myprojects-hg-reborn

Fork

\documentclass[10pt]{beamer}

\usetheme[progressbar=frametitle]{metropolis}
\usepackage{appendixnumberbeamer}
 \usepackage{graphics}

\usepackage{booktabs}
\usepackage[scale=2]{ccicons}
\usepackage{xcolor, colortbl}

\usepackage{pgfplots}
\usepgfplotslibrary{dateplot}

\usepackage{xspace}
\newcommand{\themename}{\textbf{\textsc{metropolis}}\xspace}

\title{Foreign Direct Investment Data}
\subtitle{Overview and Issues}
% \date{\today}
\date{}
\author{Lorenzo Isella}
\institute{DG Trade, Unit G2}
% \titlegraphic{\hfill\includegraphics[height=1.5cm]{logo.pdf}}

\begin{document}

\maketitle

\begin{frame}{Table of contents}
  \setbeamertemplate{section in toc}[sections numbered]
  \tableofcontents[hideallsubsections]
\end{frame}

\section{Introduction}

\begin{frame}[fragile]{State of Play}
The statistical team gets rather frequently some questions about FDI. We
always reply by providing publicly available ESTAT data.

We cannot blame our colleagues for not being able to dig up the data
by themselves.

Several aspects of the FDI data presentation by ESTAT could and should be improved. This
presentation aims at triggering a discussion about how to approach
ESTAT to unravel the FDA data.

\end{frame}  

\begin{frame}[fragile]{Recurring Questions}
  \begin{itemize}
  \item How much is the EU28 FDI to Africa? And the Chinese one?
      \item Japan external trade organisation publishes the Chinese
        FDI to Africa, why don't we have it?
  \item Do you have the FDI data for 2018? No? But I saw it on
     EUROSTAT!
     \item Do you have data before 2013 I can use to see the trend
       along many years?
    \item The website of Georgia published some time ago its
      FDI to/from France for 2018, why can't we use it?
    \item We like the very positive flow of FDI from country X to
      country Y in 2016. Can you give us the latest data? Ah, now it is
      negative and also in 2016 it is reported as negative?  

 \end{itemize}   

\end{frame}

\begin{frame}[fragile]{And Our Reaction}
  \begin{itemize}
\item We discourage mixing data from different sources (and even from
  the same source if collected following different methodologies
  [pre-BPM6 FDI data]). We
  rely on ESTAT FDI data.
\item Easy to criticise ESTAT for the obscure way the FDI data is
  presented on their site, but  
\item our colleagues are not to blame for being confused about the
  availability and freshness of FDI data
 \item and our task of explaining that the data is not there yet, or
   that, if it is there, it may not be what they asked for can be difficult. 
\item An aside: we need to track the volatility of FDI data (in particular the
  flows) and the corrections to already published data.

  
\end{itemize}
    

\end{frame}  


\section{FDI Data  }


\begin{frame}[fragile]{Foreign Direct Investment (FDI) Data Providers}
  There are several international organisations providing FDI data, e.g.
  \begin{itemize}
  \item EUROSTAT
  \item OECD
  \item UNCTAD
    \item etc...
  \end{itemize}  

  but often FDI data is not collected systematically or it does not
  deploy the latest recommended methodology (BPM6) or the data is (very) ``seasoned''.

  Despite all the issues we will mention, EUROSTAT is still the best
  resource for FDI data. To be reassessed as soon as UNCTAD releases a
  new database of bilateral FDI flows.
  
  
\end{frame}


\begin{frame}[fragile]{Well Kept Secrets -- 1/2}
Few people know in depth the methodological choices and the making of
FDI data. FDI data comes from the balance of payment data (BOP) and it
is presented as
\begin{enumerate}
\item \underline{assets/liabilities}: straight from the BOP data, quarterly
  data and the Member States (MS) have to provide the data within 85
  days from the end of the quarter $\to$ the data is always relatively
  fresh;
\item  \underline{directional representation} (outward and inward FDI, positions,
  flows and income): yearly data on EUROSTAT and the MS can provide it
  within 9 months from the end of the year $\to$ we still have 2017
  data. Relies on BOP data, but further info is required.

