A new report published in Finland reveals that the statistics used for monitoring foreign direct investment flows do not provide an accurate picture of the actual investments made by foreign-owned companies in the target country.
According to a new report produced by ETLA, the Research Institute of the Finnish Economy, and the Bank of Finland, entitled How does foreign direct investment measure real investment by foreign-owned companies, FDI statistics have underestimated the real investments made by foreign companies in Finland. The research focused on the period 2002-2011.
The picture provided by the statistics remains incomplete because, among other reasons, the foreign companies already operating in the target country often use other funding channels for their investments than the capital of the foreign corporation. They can also fund part of the investments by taking bank loans in Finland or other countries, for example, which means that these sums are not visible at all in the statistics on direct investments.
The Finnish research is unique globally in terms of its source material because the relationship between foreign direct investments and investments by foreign-owned companies has not previously been examined with the help of company-level material.
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