WRITTEN QUESTION E-0130/01

by Christopher Huhne (ELDR) to the Commission

(31 January 2001)

Subject: Stock of foreign direct investment

Will the Commission estimate the stock of foreign direct investment in each Member State and held by each Member State in other countries for the most recently available point in time? Will it break down this stock by EU partner countries, non-EU countries, Japan and the United States?

Joint answer to Written Questions E-0130/01 and E-0131/01 given by Mr Solbes Mira on behalf of the Commission

(18 April 2001)

Foreign direct investment (FDI) is a category of international investment that indicates an intention to acquire a lasting interest in an enterprise operating in another economy. It covers all financial transactions between the investing enterprise and its subsidiaries abroad. It differs from portfolio investments, because the investor seeks to obtain an effective voice in the management of the foreign enterprise. Formally defined, a direct investment enterprise is an unincorporated or incorporated enterprise in which a direct investor owns 10 % or more of the ordinary shares or voting power (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise).

Through direct investment flows, an investor builds up a foreign direct investment position that features on his balance sheet. This FDI position (sometimes called FDI stock) differs from the accumulated flows because of revaluation (changes in prices or exchange rates, and other adjustments like rescheduling or cancellation of loans, debt forgiveness or debt-equity swaps).

The Commission maintains an FDI database which contains harmonised and thus comparable data on inward and outward FDI positions, flows and income for the Community, its Member States and major FDI partners. FDI data are contained in Eurostat's database NewCronos (under theme2/bop/fdi). The main annual publication is the FDI Yearbook, which also contains descriptive analysis of FDI evolution and detailed explanation on definitions used and methodology applied in data collection.

The tables sent direct to the Honourable Member and to Parliament's Secretariat contain data on FDI flows for 1992-1999 and for stocks at the end of 1998.

Data are broken down according to four dimensions:

- Reporter: This refers to the Member States reporting FDI data to Eurostat. The 15 Member States (EU 15) total data are calculated by Eurostat aggregating Member States data and estimating missing values.

- Abroad in the reporting economy: FDI abroad is investment made by EU15 Member States in other Member States or in extra-EU countries. The minus sign indicates investment for FDI abroad, and the plus sign disinvestment.

FDI in the reporting economy is investment made in the EU15 by other Member States or by extra-EU countries. The plus sign indicates investment for FDI in the reporting economy and the minus sign disinvestment.

- Partner: This refers to the country in which FDI is made (for FDI abroad) or the country making the investment in the Community (for FDI in the reporting economy).

The selected partners included in the tables are the United States, Japan, and the candidate countries. Totals are calculated for both extra-EU, and intra-EU.

- Including/excluding reinvested earnings: Reinvested earnings are profits made by direct investment enterprises that are not distributed and are therefore deemed to be reinvested in the enterprise. Total FDI flows should include reinvested earnings, but these data are available only as from 1995 for the Community aggregate and for different periods for individual Member States. Therefore a more complete series of data excluding reinvested earnings have been included in the table.