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Valuation
M are valued usually at CIF (Cost Insurance Freight)
X are recorded FOB (Free on Board)
=> M value higher than X value by the value of freight and insurance.
FDI definitions
• IMF BoP Manual (5th ed 1993) and OECD Benchmark Definition of FDI (3rd ed) 1996:
“the category of international investment that reflects the objective of obtaining a lasting interest by a resident entity in one economy in an enterprise resident in another economy...”
Components of FDI Flows and Stocks
* Equity capital
* Reinvested earnings: in addition to equity capital
* Intercompany loans: loans extended by the paternal company to the affiliate
Measurement
Approval vs. disbursements data – two sides of the FDI coin
Gross and net measures
Directional principle
Assignment 27 September 2010: Trade and investment
Provide an overview and brief analysis of developments in
international trade and investment flows over the last decade in
[country: XXX
Trade:
Limitation: Merchandise trade (excluding trade in services)
Main indicators:
* Total XM values (trade balance)* Composition of trade
* Major regional groups/countries: source (M)/destination (X)