign direct investor or investors.
Direct investment enterprise (inward investment for reporting country)
A direct investment enterprise is define as an incorporated or unincorporated enterprise in which a foreign investor owns 10 per cent or more of the ordinary shares or voting power of an incorporated enterprise or the equivalent of an unincorporated enterprise.
The numerical guideline of ownership of 10 per cent of ordinary shares or voting stock determines the existence of a direct investment relationship. An effective voice in the management, as evidenced by an ownership of at least 10 per cent, implies that the direct investor is able to influence or participate in the management of an enterprise; it does not require absolute control by the foreign investor.
Although not recommended by the OECD, some countries may still feel it necessary to treat the 10 per cent cut-off point in a flexible manner to fit the circumstances. In some cases, the ownership of 10 per cent of the ordinary shares or voting power may not lead to the exercise of any significant influence while, on the other hand, a direct investor may own less than 10 per cent but have an effective voice in the management. OECD does not recommend any qualifications to the 10 per cent rule. Consequently, countries that choose not to follow the 10 per cent rule in all cases should identify, where possible, the aggregate value of transactions not falling under the 10 per cent cut-off rule, so as to facilitate international comparability.
Some countries may consider that the existence of elements of a direct investment relationship may be indicated by a combination of factors such as:
- representation on the board of directors;
- participation in policy-making processes;
- material inter-company transactions;
- interchange of managerial personnel;
- provision of technical information;
- provision of long-term loans at lower than existing market rates.
Other relationships may exist between enterprises in different economies which exhibit the characteristics set out above, although there is no formal link with regard to shareholding. For example, two enterprises, each operating in different economies, may have a common board and common policy making and may share resources including funds but with neither having a shareholding in the other of 10 per cent or more. In such cases where neither is a direct investment enterprise of the other, the transactions could be treated as between related subsidiaries. These are not regarded as direct investment.
Breakdowns
FDI flows and positions are broken down separately as followed:
1. FDI flows
1.1 FDI inflows
a) country or economic zone
b) industry sector based ISIC3 (and NACE)
1.2 FDI outflows
a) country or economic zone
b) industry scetor based ISIC3 (and NACE)
2. FDI Positions
2.1 Inward FDI position
a) country or economic zone
b) industry sector based ISIC3 (and NACE)
2.2 Outward FDI position
a) country or economic zone
b) industry sector based ISIC3 (and NACE)
Valuation
The OECD Benchmark Definition recommends market value as the conceptual basis for valuation. Market valuation places all assets at current prices rather than when purchased or last revalued, and allows comparability of assets of different vintages. It allows for consistency between flows and stocks of assets of different enterprises, industries, and countries, as well as over time. However, in practice book values from the balance sheets of direct investment enterprises (or investors) are generally utilised to determine the value of the stocks of direct investment. This approach reflects the fact that enterprise balance sheet values - whether they are regularly revalued on a current market value basis, reported on a historical cost basis, or are based on some interim but not current revaluation - represent the only source of valuation of assets and liabilities readily available in most countries. (In the first case, the balance sheet value is, in fact, the market value). The collection of data from enterprises on a current market value basis is to be encouraged, to narrow the gap between principle and practice.