Central Bureau of Statistics - Israel FDI , external financing and Globalisation CBS - Israel
Financing new foreign investments Compiling Economy CA’s Host Economy Original Assets Parent company Additional Assets CBS - Israel FDI Original debt Additional Debt Foreign banks
Consolidated assets and liabilities of CAs abroad l Balance sheets of parent companies include consolidated assets and liabilities of foreign CAs, that may be presented separately as a (main) component of FDI abroad l This full presentation of foreign CAs’ assets and liabilities will be better related to the level of CAs’ activities, as included in AMNE statistics, independently of the financing scheme of foreign CAs CBS - Israel March 27, 2009
Supplemental presentation of FDI in the IIP Direct Investment abroad 1. Direct Investment in Controlled Affiliates abroad 1. 1. Consolidated assets of CAs abroad 1. 1. 1. Fixed assets 1. 1. 2. Financial assets 1. 1. 3. Other assets (May include the gap between market value and book value of CAs abroad) 1. 2. Consolidated liabilities of CAs abroad (May include minority claims of non-controlling shareholders) 1. 3. Total Direct Investment in Controlled Affiliates abroad (1. 1 – 1. 2) 2. Direct Investment in Other Affiliates abroad 2. 1. Total Direct Investment in Other Affiliates abroad 3. Total Direct Investment abroad (1. 3 + 2. 1) CBS - Israel Thereof: Other capital March 27, 2009
Supplemental presentation of FDI in the IIP Financial assets and liabilities: – Equity – Bonds and notes – Deposits – Loans – Other financial assets CBS - Israel
Supplemental presentation of FDI in the IIP l Isolating assets of foreign CAs – from the consolidated balance sheet of parent companies – may give an additional insight into the full extent of assets, held by parent companies through CAs’ in host economies l In the liabilities’ side, the separate presentation of foreign CAs’ liabilities reveals the financial scheme of foreign CAs’ and – particularly – the breakdown between own funds and external financing l In this way, controlled assets and liabilities of parents abroad through CAs, may be better analyzed and compared CBS - Israel
Composition of assets and liabilities of foreign CAs l The composition of assets and liabilities of CAs - and not only their total – may have an important role in the overall financial position of MNEs. l Details on the composition mentioned above would also allow to track changes in time and to analyze possible outcomes, in cases of changes in prices and/or other relevant variables in host economies. l On the liabilities side, the information mentioned will allow to have a breakdown between financing of CAs by own MNE’s funds and by external financing in host economies, as explained above. Through this breakdown, we can track changes in financing sources and analyze developments over time. CBS - Israel
Reporting burden on corporations l Corporate reports required may increase the burden on corporations l One of the main difficulties: Separated consolidated assets and liabilities of domestic and foreign subsidiaries (OUT companies) l Easier solutions are available for IN companies and for companies having only foreign subsidiaries CBS - Israel
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