A note on FDI

Jurriaan Bendien bendien at tomaatnet.nl
Mon Sep 1 06:15:53 MDT 2003


Non-FDI foreign investment is much larger than FDI investment.  See for
yourself at
http://www.bea.doc.gov/bea/newsrel/intinv02.htm. and compare that to BOP
data. (This data by the way does not do full justice to phenomena like
dollarisation).

A huge expansion of foreign investment is occurring which is not
FDI. In fact, BEA says that U.S. investors shifted to net sellers of foreign
securities for the first time, as a result of substantially reduced net
purchases of foreign stocks and stepped up net sales of foreign bonds.

The perception of the USA as "owning the rest of the world" is just
wrong according to BEA , at the end of 2002, the value of foreign
investments
in the United States exceeded the value of U.S. investments abroad by $2.4
trillion with direct investment valued at current cost. At the
end of 2001, foreign investments in the United States exceeded U.S.
investments abroad by $2 trillion.

The UNCTAD investment reports focus on FDI by corporations, but
reported for instance that total FDI in 2001 declined by a staggering
51 percent over the previous year, in other words, only half as much was
invested overseas in direct foreign ownership (majority share holdings).
I have written already about the mobility of capital, this means that
yesterday's
FDI may be tomorrow's securities and vice versa.

If you think that foreign investment is synonymous with FDI, you are wrong.
That way you miss the wood for the trees.

J.






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