## Measuring Multinational Production with Foreign Direct Investment Statistics: Recent Trends, Challenges, and Developments

_IMF Working Papers, June 2, 2023_

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## Bibliographic details
- Authors: Bruno Casella, Maria Borga, Konstantin Wacker
- Published: June 2, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400243530.001

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### Summary
- Foreign Direct Investment (FDI) statistics capture financing aspects of multinational enterprises (MNEs) and have been widely used as a proxy for multinational production because of their wide availability and cross-country comparability.
- Concerns exist that multinational production occurs in different countries than where financial positions are recorded, calling the practice of using FDI as a proxy into question.
- The paper revisits main objections to using FDI as a proxy for multinational production, explores counterarguments, and provides guidance on using FDI statistics to measure multinational production.

### Key themes and analysis
- The complexity of the global production landscape increases the need for reliable measures of economic activity by MNEs.
- FDI statistics are frequently used as proxies for production activity due to availability and comparability across countries.
- Primary objection: geographic mismatch between recorded financial positions and actual locations of production.
- The paper examines counterarguments to these objections and assesses circumstances under which FDI statistics remain informative about multinational production.

### Guidance and implications
- The paper offers guidance on the use of FDI statistics to measure multinational production, emphasizing careful interpretation given potential mismatches between financial recording locations and production locations.
- The guidance addresses the role of conduit FDI, special purpose vehicles, offshore financial centers, and the interpretation of FDI stocks in relation to foreign affiliates and multinational enterprises.

### Subjects and keywords
- Subjects: Asset and liability management, Balance of payments, Financial institutions, Financial services, Foreign direct investment, Offshore financial centers, Special purpose vehicle, Stocks
- Keywords: conduit FDI, FDI, FDI data, FDI statistics, FDI stock, foreign affiliates, Foreign direct investment, Global, multinational enterprises, multinational production, Offshore financial centers, Special purpose vehicle, Stocks

*Source: Measuring Multinational Production with Foreign Direct Investment Statistics: Recent Trends, Challenges, and Developments (IMF Working Paper No. 2023/113, June 2, 2023).*

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_Source: https://www.imf.org/en/publications/wp/issues/2023/06/02/measuring-multinational-production-with-foreign-direct-investment-statistics-recent-trends-534064_