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1 OECD Benchmark Definition of Foreign Direct Investment, Third Edition outward Foreign Direct Investment outward FDI inward Foreign Direct Investment inward FDI International Direct Investment IDI IDI Foreign Direct Investors Foreign Direct Investment outward inward

2 -March outward oversea s Acquisitions Mergers FDI

3 FDI FDI OECD IMF OECD IMF FDI FDI OECD IMF OECD IMF FDI FDI FPIForeign Portfolio Investment FPI FPI OECD IMFFDI OECD OEEC

4 -March DAC IEA MAI OECD FDI FDI FDI FDI Third Edition of the OECD Benchmark Definition OECD IMF IMF Balance of Payments Manual Fifth Edition IMF OECD IMF IMF OECD FDI FDI FDI OECD EUROSTATFDI

5 FDI The OECD Yearbook on FDI statisitics FDI resident entity economy lasting interest incorporatedunincorporated subsidiary associate branch significant degree of influence direct investor

6 -March OECD IMF Subsidiary SAssociate A Branch B Wholly Owned Foreign Affiliates WOFAMajority Owned Foreign Affiliates MOFA Minority Owned Foreign Affiliates MINOFA Related Party Groups RPG WOFA WOFA OECD WOFAB MOFA SMINOFA A direct investment enterprise equity voting stockordinary shares

7 IMF

8 -March owner manager Chief Executive Officer CEO CEO CEO

9 WOFA MOFA MINOFA R D

10 -March SA B OECD SXN N XX X X NY N ARNN R N N Y Z X R

11 NRR N Z R B notional enterprise B B OECD IMFFully Consolidated System

12 -March S-S-Ad A-Sd A-Ad S-Ad S-S-Bd OECD Benchmark Definition of Foreign Direct Investment, Third Edition, OECD, Figure, P ANS BA NB B NCB A BN DN A ED N EF NGF NG G HN JH JN KN LK LN A B C D E F H J K LG OEDCD

13 FDI OECD IMF Fully consolidated accounting system OECD OECD IMF S A B immediate United States system OECD IMF C E G OECD IMF RPG Uncosolidated system

14 -March ibid., Annex Table,,

15 A BB CC D D E outward FDIRE RE ABC DE E Parent Company Local Company Enterprise OECD market value

16 -March book value current market value S A B OECD outward FDI income a reinvested earnings RE

17 b c earnings retained abroad goodwill a b

18 -March disinvestment X OECD Special Purpose Entities SPE FDI FDI ACyABCyB CCyCCyB CyC CyB CyC, FDI OECD IMF CyBCyC inward FDI CyC inward FDICyB inward FDI CyC outward FDICyC CyB BC A IMF FDI REinter company debt

19 OECD Benchmark Difinition of Foreign Direct Investment, Third Edition, OECD. pp. -

20 -March intra company debt FDI FDI FDI RE FDI RIR RE E M&A SPE Special Purpose Entities SPESPE SPE SPE SPEFDI

21 FDI SPE SPE allocation SPE SPE SPE SPEOECD BIAC SPE SPE

22 -March - SPE SPE OECD ultimate ownerimmediate owner acquitisionsa inward FDI C A disinvestmentc portfolio investment

23 loan guarantee FDI non equity forms effective voice R D wealthknowledgepower

24 -March FDI P% FA FA FA subsidiary associate branch i ii iii iv FDI FPI equity RE intra-company loans or debt subcontracting management contracts turnkey arrangements franchising licensing product sharing income tax depreciation profits dividends earnings interest re-invested earnings UNCTAD, World Investment Report, UN.. pp -

25 Balance of Payments Manual, Fifth Edition, International Monetary Fund, Washington DC,, p.. OECD Benchmark Definition of Foreign Direct Investment, Third Edition, Organization for Economic Co operation and Development, Paris,, pp.. ibid., p.. ibid., p.. ibid., p.. ibid., p. ibid., p.. ibid., p.. ibid., p.. ibid., p.. ibid., p.. OECD Benchmark Definition of Foreign Direct Investment, Third Edition, op. c it., p.. ibid., p.. United Nations Conference on Trade and Development, World Investment Report : Transnational Corporations, Market Structure and Competition Policy, New York and Geneva,. pp..

26 -March Definition of Foreign Direct Investment and Transnational Corporation Foregin Direct Investment FDI is defined as an investment involving a long-term relationship and reflecting a lasting interest and control of a resident entity in one country foreign direct investor or parent enterprise in an enterprise resident in an economy other than that of the foreign direct investor FDI enterprise or affiliate enterprise or foreign affiliate. Foreign direct investment implies that the investor exerts a significant degree of influence on the management of the enterprise resident in the other economy. Such investment involves both the initial transaction between the two entities and all subsequent transactions between them and among foreign affiliates, both incorporated and unincorporated. Foreign direct investment may be undertaken by individuals as well as business entities. Foreign direct investment inflows and outflows comprise capital provided either directly or indirectly by a foreign direct investor to a FDI enterprise, or capital received from an FDI enterprise by a foreign direct investor. There are three components in FDI equity capital, reinvested earnings and intra-company loans. SEKISHITA, Minoru

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