Untangling the Effects of 'Special Purpose Entities' in Global FDI
Columbia FDI Perspectives Nr. 171
Posted: 11 Jun 2016
Date Written: April 11, 2016
The measurement of foreign direct investment (FDI) flows and stocks between home countries and host countries is muddied by the widespread use of “special purpose entities” (SPEs), including for the round-tripping of domestic investment. Many national statistical bodies still do not separately track investments through SPEs and thereby risk presenting a distorted picture of global FDI. International bodies, including the OECD and UNCTAD, have long identified the problem, but it persists. This short paper provides a Russian illustration: the US$55 billion acquisition of TNK-BP, a Russian oil producer, by Rosneft, another Russian oil company, in 2013. While the case may be singular, its magnitude made the distortive effect on global FDI statistics quite visible.
Keywords: FDI, Russia, special purpose entities, offshore companies
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