What Is Real and What Is Not in the Global FDI Network?
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What Is Real and What Is Not in the Global FDI Network? / Damgaard, Jannick; Elkjaer, Thomas; Johannesen, Niels.
In: Journal of International Money and Finance, Vol. 140, 102971, 02.2024.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - What Is Real and What Is Not in the Global FDI Network?
AU - Damgaard, Jannick
AU - Elkjaer, Thomas
AU - Johannesen, Niels
PY - 2024/2
Y1 - 2024/2
N2 - Macro statistics on foreign direct investment (FDI) are blurred by offshore financial centers with enormous inward and outward investment positions. This paper uses 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 FDI into corporate shells with no substance and no real links to the local economy accounts for around 40 percent of global FDI. Ignoring Phantom FDI and allocating Real FDI to ultimate investors increases the explanatory power of standard gravity variables by around 25 percent.
AB - Macro statistics on foreign direct investment (FDI) are blurred by offshore financial centers with enormous inward and outward investment positions. This paper uses 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 FDI into corporate shells with no substance and no real links to the local economy accounts for around 40 percent of global FDI. Ignoring Phantom FDI and allocating Real FDI to ultimate investors increases the explanatory power of standard gravity variables by around 25 percent.
U2 - 10.1016/j.jimonfin.2023.102971
DO - 10.1016/j.jimonfin.2023.102971
M3 - Journal article
VL - 140
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
SN - 0261-5606
M1 - 102971
ER -
ID: 372532553