OECD Benchmark Definition of Foreign Direct Investment (Fifth Edition)

10. Links between FDI and other statistics

Abstract

This chapter explores the relationships between foreign direct investment (FDI) statistics and other macroeconomic and structural business/demographic statistics. It begins by discussing some of the ways that FDI feeds into the balance of payments, international investment position, and national accounts statistics and some of the key economic indicators that FDI can impact. It then presents the activities of multinational enterprises (AMNE) or foreign affiliate statistics (FATS). It compares and contrasts FDI and AMNE/FATS, discusses their use in the capital approach to measuring greenfield investment and extensions of capacity, and provides guidance on how compilers could link the two datasets.

10.1. Introduction

648. This Benchmark Definition provides guidance for compiling foreign direct investment (FDI) statistics as a standalone statistical product with standard aggregate statistics as well as standard and supplementary disaggregated series. However, FDI statistics are an integral part of the broader set of macroeconomic statistics, including the balance of payments (BOP) and international investment position (IIP) statistics (also called external sector statistics) and the system of national accounts. The definitions and concepts, accounting principles, and coverage recommended in this Benchmark Definition are completely consistent with those recommended in the Integrated Balance of Payments and International Investment Position Manual, Seventh Edition (BPM7, (IMF, Forthcoming[1])). They are also consistent with the 2025 System of National Accounts (2025 SNA, (United Nations et al., Forthcoming[2])) as one of the goals of the most recent update of the international standards was complete consistency, including in terminology, between the external sector statistics and the national accounts. Therefore, it is useful to understand how FDI statistics feed into the broader set of macroeconomic statistics. It is also important to consult balance of payments and national accounts compilers to ensure consistent treatment of significant FDI transactions across the macroeconomic statistics.

649. Another set of statistics that are closely related to FDI are the activities of multinational enterprises (AMNE) statistics, which include foreign affiliate statistics (FATS). AMNE/FATS statistics provide data on the operations of foreign-controlled and foreign-controlling enterprises, such as turnover (sales), employment, value added, etc. They can cover both the operations of foreign-controlled enterprises in the compiling economy, called inward FATS, and the operations of foreign enterprises controlled by the compiling economy, called outward FATS. In addition, AMNE/FATS provide information on the domestic activities of resident parents, including of their resident subsidiaries. These statistics can provide information on the impact of foreign control of enterprises on home and host economies. This set of statistics can also be used to measure greenfield investment and extensions of capacity (GI and EC) using the capital approach (for a description of measuring GI and EC using the transactions approach, see Chapter 9).

650. The discussion that follows is organised in four sections. The first section defines the BOP and IIP and shows the ways direct investment feeds into these accounts, as well as some of the key indicators derived from these accounts. The next section does the same for national accounts. It is important to stress that the discussion in these two sections is not an exhaustive description of direct investment in macroeconomic statistics but, rather, is simply meant to highlight some of the accounts where direct investment appears and the key indicators that it impacts. The subsequent section presents AMNE/FATS statistics, compares and contrasts them with FDI statistics, and provides guidance on ways that economies can link the two datasets. It also explains how AMNE/FATS can be used to measure GI and EC through the capital approach. The last section briefly mentions some other sets of statistics to which FDI might be relevant.

10.2. FDI statistics in balance of payments and international investment position

651. Direct investment is one of the five functional categories that serve as the main breakdown in the BOP and IIP.1 The BOP captures transactions between residents and non-residents during a specific period of time. The IIP shows the value of external financial assets and liabilities at a specific point in time. FDI can play a significant role in an economy’s BOP and IIP. The BOP and IIP are presented on the asset/liability basis (see Chapter 2 and Annex 2.B).

10.2.1. Balance of payments (BOP)

652. The BOP consists of the current account, the capital account, and the financial account. The current account records transactions in goods, services and earned income and transfer income between residents and non-residents. All components of FDI income – distributed earnings, reinvested earnings, and interest income – are part of the earned income account, specifically part of property income.2 The earned income account of the BOP records earned income transactions between residents and non-residents.

653. One of the key indicators in the BOP is the current account balance (CAB). The CAB is presented as the credits/revenues in the current account less the debits/expenditures:

$CAB=X-M+BEI+BTI$

where X is exports, M is imports, BEI is the balance on earned income, and BTI is the balance on transfer income. As mentioned above, FDI income will impact the current account balance through its inclusion in the balance on earned income.

654. The financial account of the BOP records transactions in financial assets and liabilities between residents and non-residents. All of the components of FDI financial transactions – in equity capital (including reinvestment of earnings) and inter-company debt – are recorded in the financial account. The entries in the financial account are the net acquisition of financial assets (NAFA), which represents the acquisitions less disposals of each financial asset in a specific period, and the net incurrence of liabilities (NIL), which represents the increases in each liability less reductions in that liability in a specific period.

655. One of the key indicators derived from the financial account is net lending/borrowing from the rest of the world (NLB). NLB is:

$NLB=NAFA-NIL=NFA$

where NFA is net financial account entries.

656. If NLB is positive, then the economy is lending to the rest of the world, and if it is negative, then it is borrowing from the rest of the world.

657. The capital account of the BOP shows: (a) capital transfers receivable and payable between residents and non-residents; and (b) the acquisition and disposal of non-produced, non-financial assets between residents and non-residents.

658. The net provision of resources to the rest of the world in a specific period by an economy can be represented by the current account balance plus the capital account balance; this shows that the net provision of resources to the rest of the world is equal to the change in net claims on the rest of the world. That is:

$NLB=CAB+KAB=NFA$

where KAB is the balance on the capital account.

