OECD Benchmark Definition of Foreign Direct Investment 2008

Fourth Edition

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Foreign direct investment (FDI) is a major driver of globalisation. The OECD Benchmark Definition of Foreign Direct Investment sets the world standard for FDI statistics. It provides a single point of reference for statisticians and users on all aspect of FDI statistics, while remaining compatible with other internationally accepted statistical standards. This edition introduces new analytical data breakdowns and statistical treatments that better reflect the realities of today’s world economy. The revised Benchmark Definition provides methods for classifying different types of FDI (e.g., mergers and acquisitions, greenfield investments) and for identifying the ultimate investor. The new edition now addresses the uses of FDI statistics, including globalisation indicators, and provides a chapter relating to the statistics on the activities of multinational enterprises.

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Annex 6

Reinvested Earnings and Reinvestment of Earnings

In a relationship between a direct investor and a direct investment enterprise (DIE), the net current earnings of a DIE that are not distributed as dividends to the shareholders (or the equivalent in the case of quasi-corporate enterprises) are deemed distributed, as investment income, to the direct investor (DI), proportionate to its (their) holdings of shares (or equivalent) in the DIE.68 As this is an imputed transaction, a counterpart imputation (of equal value but opposite direction) is required in the financial account representing the reinvestment of the funds back into the DIE. The income imputation is referred to as reinvested earnings (RE) (Box A.6.1), while the financial account entry is referred to as reinvestment of earnings income, to differentiate it from the income transaction.

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