\end{enumerate}  

In the overwhelming majority of the cases the user (perhaps
unconsciously) wants the directional representation, but the existence
of fresher data branded as FDI may cause confusion. 

  \end{frame}

\begin{frame}[fragile]{Well Kept Secrets -- 2/2}
Regardless of the chosen representation, the FDI data on ESTAT is scattered among different
data sets and the EU28 is, in some cases, separated from all the
individual MS.

Add to this that you need an inordinate number of double clicks to get
to what you want and you understand that this is enough to discourage
the average (and above average) user.

\end{frame}  
\section{Concepts and Definitions}

\begin{frame}[fragile]{Balance of Payments}

BOP is a statistical statement that summarises the transactions of an
economy with the rest of the world.   Transactions are organised into
\begin{itemize}
\item \underline{current and capital account}: it determines the exposure of an
  economy vis-à-vis the rest of the world and in particular
  \begin{itemize}
\item    the current account covers international transactions in goods, services, income, and current transfers;

\item    the capital account covers international capital transfers (e.g. debt forgiveness) and the acquisition/disposal of non-produced, nonfinancial assets (such as patents);

\end{itemize}
\item \underline{financial account}: it determines how the exposure is
  financed: it deals with transactions involving financial claims on, or liabilities to, the rest of the world, including international purchases of securities, such as stocks and bonds.

  
\end{itemize}  

In principle, the sum of the two accounts is zero. FDI data is buried
in the financial account.


\end{frame}

\begin{frame}[fragile]{FDI}
Foreign direct investment (FDI) is the category of international
investment that reflects the objective of obtaining a lasting interest
by an investor in one economy in an enterprise resident in another
economy.

Where to find it?
\begin{itemize}
\item asset/liability presentation: BOP quarterly 
  (\verb|bop_c6_q| and \verb|bop_eu6_q|) and monthly (\verb|bop_c6_m|
  and \verb|bop_eu6_m|) data, look for the financial
  account and direct investment;
  \item directional representation: \verb|bop_fdi6_pos| and
    \verb|bop_fdi6_flow|  data sets (with some info on the FDI broken
    by NACE). Yearly data collected from 2013 according to the BPM6
    methodology (see  \url{https://www.imf.org/external/pubs/ft/bop/2007/pdf/bpm6.pdf})
\end{itemize}  


  \end{frame}

  \begin{frame}[fragile]{FDI: Asset/Liability Representation}

In a country’s balance of payments, nonresidents' claims made on
residents' financial assets are liabilities, while claims made against
nonresidents by residents are assets.
\begin{itemize}
\item Economic assets are resources over which ownership rights are enforced and from which future economic benefits may flow to the owner.
\item Liabilities are  contractual obligations to deliver cash or similar to another entity or a potentially unfavorable exchange of financial assets or liabilities with another entity
\end{itemize}  


\end{frame}  

  \begin{frame}[fragile]{FDI: Negative Asset/Liability}
    \begin{itemize}

\item Negative asset: it could be due to an accumulated depreciation
  of an asset. A simple, non-financial example is that of a car which
  has yearly maintenance costs which finally overtake the value of the
  car. The car is a negative asset, but still an asset since it can be
  sold while killing the maintenance costs.
  \item Negative liability: a credit balance. One company pays out
    more than the amount required by the liability.
      \end{itemize}
The discussion could go on (disinvestments, reverse stocks, etc...)
.
    \end{frame}


 \section{Relations Between the FDI Data Presentations}   

  \begin{frame}[fragile]{FDI Data: an Example}

French FDI from BOP statistics with the extra
EU28. Net=assets-liabilities. Values in MIO EUR. See \url{https://frama.link/vJcW7v06}
    
