Looking through conduit FDI in search of ultimate investors – a probabilistic approach

Bruno Casella

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents a novel computational method to determine the distribution of ultimate investors in bilateral FDI stock. The approach employs results from the probabilistic theory of absorbing Markov chains. The method allows for the estimation of a bilateral matrix that provides inward positions by ultimate counterparts for over 100 recipient countries, covering 95% of total FDI stock and including many developing countries. Reconstructing the global FDI network by ultimate investors enables a more accurate and complete snapshot of international production than do standalone bilateral FDI statistics. This has considerable implications for policymaking. It also provides more nuanced context to some contemporary developments such as the trade tensions between the United States, China and others, as well as Brexit

Keywords: ultimate investors; bilateral FDI; conduit FDI; international production; absorbing Markov chains (search for similar items in EconPapers)
JEL-codes: F23 F3 F36 F6 (search for similar items in EconPapers)
Date: 2019-04-26
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (16)

Published in Transnational Corporations 1.26(2019): pp. 109-143

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:95188

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