10.2.2. International investment position (IIP)

659. The IIP records the value and composition of financial assets of residents that are claims on non-residents and gold bullion held as reserve assets (called external financial assets), and the liabilities of residents to non-residents (called external liabilities) at a specific point in time, usually the end of the quarter or the end of the year. The IIP is broken down into the above-mentioned main functional categories; one of them being direct investment, inclusive of debt and equity positions, shown separately.

660. The difference between an economy’s external financial assets and liabilities is referred to as the net IIP. If the net IIP is positive, then the economy is a creditor nation; if it is negative, then the economy is a debtor nation.

10.2.3. Other changes in financial assets and liabilities accounts

661. The other changes in financial assets and liabilities account shows changes in financial positions that are not due to transactions. These are broken down into other changes in volume and revaluations (see Chapter 5). Revaluations are further broken down into exchange rate changes and other price changes.

662. The integrated IIP statement explains the changes between the values in the opening and closing positions of the IIP through the accumulation accounts, which consist of the balance of payments’ financial account transactions and the other changes in financial assets and liabilities accounts. Specifically, the integrated IIP statement shows:

Beginning of period position

+ Transactions during the period

+ Other changes in volume during the period

+ Revaluations due to exchange rate changes

+ Other price changes

= End of period position

663. The main breakdown of the integrated IIP statement is by functional category, including direct investment.

10.3. System of national accounts

664. The national accounts measure the economic activity of an economic territory, including transactions between residents and non-residents. In the national accounts, transactions and positions between residents and non-residents are recorded as if the latter constitute another sector of the economy, called the rest of the world, although it can technically not be regarded as such (i.e., there is no full accounting of all transactions and positions of non-resident units as is the case for the domestic sectors). The BOP and IIP are closely related to the national accounts, and, in many countries, the data for the rest of the world are taken directly from the BOP and IIP.3

665. The national accounts can be grouped into three categories: i) current accounts, ii) accumulation accounts, and iii) balance sheets. Current accounts deal with the production of goods and services, the generation of income by production, the allocation of income, and the use of income. Accumulation accounts are those that record flows, revaluations, and other changes in volume that affect the entries in the balance sheets between the start and end of the accounting period. The balance sheets present stocks of (financial and non-financial) assets and liabilities and net worth.

666. This section will discuss the role of direct investment in the national accounts’ earned income, financial accounts and in the balance sheets. The recording in the national accounts is on the asset/liability basis.

10.3.1. The allocation of income account

667. The allocation of earned income account focuses on resident institutional units as recipients of earned income rather than on their role as producers whose activities generate earned income. The allocation of earned income account shows where the items payable in the earned income account are receivable and also includes the amounts of property income receivable and payable by institutional sectors. Under property income, the allocation of earned income account shows the distributed income of corporations and the reinvested earnings on foreign direct investment. Dividends and withdrawals of income from quasi-corporations from FDI statistics are recorded along with these items from other functional categories. However, the reinvested earnings on foreign direct investment are shown separately because reinvested earnings are only recorded for direct investment enterprises (DIEs).4

668. The rest of the world column of the allocation of earned income account is key to converting income arising from production (i.e., gross domestic product (GDP)) into gross national income (GNI). GNI is equal to the income from GDP plus the income residents earned from abroad less the income residents paid to abroad; that is, the difference between GDP and GNI is net income from abroad (NIA):

$GNI=GDP+NIA$

FDI income plays an important role in net income from abroad in many economies.

10.3.2. Financial accounts

669. The financial flow accounts of the national accounts record transactions between residents and between residents and non-residents that involve financial assets and liabilities. The main breakdown is by instrument. Within the financial flow accounts, components obtained from FDI statistics are incorporated as equity inclusive of reinvestment of earnings and debt claims in the rest of the world column along with other functional categories.

10.3.3. Balance sheets

670. The balance sheets show the value of assets and liabilities of residents at a specific point in time. Unlike the IIP, the balance sheets include both financial assets and non-financial assets, including both produced and non-produced non-financial assets. However, non-financial assets only appear on the balance sheets of resident sectors. Produced non-financial assets include things like fixed assets, inventories, and valuables. Non-produced non-financial assets are assets that came into being other than through production processes, such as contracts, leases, and purchased goodwill. Natural resources, such as land, water resources, timber and fish stocks, and mineral and energy resources that have an economic value and over which ownership may be enforced and transferred are also included.

671. The IIP is included in the financial assets and liabilities with the rest of the world in the balance sheets. The main breakdown is by instrument; thus, FDI equity and debt positions are included.

672. One of the key indicators from the national balance sheet is national net worth. National net worth of an economy is the total value of non-financial assets of residents plus the balance of financial assets and liabilities of residents with the rest of the world:

$National net worth=value of non-financial assets+net IIP$

10.3.4.  Accumulation accounts

673. The accumulation accounts of the national accounts record flows that affect the opening and closing entries in the NBS. There are four accumulation accounts: i) the capital account; ii) the financial account; iii) the other changes in volume of assets and liabilities account; and iv) the revaluation account. Direct investment financial transactions appear in the financial account as discussed above. Other changes in volume in direct investment would be reflected in the other changes in the volume of assets and liabilities account, and revaluations of direct investment would be reflected in the revaluations account.

10.4. Activities of multinational enterprises and foreign affiliate statistics

674. A multinational enterprise (MNE) is a legal entity that has at least one non-resident affiliate or branch, and exercises control over its affiliate(s) or branch(es) either directly – by having over 50 percent of the voting power in the entity – or by indirect transmission of control. The MNE is the ultimate controlling parent—the direct investor at the top of the control chain (BPM7, Chapter 4, Section A.1). This definition implies that all MNEs are FDI companies, but not all FDI companies are MNEs.

