The Journal of World Investment & Trade, Volume 13, Number 4, 2012 , pp. 542-555
Posted: 10 Sep 2012
Date Written: 2012
This article analyses indirect FDI, denoting investment projects, in which the ultimate owner is different from the immediate investor. Reasons for the existence of this type of investment projects can be mostly corporate strategies and tax considerations. The development impact of indirect FDI is not necessarily negative; however it varies by the key types of indirect FDI (delegation of power to regional headquarters, nearshoring, concealed investment, and round tripping). It also depends on how the project money is transhipped: through an affiliate abroad, or through a special purpose entity. Government polices may influence largely the extent and development impact of indirect FDI, especially through tax policies. The phenomenon deserves more attention in the future, as currently indirect FDI is an under-researched topic.
Keywords: indirect FDI, transhipped FDI, round tripping, special purpose entities, ultimate owner, taxation
JEL Classification: F23, H25, K33
Suggested Citation: Suggested Citation