Looking through Conduit FDI in Search of Ultimate Investors – a Probabilistic Approach

Casella, B. (2019). Looking through conduit FDI in search of ultimate investors – a probabilistic approach. Transnational Corporations, 26(1):109–146.

38 Pages Posted: 21 Jul 2019

See all articles by Bruno Casella

Bruno Casella

United Nations - Conference on Trade and Development (UNCTAD)

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Date Written: April 26, 2019

Abstract

This paper presents a novel computational method to determine the distribution of ultimate investors in bilateral FDI stock. The approach employs results from the probabilistic theory of absorbing Markov chains. The method allows for the estimation of a bilateral matrix that provides inward positions by ultimate counterparts for over 100 recipient countries, covering 95% of total FDI stock and including many developing countries. Reconstructing the global FDI network by ultimate investors enables a more accurate and complete snapshot of international production than do standalone bilateral FDI statistics. This has considerable implications for policymaking. It also provides more nuanced context to some contemporary developments such as the trade tensions between the United States, China and others, as well as Brexit

Keywords: ultimate investors, bilateral FDI, conduit FDI, international production, absorbing Markov chains

JEL Classification: F22, F23

Suggested Citation

Casella, Bruno, Looking through Conduit FDI in Search of Ultimate Investors – a Probabilistic Approach (April 26, 2019). Casella, B. (2019). Looking through conduit FDI in search of ultimate investors – a probabilistic approach. Transnational Corporations, 26(1):109–146., Available at SSRN: https://ssrn.com/abstract=3422770

Bruno Casella (Contact Author)

United Nations - Conference on Trade and Development (UNCTAD) ( email )

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Geneva, 1211
Switzerland

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