675. AMNE/FATS statistics have often been compiled as part of structural and demographic business statistics, which are statistics designed to provide information on the industrial structure, dynamics and performance of businesses in an economy.5 AMNE/FATS provide data that can be used to assess the impact of globalisation, specifically foreign control of enterprises, on an economy. In addition, they can be used to support international agreements, such as the General Agreement on Trade in Services, which includes commercial presence as a mode of supply. Guidance for the compilation of AMNE/FATS is provided in the 2010 Manual of Statistics of International Trade in Services (2010 MSITS, (United Nations et al., 2012[3])) and Eurostat provides guidance to its member states on the compilation of FATS in its European Business Statistics Compilers’ Manual for Foreign Affiliate Statistics, 2024 Edition (2024 FATS manual, (Eurostat, 2024[4])).

676. This section begins with a discussion of the intersection between FDI and AMNE/FATS statistics. It then discusses the coverage of AMNE/FATS, followed by the disaggregation by geography and by industry. It then describes possible variables to be included in AMNE/FATS and some globalisation indicators that can be constructed from them. Next, it contrasts FDI and AMNE/FATS statistics. Finally, it offers guidance to compilers who would like to link their FDI with AMNE/FATS statistics.

10.4.1. Intersection between FDI and AMNE/FATS statistics

677. Before discussing AMNE statistics as a second data set that can be used to assess and analyse the extent and effects of globalisation, it will be helpful to consider how these statistics and statistics on FDI relate to one another. The intersection between FDI and AMNE statistics can be explored by constructing a balance sheet for a hypothetical DIE in which assets, liabilities, and owners’ equity are broken down on the basis of whether or not they represent positions of, or with, the direct investor(s). An example is provided in Table 10.1.

Table 10.1. Foreign affiliate balance sheet

Assets:	Liabilities:
A1 Equity claims on direct investor (reverse investment)	L1 Debt owed to direct investor
A2 Debt claims on direct investor	L2 Other liabilities
A3 Other assets
	Owners’ equity:
	O1 Equity claims of direct investor
	O2 Equity claims of other owners

Source: OECD (2009[5]), OECD Benchmark Definition of Foreign Direct Investment 2008: Fourth Edition, https://doi.org/10.1787/9789264045743-en.

678. Given the accounting identity which states that assets equal liabilities plus owners’ equity, it is the case that:

$A1+A2+A3=L1+L2+O1+O2$

679. These terms can be re-arranged as follows, so that the left-hand side of the equation shows the direct investment position:

$L1+O1-A1-A2=A3-L2-O2$

680. That is, the direct investment position – the equity and debt claims of the direct investor on the DIE less the equity and debt claims of the DIE on the direct investor – equals the assets of the enterprise not representing claims on the direct investor, less equity and debt claims on the enterprise by entities other than the direct investor. Put another way, the direct investment position can be viewed as financing the portion of the “other” assets of the enterprise (A3) that is not financed by other investors and lenders. Included among these “other” assets would be tangible assets, such as plant, equipment, and inventories; intangible assets, such as patents and copyrights; and financial claims – both equity and debt – on entities other than the direct investor.

10.4.2. Description of AMNE/FATS statistics

681. This section provides a brief description of AMNE/FATS statistics by discussing their coverage and statistical units. For more detail, see the 2010 MSITS and the 2024 FATS Manual.

Coverage: Ownership criteria

682. AMNE/FATS statistics are compiled for the controlled subset of foreign affiliates. Statistics on foreign affiliates owned by residents of the compiling economy (outward FATS) should include all controlled foreign affiliates, irrespective of whether the affiliate is held directly or indirectly, and for which the direct investor in the compiling economy is the ultimate controlling parent in an ownership chain. However, if an economy compiles data on the activities of affiliates held by both the ultimate and intermediate investors, it may be useful to indicate the aggregate share of AMNE variables accounted for by enterprises for which the compiling economy is an intermediate rather than ultimate owner.

Statistical units

683. In principle, AMNE statistics could be collected at either the enterprise (company) level or the level of individual business locations or establishments. Neither basis of collection is unequivocally superior to the other; rather, each has its own strengths and weaknesses. For example, some financial indicators, such as total assets, are more naturally collected from enterprises than from establishments. In addition, because FDI statistics usually are collected at the enterprise level, collection of AMNE statistics at this same level facilitates linkages between the two types of data. However, because enterprises are more likely than establishments to have activities in multiple industries, data that are classified on the basis of primary activity can be more difficult to interpret for enterprises than for establishments. Because there may thus be advantages and disadvantages associated with each basis of collection, there is no recommendation concerning the statistical unit to be used in the 2010 MSITS, however, Eurostat requires its member states use the enterprise as the statistical unit for FATS statistics. AMNE/FATS statistics often will be developed in the context of existing statistical systems, in which the statistical units are already defined, and, in these cases, there may be little choice in the units that are to be used.

684. Because the statistical units used can have an important bearing on how the statistics should be interpreted, both for AMNE/FATS in isolation and in comparisons with FDI statistics, it is recommended that information on the statistical units used in collecting AMNE/FATS statistics be disclosed in explanatory notes.

10.4.3. Disaggregation of AMNE/FATS variables by geography and by industry

685. AMNE/FATS variables may be disaggregated, or attributed, in a variety of ways. One way is geographic – that is, in which economy did the production take place, and which economy is to be regarded as the economy of the owner of the producing affiliate. Another way is on the basis of the primary industrial activity of the producer. Some variables may, in addition, be classified by product, that is, according to the types of goods or services produced.

