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Looking beyond the curtain: pass-through capital and round-tripping in Italy's foreign direct investment

Author

Listed:
  • Nadia Accoto

    (Bank of Italy)

  • Giacomo Oddo

    (Bank of Italy)

Abstract

The growing complexity of the financing and ownership structures of multinational enterprises (MNEs) leads to control chains that extend across a number of countries and obscure the ultimate sources and destinations of foreign direct investment (FDI). This results in what is known in the literature as ‘pass-through capital' (i.e. capital entering and exiting from a given country) and 'round-tripping' (i.e. capital leaving the investor's jurisdiction at the top of the investment chain and then returning to the same country). This study quantifies and analyses pass-through capital and round-tripping for Italy along their geographical and sectoral dimensions, applying a simple methodology based on information on the residency of the ultimate investor as reported in the surveys of firms conducted for the purpose of compiling the balance of payments in the years 2013-2020.

Suggested Citation

  • Nadia Accoto & Giacomo Oddo, 2023. "Looking beyond the curtain: pass-through capital and round-tripping in Italy's foreign direct investment," Questioni di Economia e Finanza (Occasional Papers) 762, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_762_23
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2023-0762/QEF_762_23.pdf
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    References listed on IDEAS

    as
    1. Olivier Blanchard & Julien Acalin, 2016. "What Does Measured FDI Actually Measure?," Policy Briefs PB16-17, Peterson Institute for International Economics.
    2. Jannick Damgaard & Thomas Elkjaer, 2017. "The Global FDI Network: Searching for Ultimate Investors," IMF Working Papers 2017/258, International Monetary Fund.
    3. Maria Borga & Cecilia Caliandro, 2018. "Eliminating the Pass-Through: Towards FDI Statistics that Better Capture the Financial and Economic Linkages between Countries," NBER Working Papers 25029, National Bureau of Economic Research, Inc.
    4. Mr. Philip R. Lane & Mr. Gian M Milesi-Ferretti, 2017. "International Financial Integration in the Aftermath of the Global Financial Crisis," IMF Working Papers 2017/115, International Monetary Fund.
    5. Casella, Bruno, 2019. "Looking through conduit FDI in search of ultimate investors – a probabilistic approach," MPRA Paper 95188, University Library of Munich, Germany.
    6. Bruno Casella, . "Looking through conduit FDI in search of ultimate investors – a probabilistic approach," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    foreign direct investment; pass-through capital; multinational enterprises; external statistics;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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