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Exploring the Borderline Between Direct Investment and Other Types of Investment: The U.S. Treatment

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  • Ralph Kozlow

    (Bureau of Economic Analysis)

Abstract

This paper discusses the classification in the U.S. international economic accounts of borderline cases between direct investment and other types of investment. In the fifth edition of the Balance of Payments Manual (BPM5), one of the key steps forward was in the provision of uniform guidelines for identifying direct investment and distinguishing it from other types of investment. BPM4 had defined direct investment only in terms of general conceptual criteria, whose implementation was likely to vary from country to country, resulting in bilateral asymmetries in the classification of investments. Thanks to the more specific guidance in BPM5, gross inconsistencies are now less of a problem. However, borderline cases, not specifically treated in BPM5 (or in its companion volumes or the OECD Benchmark Definition) still exist. These may have become more numerous and more significant over time, as multinational firms have grown in size and in organizational complexity.

Suggested Citation

  • Ralph Kozlow, 2002. "Exploring the Borderline Between Direct Investment and Other Types of Investment: The U.S. Treatment," BEA Papers 0024, Bureau of Economic Analysis.
  • Handle: RePEc:bea:papers:0024
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    File URL: https://www.bea.gov/papers/pdf/Kozlow-Exp.pdf
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    References listed on IDEAS

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    1. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-544, September.
    2. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2002. "Chains of Ownership, Regional Tax Competition, and Foreign Direct Investment," NBER Working Papers 9224, National Bureau of Economic Research, Inc.
    3. Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2005. "Vertical Production Networks in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 664-678, November.
    4. Susan E. Feinberg & Michael P. Keane, 2001. "U.S.-Canada Trade Liberalization And Mnc Production Location," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 118-132, February.
    5. repec:rus:hseeco:121605 is not listed on IDEAS
    6. Clausing, Kimberly A, 2000. "Does Multinational Activity Displace Trade?," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 190-205, April.
    7. Subramanian Rangan & Robert Z. Lawrence, 1999. "Search and Deliberation in International Exchange: Learning from Multinational Trade About Lags, Distance Effects, and Home Bias," NBER Working Papers 7012, National Bureau of Economic Research, Inc.
    8. Helleiner, G K & Lavergne, Real, 1979. "Intra-Firm and Industrial Exports to the United States," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 297-311, November.
    9. Robert E. Lipsey, 1995. "Trade and Production Networks of U.S. MNCs and Exports by Their Asian Affiliates," NBER Working Papers 5255, National Bureau of Economic Research, Inc.
    10. Lall, Sanjaya, 1978. "The Pattern of Intra-Firm Exports by U.S. Multinationals," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 40(3), pages 209-222, August.
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    Cited by:

    1. Ralph Kozlow, 2006. "Globalization, Offshoring, and Multinational Companies: What Are the Questions, and How Well Are We Doing in Answering Them?," BEA Papers 0057, Bureau of Economic Analysis.
    2. Matthew D. Atkinson, 2003. "A Computational Routine for Disaggregating Industry Margin Data to Estimate Product Margin Rates," BEA Papers 0031, Bureau of Economic Analysis.

    More about this item

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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