Disaggregation by economy

686. The issues to be addressed in attributing variables by economy differ between inward and outward AMNE/FATS statistics. For inward statistics, a choice must be made between attribution to the immediate investing economy and attribution to the ultimate investing economy. For foreign-owned affiliates in the compiling economy, the economy of the ultimate investor is conceptually preferable for attribution of variables because that is the economy that ultimately owns or controls, and therefore derives the benefits from owning or controlling, the DIE.

687. For outward statistics, the issue is whether to attribute variables to the immediate host economy or to the ultimate host economy. For affiliates owned by residents of the compiling economy, it is recommended that AMNE/FATS statistics be attributed to the economy of the affiliate whose operations are described by the variables (i.e., the ultimate host economy), for that is the economy in which the foreign direct investor’s commercial presence exists, and it is the economy where the various activities – sales, employment, and so forth tracked by the statistics – are carried out. This attribution is consistent with the treatment of foreign-controlled enterprises in the SNA, in that the value added in production by the enterprise is attributed to (i.e., is included in the gross domestic product of) the economy of location of the enterprise. The need to follow investment to its ultimate origins or destinations reflects both the nature and the uses of the statistics. For guidance on specific cases, such as equal ownership shares by residents of more than one economy, please see the 2010 MSITS and the 2024 FATS manual.

Disaggregation by industry and by product

688. Ideally, it would be possible to disaggregate all AMNE/FATS variables on the basis of the industrial activities of the producers and, in addition, particular variables such as sales or output, exports, and imports by the types of products produced and sold. Data on a product basis would identify the specific types of goods and services delivered through the commercial presence and could most readily be compared with data on goods and services delivered through trade between residents and non-residents. However, some variables, such as value added and employment, do not lend themselves to a product classification. Also, for some compilers, AMNE/FATS statistics may be developed as a subset of domestic enterprise or other statistics that are classified only by industry. This means that all data for a given enterprise are classified in the single largest industry based on some key variable (such as employment or sales). This industry is often termed the “primary” industry.

689. Mainly because the activities carried out by a given enterprise are often not limited to its industry of classification, data recorded against any given industry must be interpreted as an indication of total activity of companies for which the given industry is the most important, or primary industry, rather than as a precise measure of the industry itself.6

690. It is noteworthy that, even though FDI and AMNE/FATS statistics may be classified by industry, only the latter statistics will reflect the industries in which DIEs are producing goods and services. As noted earlier, FDI statistics are attributed to the industries of the enterprises with which direct investors have direct transactions and positions (and, if possible, also on the basis of the industries of the direct investors). Statistics tabulated on this basis show the types of enterprises with which direct investors have financial claims and liabilities. The industries associated with the activities of indirectly-held DIEs will not be reflected in standard FDI statistics, but they will be reflected in AMNE/FATS statistics. Thus, the industrial classification of AMNE/FATS statistics may give a truer picture of the economic nature of the productive activities of foreign affiliates than does that of FDI statistics.7

691. As a longer-term goal, compilers are encouraged to work toward disaggregating some or all of the variables by product – which include sales (turnover), output, exports, and imports – that lend themselves to this basis of attribution. Product-based statistics are free of problems of interpretation related to secondary activities and are consistent with the basis of classification used for trade between residents and non-residents.

10.4.4. Economic variables for AMNE/FATS statistics

692. A wide range of economic data or variables – operational and financial – may be pertinent for analytical and policy purposes. The selection of the variables to be collected for AMNE/FATS should be based on their usefulness in addressing questions pertaining to the production, employment, and international trade of foreign-controlled enterprises. The practicalities of data availability also must be considered. With such considerations in mind, a list of variables that may be found in AMNE/FATS statistics is given below.

Sales (turnover) and/or output

693. AMNE/FATS usually include a measure of production. There are two possibilities: sales or turnover, which are used here inter-changeably, and output. Following the SNA, a significant difference between output and sales is changes in inventories of finished goods and work in progress included in output but not in sales for some industries (2025 SNA, Chapter 7, Section E.2, paragraph 100).

694. In addition for certain services activities, special conventions are used for measuring output.

• For wholesale and retail trade, although the sales are of goods, the output is defined as a service, equal not to the total value of sales but to the trade margins realised on goods purchased for resale.

• For financial intermediaries, output includes not only services that are charged for by explicit fees, but also margins on buying and selling transactions, asset management costs deducted from property income receivable in the case of asset-holding entities, and margins between interest payable and the reference rate on loans (called implicit financial services on loans and deposits).

• For insurance, output is measured not by total premiums earned, but by a service charge that takes into account the income earned on technical reserves. Furthermore, a portion of premiums must be devoted, not to the provision of services, but to the payment of claims and to the accumulation of capital sums guaranteed under life insurance policies, annuity plans, and pension entitlement schemes.

In all these cases, output will generally be considerably lower than sales because it, unlike sales, excludes the amounts – which may constitute a large portion of total operating revenues – that pass through the enterprise without being considered a part of its intermediate consumption. Otherwise, services activities do not involve inventories of finished goods, and changes in work-in-progress will usually be impossible to measure. In practice, therefore, measured output will be identical to sales for most other service activities.

695. While output is a superior and more refined measure of activity for most purposes, sales data are easier to collect and may present more options for disaggregation. Sales measure gross operating revenues less rebates, discounts, and returns. Sales should be measured exclusive of consumption and sales taxes on consumers, and value-added taxes. Sales indicate the extent to which foreign affiliates are used to deliver outputs to customers, irrespective of the extent to which the output originated in the affiliates themselves or outside. Further, sales are comparable to variables such as exports and imports, which themselves mainly arise from sales.

