a decisive influence on the direction of direct investment, thus allowing false conclusions to be drawn. for example, in the past year, german parent companies borrowed more from their foreign subsidiaries ( € 25 bn ) than they invested abroad in new equity capital ( € 13 bn ). in this case, it would surely be a mistake to take the net position of these flows to judge the quality of germany as a location to do business. and there is another problem : the low threshold for participating interests for fdi. it ’ s only 10 %. such a low threshold tells us very little about an investor ’ s lasting interest. the bundesbank introduced the reduction in the participation threshold and the inclusion of short - term financial loans and trade credits into the direct investment flows only in 1999 when emu was set up. ultimately, there is a trade - off between the narrow definition of foreign direct investment, on the one hand, and the necessity to provide internationally comparable data, on the other. 6 we have tried to solve this conflict by presenting direct investment data as detailed as possible. the researchers can select the data and definitions in such a way as to adjust them to fit their respective analysis. at the same time, the data are compatible internationally ( and within emu ). 7 after my short discussion of the bundesbank being a data provider, i ’ d like to turn to the second reason for our soft spot for the subject of this conference. it ’ s research. we try to show that the german economy is not only affected by globalisation, but also has a strong impact on globalisation. the german economy, with its extensive cross - border investment and its substantial foreign trade, has actually been one of the driving forces behind the globalisation process. the diverse and everchanging transmission mechanisms of foreign impact on the domestic economy make it all the more important for a central bank to constantly analyse these developments. in the past few years, we have studied intensively the reasons behind foreign direct investment. 8 our research at the bundesbank shows that there are many different motives for conducting fdi. these motives cannot be simply reduced to cost aspects, and particularly not only to labour costs, however important they may be. 9 there are also tax considerations and regulatory differences to consider. see, for example, richard reichel, okonomische theorie der internationalen wettbewerbsfahigkeit von volkswirtschaften, wiesbaden 2002.

hermann remsperger : foreign direct investment ( fdi ) and the deutsche bundesbank dinner speech by professor hermann remsperger, member of the executive board of the deutsche bundesbank, on the occasion of the workshop on multinationals and international integration by the kiel institute for world economics and the deutsche bundesbank, kiel, 8 october 2004. * * * ladies and gentlemen the topic of our workshop today and tomorrow is “ multinationals and international integration ”. this evening, i ’ d like to give you 3 reasons, why we at the bundesbank have a soft spot for this subject, namely : supply of data, research and economic policy. 1 the first reason is very simple, but also very important : we supply the public with data on foreign direct investment ( fdi ). just think about the flow statistics from the balance of payments or the stock figures from our survey on enterprises ’ international capital links. 2 we have anonymously processed the individual data taken from our statistics on german enterprises ’ international capital links in a database. and we make this database available for research purposes. 3 our data currently cover 14 years starting in 1989. for the year 2002, this data record contains reports from around 6, 000 german enterprises with 22, 000 foreign affiliates. and we have data on over 7, 000 foreign enterprises with 10, 000 subsidiaries and branches in germany. our statistics not only provide a breakdown of fdi stocks by country and industry. they also include several important indicators of the respective investments such as the number of employees, the annual turnover and the balance sheet total. our experts at the bundesbank, working together with external researchers, have managed to link the individual data on fdi with other statistics. the links made with the banking and the balance of payments statistics have proved to be very promising. this is documented in research papers by claudia buch and alexander lipponer on the investment behaviour of german banks abroad. 4 now we are examining how to enrich our data on direct investment with further data. some examples are banks ’ reports on their external position, which are collected by the bundesbank, as well as a data set of the federal employment agency. you can imagine, ladies and gentlemen, that we do not only want to supply data on fdi. we also have a great interest that these data are being used appropriately. for example, fdi often serves as an indicator for the sound financing of a current account deficit and for the quality of