% latex table generated in R 3.5.3 by xtable 1.8-3 package
% Thu Apr  4 11:55:30 2019
\begin{table}[ht]
  \centering
  \resizebox{\textwidth}{!}{
\begin{tabular}{lllrrrrr}
  \hline
FDI & Reporter & Partner & 2013 & 2014 & 2015 & 2016 & 2017 \\ 
  \hline
Net & France & Extra EU28 & -13992 & 20896 & -4723 & 22938 & 4686 \\ 
  Assets & France & Extra EU28 & -8217 & 10587 & 13310 & 32009 & 10539 \\ 
  Liabilities & France & Extra EU28 & 5775 & -10309 & 18033 & 9071 & 5853 \\ 
   \hline
\end{tabular}
}
\end{table}

The BOP data does not show the direction of the investments. The
assets (liabilities) are the sum of the assets (liabilities) held by French companies in the extra
EU28 plus the assets (liabilities) held by extra EU28 companies in France.

\end{frame}

  \begin{frame}[fragile]{FDI: Positional Representation}
Definitions
\begin{itemize}
\item Flows refer to economic actions and effects of
  events within an accounting period. Flows
measure changes in economic value over a period of time.
  \item Positions (also called stocks) refer
to a level of assets or liabilities at a point in time. Stocks measure economic value at a point in time. 
\end{itemize}

Flows and
positions are integrated so that all changes in positions between two points in time are fully explained
by the recorded flows (in theory).

In the directional presentation, FDI stocks, flows or income are classified according to the status
of the resident entity
\begin{itemize}
\item Direct Investment Abroad (DIA) and
\item Direct Investment in the Reporting Economy (DIRE)
\end{itemize}
\end{frame}

  \begin{frame}[fragile]{FDI: An Example with the Positional
      Representation}
French FDI flows with extra EU28 in the directional representation. Data
from \url{https://frama.link/G-YrCEor}
% latex table generated in R 3.5.3 by xtable 1.8-3 package
% Thu Apr  4 13:56:56 2019
\begin{table}[ht]
  \centering
    \resizebox{\textwidth}{!}{
\begin{tabular}{lllrrrrr}
  \hline
FDI & Reporter & Partner & 2013 & 2014 & 2015 & 2016 & 2017 \\ 
  \hline
Assets (DIA) & France & Extra EU28 & -1400 & 13049 & 13880 & 26574 & 16242 \\ 
  Liabilities (DIA) & France & Extra EU28 & -162 & -2778 & -902 & 1325 & -1928 \\ 
  Net FDI outward & France & Extra EU28 & -1238 & 15828 & 14782 & 25248 & 18170 \\ 
  Assets (DIRE) & France & Extra EU28 & -6815 & -2463 & -570 & 5436 & -5703 \\ 
  Liabilities (DIRE) & France & Extra EU28 & 5936 & -7531 & 18934 & 7747 & 7782 \\ 
  Net FDI inward & France & Extra EU28 & 12752 & -5068 & 19504 & 2311 & 13485 \\ 
   \hline
\end{tabular}
}
\end{table}

\end{frame}


  \begin{frame}[fragile]{Relation between the Two Representations 1/2}

    FDI flows: first we focus on the assets.
\begin{table}[ht]
  \centering
  \resizebox{\textwidth}{!}{
\begin{tabular}{lllrrrrr}
  \hline
FDI & Reporter & Partner & 2013 & 2014 & 2015 & 2016 & 2017 \\ 
  \hline
 \rowcolor{red} Assets & France & Extra EU28 & -8217 & 10587 & 13310 & 32009 & 10539 \\ 
   \hline
Assets (DIA) & France & Extra EU28 & -1400 & 13049 & 13880 & 26574 & 16242 \\ 
  Assets (DIRE) & France & Extra EU28 & -6815 & -2463 & -570 & 5436 & -5703 \\ 
  \hline
\rowcolor{red} Assets (DIA) + Assets (DIRE) & France & Extra EU28 & -8215 & 10586 & 13310 & 32010 & 10539 \\ 
  \hline
 
\end{tabular}
}
\end{table}

By summing the assets in the two directions (French assets invested
abroad and extra EU28 assets invested in France), we reconstruct the
value of the assets between France and the extra EU28 in the BOP, but
knowing who holds assets where. The same applies to the liabilities.