696. In addition to disaggregation by industry and by economy (following the principles of disaggregation discussed earlier), other breakdowns of sales may be useful for particular purposes. One such breakdown is to distinguish among sales within the host economy (local sales), sales to the economy of the parent enterprise (i.e., the immediate investor), and sales to third economies.8 All three types of sales result from a commercial presence by the home parent enterprise in the host economy via its affiliate. However, only the local sales represent the delivery of output within host economies. In any analysis of AMNE variables in conjunction with data on trade with non-residents of the economy of the parent company, it should be noted that the foreign affiliates’ sales to the economy of the parent company would appear in both datasets, which may suggest the usefulness of an adjustment to eliminate the duplication, or a memorandum item to identify it.

697. Among other sales breakdowns that may prove useful would be a breakdown of sales within each industry, e.g., sales of goods and sales of services, which would represent a first step toward a product breakdown of sales.

Employment

698. Employment can be measured as the number of persons on the payrolls of foreign affiliates. Employment data are sometimes converted to a “full-time equivalent” basis, in which part-time workers are counted according to the time worked (e.g., two workers on half-time schedules count the same as one full-time worker). The number of employees should be representative of the period covered, but in the absence of strong seasonal or other fluctuations in employment, it may be measured as of a point in time, such as the end of the year, following national practices.

Value added

699. Following the SNA, “the gross value added of an establishment, enterprise, industry, or sector is measured by the amount by which the value of the outputs produced exceeds the value of the intermediate inputs consumed” (2025 SNA, Chapter 7, Section A, paragraph 8). A related concept, “net value added”, is defined as gross value added less depreciation. Gross value added can provide information about the contribution of foreign affiliates to host economy gross domestic product, both in the aggregate and in specific industries. It may often be easier to compute (because it does not require estimation of capital consumption) and is thus more widely available.

700. Although it is defined in terms of outputs and intermediate inputs, value added also is equal to the sum of primary incomes generated in production (compensation of employees, profits, etc.). In some cases, depending on the particular data that are available, this equivalence may be exploited in deriving estimates of value added. This alternative might be chosen, for example, if data on intermediate consumption were lacking but information on the various incomes generated in production were available.

701. Because it includes only the portion of the enterprise’s output that originates within the company itself, value added is a particularly useful measure. For inward AMNE/FATS statistics, value added will often be available from regular industrial or enterprise surveys, but for outward statistics it may have to be derived from other variables or collected in separate surveys.

Exports and imports of goods and services

702. International goods and services transactions of foreign affiliates are another basic indicator of activity. Both BOP data and data provided by parent enterprises and affiliates in separate questionnaires may be appropriate sources for such information. To a large extent, the possibilities for disaggregating total exports and total imports will depend on the data sources used.

703. Where data are obtained through linkages with primary data sources for BOP transactions, breakdowns by product and by origin or destination will often be possible. In this event, exports and imports might be disaggregated, not only by the primary activity of the affiliate, but also by product and by geography.

704. Although linkages with BOP data may provide useful information, it often will be difficult or impossible to isolate the transactions of foreign-owned enterprises in these data. Thus, it may be necessary to develop data on exports and imports only through the use of separate dedicated questionnaires. In this event, these same breakdowns would be useful, but it may not be possible to collect the necessary data with the same frequency or in the same detail as provided for BOP. However, it may be possible to disaggregate exports and imports into a few broad categories in which trade with related enterprises would be distinguished from trade with unrelated parties. In addition, trade with the economy of the parent enterprise could be distinguished from trade with other economies. If possible, these breakdowns should be obtained separately for goods and services. For inward AMNE statistics, for example, this would mean disaggregating the affiliate’s exports of goods and exports of services into (i) exports to the parent enterprise, (ii) other exports to the economy of the parent, and (iii) exports to third economies. Imports would be similarly disaggregated.

Number of enterprises

705. The number of foreign-controlled enterprises (or establishments, where that is the statistical unit) is a basic indicator of the prevalence of majority ownership by foreigners in the host economy. This number may be compared with the total number of enterprises (or establishments) in the economy. It may also be assessed in relation to the other AMNE/FATS variables because it allows the computation of ratios – such as value added or number of employees per enterprise – that may be compared with the same ratios for domestically-owned enterprises, thus giving an indication of the behaviour of foreign affiliates.

706. It should be recognised that the number of enterprises alone may not give an accurate picture of the overall importance of foreign-owned companies because of differences in size between those that are foreign compared with domestically owned. If foreign-controlled enterprises tend to be larger, for example, then their share in the total number of enterprises would be smaller than their share in the various measures of operations and would thus tend to understate their role and importance in host economies.

707. Typically, information on numbers of enterprises will be a natural by-product of collection of data on other AMNE/FATS variables, rather than a separate object of the data collection effort. As such, the number is likely to be affected, often significantly, by the level of company consolidation and by thresholds for reporting on surveys. To assist users in interpreting counts of enterprises (or establishments), compilers are encouraged to indicate in explanatory notes how the numbers are derived.

Other variables

708. There are additional variables that would enable comparisons with the total economy and with specific sectors and can thus be used for assessing the impact of foreign-controlled enterprises on home and host economies. Other variables that may be useful for additional details, and whose definitions are drawn from the SNA, include:

• Assets – Store of value representing a benefit or series of benefits accruing to the economic owner by holding or using the entity over a period of time. It is a means of carrying forward value from one accounting period to another.

