OECD Benchmark th Definition of FDI 4 edition

OECD Benchmark th Definition of FDI, 4 edition Implementation & Research Agenda Ayse Bertrand Investment Division, Directorate for Financial and Enterprise Affairs 1

Benchmark Definition of FDI, 4 th edition n February 2008 – Approval by the Working Group on International Investment Statistics (WGIIS) March 2008 – Approval by the Investment Committee (IC) – Review by the Statistics Committee May 2008 – Approval by the OECD Council – Council recommendation 2

Council n I. RECOMMENDS that Member countries continue to take steps to bring their statistical methodology into line with the OECD Benchmark Definition of Foreign Direct Investment and to consider 2010 as a target year for its full implementation, thereby providing a comparable and reliable basis for users of foreign direct investment statistics. 3

Council (contd. ) n n n II. INSTRUCTS the Investment Committee, through its Working Group on International Investment Statistics, (i) to continue co-ordinating within OECD the collection of information on international direct investment and multinational enterprises; (ii) to collect and publish at regular intervals stock and flow data on inward and outward foreign direct investment; 4

Council (contd. ) n n (iii) to prepare accompanying methodological notes in light of the results of the Survey of Implementation of Methodological Standards for Direct Investment; documenting areas where the methodology used by Member countries differs from the OECD Benchmark Definition; (iv) to take steps for the harmonization and integration of FDI statistics and the statistics on the activities of multinational enterprises to respond to the needs of the analysis of the global economy; and 5

Council (contd) n (v) to keep abreast of new developments impacting statistical methodologies, including issues indicated in annex 13 of the OECD Benchmark Definition. 6

Research agenda Items complementing Benchmark Definition, 4 th edition n Globalisation n Other items. n 7

Research agenda n Other items. – Of which – FDI by size of enterprise – Privatisation and FDI – Possible reconciliation with trade statistics – Sales of patents – Developing a reference survey – Special studies by type of entity: (eg hedge funds, private equity funds, SWF, etc) 8

Research agenda n Priority list – Items complementing Benchmark Definition, 4 th edition • • Extended Directional Principle (Ex. DP) Exploring cases to access voting power Treatment of multi-territory enterprises Capital in transit (CIT) – Globalisation 9

Research agenda n Organisation of the work – Under the auspices of WGIIS – Electronic Discussion Groups – Joint meetings (as relevant) – Reports to WGIIS 10

Extended Directional Principle n Mandate – Refining the examples – Conducting numerical studies n n Time line – WGIIS approval October 2008 Basic concept – DP – Ex. DP n Purpose – Capital in transit – Round tripping 11

French experience 12

French experience Chart 6: Outward FDI according to BMD 3 and BMD 4 250 BMD 3 200 150 BMD 4 100 50 0 2001 2002 Outward FDI (according to the BMD 3) 2003 2004 Outward FDI (according to the BMD 4) 2005 2006 2007 Mergers and acquisitions 13

French experience Chart 7: Inward FDI according to the BMD 3 and the BMD 4 140 BMD 3 120 100 80 BMD 4 60 40 2001 2002 2003 2004 2005 2006 2007 -20 Inward FDI (according to the BMD 3) Inward FDI (according to the BMD 4) Mergers and acquisitions Reinvested earnings 14

French experience 15

Voting Power n Mandate – acquiring voting power by means other than or in addition to direct ownership of voting equity n Time line – – Interim report : October 2008 – WGIIS approval March 2009 n Focus of the interim report – – Nominee accounts Sell/Buy-Back & repos Share lending agreements Financial derivative contracts 16

Multi-territory enterprises n Mandate – identify a parent entity in a multi-territory enterprise n Time line – – Interim report : October 2008 – WGIIS approval March 2009 n Focus of the interim report – examples of multi-territory enterprises – Examination of their structures 17

Examples examined n Cross-border gas pipeline facility n Cross-border bridge facility n Space satellite installation n International shipping line n International airline hub arrangement 18

CIT n Mandate – Priority list; – Exploring methods to expand the segregation of res. SPE to CIT of all entities; – Exploring data collection/ estimate for looking through nonresident entities; – Exploring the use of business registers; – Reviewing the criteria of SPEs, if new instruments are put in place by MNEs; – Exploring synergies with the research work on ultimate investing/host country attribution. 19

Capital in Transit n Time line – – Interim report : October 2008 – Interim report : March 2009 – WGIIS approval : October 2009 n Focus of the interim report – Looking through SPEs 20

Research agenda n Globalisation – Reconciliation of FDI/AMNE statistics – Ultimate investing / ultimate host country – Economic definition of FDI – Explore the hybrid system for FDI relation – FDI by type (follow up of M&A, Greenfield) – Explore synergies with business registers for MNEs 21

Globalisation n BMD 4 - Chapter 8: FDI and Globalisation Council recommendation 2 nd Joint session of WGIIS/WPGI (8 October 2008) – Comparative analysis of underlying methodologies – Population of FDI and AMNE statistics – Analysing FDI and AMNE statistics – Revision of the OECD Handbook on Globalisation Indicators 22

n Thank you 23