\end{frame}






  \begin{frame}[fragile]{Relation between the Two Representations 2/2}
And now let us look at the net values

\begin{table}[ht]
  \centering
    \resizebox{\textwidth}{!}{
\begin{tabular}{lllrrrrr}
  \hline
FDI & Reporter & Partner & 2013 & 2014 & 2015 & 2016 & 2017 \\ 
  \hline
\rowcolor{red} Net & France & Extra EU28 & -13992 & 20896 & -4723 & 22938 & 4686 \\ 
  \hline

  Net FDI outward & France & Extra EU28 & -1238 & 15828 & 14782 & 25248 & 18170 \\ 
  Net FDI inward & France & Extra EU28 & 12752 & -5068 & 19504 & 2311
                                                     & 13485 \\
  \hline
\rowcolor{red} Net FDI outward - Net FDI inward  & France & Extra EU28 & -13990 & 20896 & -4722 & 22937 & 4685 \\ 

   \hline
\end{tabular}
}
\end{table}
Same philosophy as before: by combining the directional data, we can
always reconstruct the BOP data, but not the other way around. Think
of the analogy of imports, exports and total trade between two countries.


  \end{frame}  


\section{Conclusions and Outlook}


\begin{frame}[fragile]{Back to FDI Statistical Questions}
  \begin{itemize}
\item Most of the time our colleagues want the directional
  representation of the FDI $\to$ need to know who invests
  where.
  \item BOP presentation of FDI data more up-to-date than the
    directional presentation $\to$ hard time to explain why we do not
    have any 2018 data
    \end{itemize}

\end{frame}   


\begin{frame}[fragile]{How We Organize the FDI Data}
Back to the example of France vis-à-vis the extra EU28 (with FDI
positions from \url{https://frama.link/9brZZqup})

% latex table generated in R 3.5.3 by xtable 1.8-3 package
% Fri Apr  5 11:22:09 2019
\begin{table}[ht]
  \centering
   \resizebox{\textwidth}{!}{ 
\begin{tabular}{rllrrrr}
  \hline
year & reporter & partner & in\_stock & out\_stock & in\_flow & out\_flow \\ 
  \hline
2013 & France & Extra-EU28 & 152278 & 388710 & 12752 & -1238 \\ 
  2014 & France & Extra-EU28 & 153163 & 443728 & -5068 & 15828 \\ 
  2015 & France & Extra-EU28 & 173425 & 497881 & 19504 & 14782 \\ 
  2016 & France & Extra-EU28 & 180456 & 530661 & 2311 & 25248 \\ 
  2017 & France & Extra-EU28 & 197491 & 493628 & 13485 & 18170 \\ 
   \hline
\end{tabular}
}
\end{table}

It would be ideal to retrieve directly the data in this format from the
ESTAT website. NB: the flows do not account entirely for the stocks variation.
  
\end{frame}   

\begin{frame}[fragile]{What We Would Like}
  \begin{itemize}
\item To have the FDI data in two specialised tables (BOP and
  directional) already in a user-friendly format (we can give ESTAT
  some examples of the desired formats).
  \item Fresher directional data. We accepts estimates, footnotes,
    preliminary flags etc...
  \item A better coverage on what China does (due to a growing
    interest on Chinese investments).
    \item Suggestions? Extra?
  \end{itemize}  

\end{frame}   
  
\end{document}