• Total purchases of goods and services – The total amount of goods and services purchased by the statistical unit, recognised in accounting as current assets or expenses during the reference period.

• Purchases of goods and services for resale – Purchases of goods for resale to third parties without further processing. They also include purchases of services by ‘invoicing’ service companies, i.e., enterprises whose turnover is composed not only of agency fees charged on a service transaction (as in the case of estate agents) but also the actual amount involved in the service transaction, e.g., transport purchases by travel agents.

• Compensation of employees – The total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the employee during the accounting period.

• Net worth – The value of an institutional unit's assets less its outstanding liabilities (including shares and other equity).

• Net operating surplus – Measured as value added (gross), less compensation of employees, consumption of fixed capital, and taxes on production, plus subsidies receivable.

• Gross fixed capital formation (GFCF) – Acquisitions less disposals of fixed assets during the accounting period, including certain specified expenditures on services that add to the value of non-produced assets.

• Taxes on income – Taxes payable on income, profits and capital gains. These include corporate income taxes, corporate profit taxes, corporate surtaxes, and so forth, and taxes that accrue to owners of unincorporated enterprises as a result of the income of those enterprises. Taxes on income include only taxes in the host economy of the affiliate and not any taxes paid by the parent in the home economy as a result of income earned or distributed by the affiliate. Taxes on income are usually assessed on the total income of corporations from all sources and not simply profits generated by production.

• Research and development (R&D) expenditures – Expenditures for activities undertaken for the purpose of discovering or developing new products (goods and services), including improved versions or qualities of existing products or discovering or developing new or more efficient processes of production.

• R&D personnel – All persons engaged directly in R&D, whether employed by the statistical unit or external contributors fully integrated into the statistical unit’s R&D activities, as well as those providing direct services for the R&D activities (such as R&D managers, administrators, technicians, and clerical staff). Persons providing indirect support and ancillary services, such as canteen, maintenance, administrative and security staff, should be excluded, even though their wages and salaries are included in ‘other current costs’ when measuring intra-mural R&D expenditure.

10.4.5. Globalisation indicators constructed from AMNE/FATS variables

709. AMNE/FATS statistics can be used to construct ratios comparing the operations of foreign-controlled enterprises within host economy totals to highlight their role in the reporting economy. For example:

• Employment of foreign affiliates to host economy employment

• Gross value added of foreign affiliates to host economy gross domestic product

• Exports (imports) of foreign affiliates to total host economy exports (imports)

• R&D expenditures by foreign affiliates to total host economy R&D expenditures.

Disaggregated data by industry can also be used to examine the impact of foreign-controlled enterprises in specific industries. For example, an industry breakdown of affiliates’ employment, or compensation of employees where available, can yield further insights into the impact of foreign-owned enterprises on specific parts of the economy.

710. The AMNE/FATS can also be used to construct indicators to compare the operations of foreign-controlled enterprises to domestic enterprises. These include such ratios as:

• Export intensity as measured by exports divided by sales (turnover)

• R&D intensity as measured by R&D expenditures divided by sales (turnover)

• Employee compensation per employee

• Labour productivity as measured by output (or value added) per employee.

711. The 2025 SNA recommends adding granularity to the institutional sector accounts and the external sector accounts based on ultimate control and ownership of corporations to highlight the full impact of MNE activities in the macroeconomic accounts. It recommends a sub-sectoring that identifies foreign-controlled enterprises as well as enterprises that are part of domestic MNE groups (that is, the parent company of the domestic MNE and all resident enterprises that it controls). Because of the data intensity involved, it is recommended that the increased granularity be limited to non-financial corporations and financial corporations sectors. This information highlights the role of foreign-controlled enterprises and domestic MNEs in key macroeconomic aggregates, such as output, value added, and net lending/borrowing. See 2025 SNA, Chapter 23 for more information.

712. AMNE/FATS data can also be used to derive ratios to calculate the share of domestic parent companies’ operations in home economy totals, as discussed above for foreign affiliates. They can also be used to construct ratios showing how much of the operations of domestic MNEs are carried out in the home economy and how much abroad. For example, home and host economy employment in total MNE employment.

10.4.6. Measuring greenfield investment and extensions of capacity by capital approach

713. As discussed in Chapter 9, there is often significant interest from policymakers in understanding the role of FDI in expanding the productive capacity of host economies. That chapter presented an approach to identifying FDI financial transactions related to GI and EC. There is an alternative approach, called the capital approach, that AMNE/FATS can support.

714. The capital approach measures fixed capital formation of newly created DIEs and the expansion of existing affiliates regardless of the source of funding, which means that it goes beyond the boundary of FDI. This method can use the GFCF variable included in AMNE that captures all of the GFCF undertaken by the domestic subsidiary, regardless of funding. This measure of GFCF includes GFCF of (i) newly established subsidiaries as well as (ii) existing subsidiaries (including GFCF of their domestic majority-owned subsidiaries). This approach could be supplemented by a similarly constructed GFCF measure related to FDI influence relationships to capture the GFCF of the full DIE population although (based on the dominance of control relationships in many economies) this is expected to be a relatively small supplementary measure. Given that R&D is capitalised in the national accounts, R&D expenditures should also be included in the capital approach.

715. The capital approach has several advantages over the transactions approach. The capital approach captures GFCF funded from any source while the transactions approach identifies only one source of funds for capital formation and thus does not provide a complete picture of capital expenditures. In addition, part of the funding measured in the transactions approach can be used for working capital rather than capital expenditures, while the capital approach actually measures the expenditures for capital formation.

