Eliminating the Pass-Through: Towards FDI Statistics that Better Capture the Financial and Economic Linkages between Countries

Maria Borga, Cecilia Caliandro

NBER Working Paper No. 25029
Issued in September 2018
NBER Program(s):The International Finance and Macroeconomics Program, The International Trade and Investment Program

FDI plays a central role in managing global production networks, but FDI statistics also reflect other factors, including tax avoidance, that make it difficult to differentiate between FDI for “long-term” investments that serves as a source of growth and FDI that is purely financial and has little real economic impact as it merely passes through an economy. This latter FDI also obscures the ultimate sources and destinations of FDI. This paper addresses these challenges by developing a framework for consolidated FDI statistics based on the nationality of the MNE group that complements residency-based FDI statistics. While residency-based statistics are useful to identify where financial claims and liabilities are held, nationality-based statistics provide information on who makes the decisions, reaps the benefits, and bears the risk. Consolidated FDI statistics remove pass-through capital and are better for understanding ‘real’ financial integration between economies and for analysing the relationship between the financing of MNEs and their operations. While some countries produce separate FDI statistics for resident Special Purpose Entities (SPEs) to identify pass-through capital, we demonstrate that this only provides a partial view and that about one-quarter of the inward FDI positions in a selection of European countries reflects pass-through capital through non-SPEs.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w25029

Forthcoming: Eliminating the Pass-Through: Towards FDI Statistics that Better Capture the Financial and Economic Linkages between Countries, Maria Borga, Cecilia Caliandro. in The Challenges of Globalization in the Measurement of National Accounts, Ahmad, Moulton, Richardson, and van de Ven. 2018

NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us