Brazilian-American Capital and Investment Exchange Analysis
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According to UNCTAD, FDI flows to subsidiary companies
consist of the net sales of shares and loans (including non-
cash acquisitions made against equipment, manufacturing
rights, etc.) to the parent company, plus the parent firm's
share of the subsidiary's reinvested earnings, plus total
net intra-company loans provided by the parent company.
For affiliates, FDI flows consist of the increase in reinvested
earnings plus the net increase in funds received from the
parent company. FDI outflows (reverse flows or disposals)
are very much possible, and indicate that at least one of the
above components is negative and is not outweighed by the
sum of the remaining components. For subsidiary companies,
FDI stock is the value of the share of their capital and reserves
attributable to the parent company (this is equal to total
assets minus total liabilities), plus the net indebtedness of the
subsidiary to the parent firm. For affiliates, it is the value of
fixed assets and the value of current assets and investments,
excluding amounts due from the parent, less liabilities to
third parties. This figure may also be negative, although this
occurrence will be more related to the accounting methods of
the organizations used as a source.
V. What is announced FDI considered to be?
Based on the concept formulated by FDI Markets, the
Financial Times' intelligence division, announced FDI consists
of physical expansion projects involving new investments and
reinvestments that result in an injection of capital and new
jobs in the economy. In this case, all greenfield operations are
included, as well as joint ventures. Mergers and acquisitions
and other equity investments are not included, however,
as they do not involve immediate physical expansion. In
addition, it is important to take into account that not all
investments actually come to fruition, given that samples are
Figure 1: FDI and Announced FDI
Total FDI
Portfolio Investments
Announced FDI
Investments involving expansion
of physical capital
Investments announced
but not executed
based on announcements. Figure 1 illustrates the difference
between total FDI and investment actually executed in a
country, and announced FDI.
VI. What do total assets of a country "A" in another country
"B" mean?
This concept is derived from statistics about multinational
companies' activities, providing an additional perspective
about the impact of foreign direct investment, as well as
those provided by statistics on FDI stocks and flows in the
country. According to the Bureau of Economic Analysis, "total
assets" refers to the sum of assets of all companies over
which country "A" has control (more than 50%) installed in
the territory of country "B."
BIBLIOGRAPHY
FINANCIAL TIMES - FDI MARKETS. Available at: http://www.
fdimarkets.com/. Accessed on May 5, 2015.
INTERNATIONAL MONETARY FUND (IMF). Balance of Payments
Manual. Available at: http://www.imf.org/external/pubs/ft/
bopman/bopman.pdf. Accessed on May 27, 2015.
ORGANIZATION FOR ECONOMIC COOPERATION AND
DEVELOPMENT (OECD). Glossary of Foreign Direct
Investment Terms and Definitions. Available at: http://www.
oecd.org/daf/inv/investment-policy/2487495.pdf. Accessed
on May 26, 2015.
BRAZILIAN FEDERAL REVENUE SERVICE. IDE - Investimento
Estrangeiro Direto ("Foreign Direct Investment"). Available
at: http://www.receita.fazenda.gov.br/aduana/IDE/
IDEBrasilCuba/ide.htm. Accessed on May 27, 2015.
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
(UNCTAD). FDI Bilateral Statistics. Available at: http://unctad.
org/en/Pages/DIAE/FDI%20Statistics/FDI-Statistics-Bilateral.
aspx. Accessed on May 26, 2015.
US BUREAU OF ECONOMIC ANALYSIS. Available at: http://bea.
gov. Accessed on May 21, 2015.
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