Ms. Yevgeniya Korniyenko, Manasa Patnam, Rita Maria del Rio-Chanon, and Mason A. Porter
conceptual framework provided by the IMF Global Financial Flows of Funds approach (for details, see Errico and others (2014) ). Missing data and data gaps were filled either by using mirror statistics or national data sources (specifically, Bundesbank and USTIC database). 9 Using this database, we constructed six networks for each year: (i) bilateral foreign direct investments in equity (FDI-equity); (ii) bilateral foreign direct investments in debt (FDI-debt); (iii) bilateral portfolio investments in equity (PI-equity); (iv) bilateral portfolio investments in debt
This paper addresses three types of geographical decoupling in foreign direct investment (FDI), i.e., challenges when using traditional FDI data as a proxy for real economic integration between economies: (i) large bilateral asymmetries between inward and outward FDI, (ii) the role of special purpose entities (SPEs), and (iii) the effect of moving from immediate counterpart to ultimate investing economy (UIE). A unique global FDI network is estimated, where SPEs are removed and FDI positions are broken down by the UIE. Total inward FDI in the new network is reduced by one-third, and financial centers are less dominant.