716. Nevertheless, the capital approach has challenges. These include defining extension of capacity separately from, for example, maintenance, replacement, or upgrading of existing capacity and dealing with specific cases, such as holding companies and real estate. Finally, companies might not be able to separate the GI amount from company accounts regardless of the approach because the transactions and capital expenditures might have more than one purpose.

717. Given the advantages of the capital approach, it has been argued that the capital approach could be more appropriate to measure the impact of FDI on GFCF in an economy and that it could be interesting to relate such data to other data, such as total domestic GFCF, which could give an indication of the importance of foreign-owned companies’ contribution to an economy.

10.4.7. Differences between FDI and AMNE/FATS statistics

718. While FDI statistics and AMNE/FATS statistics are closely related, there are some substantive differences that make it difficult to use these statistics together.

719. The first key difference is in the populations covered. FDI covers both influence and control relationships while AMNE/FATS cover only control relationships. There can be other differences, such as the inclusion of real estate for personal use by non-residents in FDI, or that some industries may not be covered in AMNE/FATS statistics depending on the data sources. For example, some economies exclude agriculture or transportation from their AMNE/FATS statistics.

720. A second key difference is in the variables covered. FDI statistics cover the financing and income of DIEs while AMNE/FATS cover the activities of subsidiaries, such as their employment and production. However, some countries collect some balance sheet and income statement information, such as total assets or net income, as part of their AMNE/FATS statistics.

721. A third difference is the use of total versus foreign share of capital in measurement. In FDI, the variables only reflect the direct investor’s share in the DIE, that is, their claim on the position and income of the DIE. In contrast, AMNE/FATS reflect the total value of the variable even if the foreign investor owns less than 100% of the enterprise.

722. A fourth difference is in the primary attribution by partner economy. For FDI statistics, the primary attribution is by immediate partner economy while for AMNE/FATS, the attribution is by ultimate partner economy. The development of inward FDI statistics by ultimate investing economy (UIE) and of outward FDI by ultimate host economy in this Benchmark Definition can bring the two datasets closer together. It should be noted that the ‘Winner Takes All’ (WTA) approach to compiling inward positions by UIE is closer to the concept used in AMNE/FATS than the ‘Proportional Ownership’ (PO) approach (see Chapter 8 for more details on approaches to compiling inward positions by UIE).

723. In practice, FDI statistics are available for many more economies than AMNE/FATS because they are part of the BOP and IIP.

10.4.8. Linking FDI and AMNE/FATS statistics

724. Compilers are encouraged to compile data and conduct analyses that highlight the role of FDI in home and host economies. One way that this can be done is to do a direct link with AMNE/FATS. This can be done either by collecting FDI and AMNE/FATS statistics on the same survey or by linking the separate surveys.

725. If AMNE/FATS statistics are not compiled, compilers could link their FDI surveys with other sources of information such as business, labour market, or national accounts surveys that could provide insights on the role of DIEs in the domestic economy; these could cover either only controlled DIEs or both controlled and influenced DIEs. Such linking could be enabled by including ownership information in the business register used by the statistical agency to conduct these various surveys.

726. To help reconcile FDI statistics with AMNE/FATS variables when they are linked, compilers may want to explore additional breakdowns, such as FDI statistics that differentiate between influence and control relationships, or additional variables, such as total assets and liabilities.

727. If information from other surveys is not readily available to FDI compilers, they are encouraged to explore ways to overcome institutional barriers to information sharing.

10.5. Other information that could use FDI statistics

728. There are other statistics that might provide valuable insights to policymakers and researchers if linked with FDI. This section discusses three examples, but compilers could explore other possibilities.

10.5.1. Sub-national statistics

729. Many countries produce sub-national (i.e., regional) statistics that are consistent with macroeconomic statistics. Given the consistency between FDI and other macroeconomic statistics, it may be possible to introduce a FDI dimension to such statistics. The resulting statistics could be used to look at the role of FDI in business networks or clusters and extended to look at global value chains.

10.5.2. Trade and investment income by enterprise ownership

730. To better identify the role of MNEs in BOP current account transactions, BPM7 and the 2025 SNA recommend a supplementary table of trade and investment income by characteristics of the enterprise, including ownership (e.g., domestically-controlled, or foreign-controlled) (BPM7, Chapter 15, Section 2, Table 15.2). These indicators are not only useful for understanding international transactions by characteristics of the enterprise, but also for national accounts more generally, such as for the extended supply and use tables discussed below.

731. The main breakdown is by domestic versus foreign ultimate control with a further breakdown of domestic control between domestic MNEs and other (i.e., purely domestic) enterprises. FDI income for control relationships only and classified by the residency of the ultimate controlling parent could be used to fill the lines in the supplementary table for investment income by domestically-controlled MNEs and foreign-controlled enterprises. The supplementary table also includes detail for the major partner economies and industries. However, some economies may be able to provide further disaggregation along certain dimensions. Other economies may not be able to provide the recommended level of disaggregation because of their own confidentiality criteria for disseminating the information or lack of detailed data; in this case, the most appropriate breakdown possible should be considered when publishing these statistics.

10.5.3. Extended supply/use tables

732. Another example is extended supply/use tables (eSUTs) that are designed to provide more granularity regarding transactions associated with globalised production processes in a flexible manner that allows for a number of possible extensions (2025 SNA, Chapter 23, Section E.2, paragraph 78, (OECD, 2023[6]) and (OECD and European Commission Joint Research Center, Forthcoming[7])). This additional granularity can support the compilation of trade in value added (TiVA) statistics. There are many extensions that compilers may consider, but one that could use FDI statistics is the inclusion of investment income broken down by enterprise characteristics, as discussed above for the supplementary breakdown of the BOP current account.

733. Under the eSUT approach, economies can implement them according to their own priorities and resources in a way that is most relevant to their specific needs, circumstances, and data availability. The objective of eSUTs is to create an integrated accounting framework that can link disparate data sources such as structural business statistics, trade-by-enterprise characteristics, foreign affiliate trade statistics, FDI income statistics, and trade data in a coherent framework. The eSUTs should be parsimonious in construction – that is, it is not necessary to break down all activities into more homogeneous groups. The eSUTs only need to focus on the industries and/or products where extra granularity is needed in the context of analysing their economy. For example, if there is no foreign presence in a given industry, then there is no granularity to be added. The eSUTs can also serve as useful and important inputs in the compilation of TiVA statistics.9

734. Including income in eSUTs and in TiVA statistics addresses an important issue as well: the blurring distinction between trade in services and property income, which can distort the measurement of value added. This is most prominent within MNEs as payments for the use of intangible assets within MNEs can appear in official statistics as either international trade in services or implicitly as primary income payments. In principle, the use of intangible assets of parents by affiliates, or affiliates in other countries, should be recorded as imports of services so that it is included in the affiliate’s intermediate consumption and, thus, measures accurately the affiliate’s, related parties’ and parent’s value added. However, if the services of these intangible assets are unvalued or undervalued, they are recorded implicitly under income payments, and, so, the affiliate’s value added is overstated.10 In conjunction, exports of the parent and related parties in other countries are also under-recorded, as well as the domestic value-added content of their exports. Identifying FDI income by the residence of the ultimate investor can help to address this issue by attributing the operating surplus included in value added to the economy of the ultimate controlling parent.

References

[4] Eurostat (2024), European Business Statistics Compilers’ Manual for Foreign Affiliate Statistics - 2024 Edition, Publications Office of the European Union, https://doi.org/10.2785/817091.

[1] IMF (Forthcoming), Integrated Balance of Payments and International Investment Position Manual, Seventh Edition (BPM7), International Monetary Fund, Washington D.C.

[6] OECD (2023), OECD Handbook on Compiling Digital Supply and Use Tables, OECD Publishing, Paris, https://doi.org/10.1787/11a0db02-en.

[5] OECD (2009), OECD Benchmark Definition of Foreign Direct Investment, Fourth Edition (BD4), OECD Publishing, Paris, https://doi.org/10.1787/9789264045743-en.

[7] OECD and European Commission Joint Research Center (Forthcoming), Handbook on Measuring Extended Supply and Use Tables.

[3] United Nations et al. (2012), Manual on Statistics of International Trade in Services 2010, United Nations publication, ESA/STAT/Ser.M/86, Sales No. E.02.XVII.11, New York, https://unstats.un.org/unsd/publication/seriesm/seriesm_86rev1e.pdf.

[2] United Nations et al. (Forthcoming), 2025 System of National Accounts, United Nations et al., New York.

Notes

← 1.  There are five functional categories: i) direct investment; ii) portfolio investment; iii) financial derivatives; iv) other investment; and v) reserve assets. The functional categories are used to support analysis by distinguishing categories of investment that exhibit different economic motivations and patterns of behaviour.

← 2.  Property income is defined as the income receivable by the owner of a financial asset or the owner of a non-produced natural resource or another non-produced non-financial asset in return for providing funds to, or putting the non-financial assets at the disposal of, another institutional unit.

← 3.  The BOP and IIP entries are entered with the opposite sign because the BOP and IIP are recorded from the point of view of the domestic economy, whereas the rest of the world in the national accounts is compiled from the point of view of non-residents.

← 4.  BPM7 (IMF, Forthcoming[1]) provides guidance on a supplementary (i.e., voluntary) recording of reinvested earnings on portfolio investment, but this is not yet reflected in the standard presentation of the accounts.

← 5.  Structural and demographic business statistics provide information on operations of businesses, including variables like turnover, employment, and production, by economic activity but also by other dimensions, such as size class and foreign ownership. They also include demographic information, such as on enterprise birth, death and survival rates.

← 6.  For example, computer services may be provided not only by enterprises classified in the computer services industry, but also by those classified in computer manufacturing and computer wholesale trading. Similarly (though in reality less commonly), computer services companies may engage in manufacturing or wholesale trade as secondary activities. Statistics shown for the industry “computer services” would mis-report the value of the industry by excluding the computer services provided by manufacturers and wholesale traders and by including the manufacturing and wholesale trade activities of computer services.

← 7.  The supplementary presentation of outward position statistics by ultimate host economy could help address this issue for FDI statistics by enabling the classification by the industry of indirectly held DIEs.

← 8.  In some cases, it might be possible to derive a close proxy for this breakdown by examining data on total sales in conjunction with data on exports. Export data may indicate sales to the economy of the parent separately from sales to third economies, and local sales may be derived by subtracting these export sales from total sales.

← 9.  Detailed discussions and recommendations for eSUTs can be found in (OECD, 2023[6]).

← 10.  In practice, parents or related parties might not charge their affiliates for the use of their intellectual property assets. This lowers an affiliate’s expenses and raises their value added and net income compared to what they would have been had they had to source the intellectual property from outside the enterprise. At the same time, the parent company does not record an export nor the revenue it would receive from an export; rather, it is compensated through the higher income received from its affiliate. As a result, the value added of the parent is lower than if it had charged its affiliate directly for the use of the intellectual property. This will lower the GDP of the economy of the parent and will raise the GDP of the economy of the affiliate, but the GNI of these two economies is recorded correctly.