Central Bureau of Statistics - Israel
FDI , external financing
and Globalisation
CBS - Israel
November 2009
Financing new foreign investments
Compiling Economy
Parent
company
CA’s Host Economy
Assets
Liabilities
Original
Assets
FDI
New investments
Additional
Assets
CBS - Israel
Original debt
Foreign
banks
Additional
Debt
November 2009
Financing new foreign investments
Balance sheet of Controlled Affiliate abroad – Year n
Assets
Liabilities
Fixed assets
100
FDI
75
Financial assets
50
External financing
75
Total assets
150
Total liabilities and own
funds
150
Sales
FDI to Sales
(AMNE statistics)
(FDI to AMNE statistics)
1000
7.5%
Balance sheet of Controlled Affiliate abroad
Assets
Liabilities
Fixed assets
400
FDI
75
Financial assets
100
External financing
425
Total assets
CBS - Israel
500
Total liabilities and own
funds
– Year (n+1)
Sales
FDI to Sales
(AMNE statistics)
(FDI to AMNE statistics)
4000
1.9%
500
November 2009
Linking FDI and AMNE statistics

Comparison of FDI and AMNE statistics between
economies where financing of foreign CAs is based heavily
on host countries’ funds, and economies where financing is
based mainly on FDI

Development of FDI and AMNE variables over time, when
there is an increasing use of external financing of CAs

Relative values of FDI and AMNE variables for OUT and IN
corporations, when financing schemes for OUT and IN are
different
CBS - Israel
November 2009
Linking FDI and AMNE statistics
1) Indicators linking foreign controlled assets
to total and domestic assets of MNEs :
1)
2)
3)
CBS - Israel
Positions
Flows
AOUT-CA / ABS
AOUT-CA / DABS
AOUT-CA / AOUT
 AOUT-CA /  ABS
 AOUT-CA /  DABS
 AOUT-CA /  AOUT
November 2009
Linking FDI and AMNE statistics
AOUT-CA /  AOUT-CA –
ABS /  ABS
Total assets/change in assets of controlled
affiliates abroad of domestic parent companies
– Total assets /change in assets of the domestic
business sector
DABS /  DABS
– Total domestic assets / change in domestic assets of
the domestic business sector
AOUT /
 AOUT
– Total assets /change in assets of outward domestic
parent companies
CBS - Israel
November 2009
Linking FDI and AMNE statistics
2) Indicators showing relative shares of FDI
and foreign external financing of CAs:
4)
FDIOUT-CAs / AOUT-CA
5)
1 – (FDIOUT-CAs / AOUT-CA)
FDIOUT-CAs - Value of FDI related only to investment in CAs abroad
CBS - Israel
November 2009
Consolidated assets and liabilities of CAs
abroad

Balance sheets of parent companies include (in many
cases) consolidated assets and liabilities of foreign CAs,
that may be presented separately as a (main) component of
FDI abroad

This full presentation of foreign CAs’ assets and liabilities
will be better linked to the level of CAs’ activities, as
included in AMNE statistics, independently of the financing
scheme of foreign CAs
CBS - Israel
November 2009
Supplemental presentation of FDI in the IIP
Direct Investment abroad
1. Direct Investment in Controlled Affiliates abroad (1.1 less 1.2)
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)
2. Direct Investment in Other Affiliates abroad
3. Total Direct Investment abroad (1 + 2)
Thereof: Other capital
CBS - Israel
November 2009
Supplemental presentation of FDI in the IIP
Financial assets and liabilities:
– Equity
– Bonds and notes
– Deposits
– Loans
– Other financial assets
CBS - Israel
November 2009
Supplemental presentation of FDI in the IIP

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

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

In this way, controlled assets and liabilities of parents
abroad through CAs, may be better analyzed and compared
CBS - Israel
November 2009
Composition of assets and liabilities of
foreign CAs

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.

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, interests and/or other relevant
variables in host economies.

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
November 2009
Reporting burden on corporations

Corporate reports required may increase the burden on
corporations

One of the main difficulties: Separated consolidated assets
and liabilities of domestic and foreign subsidiaries (OUT
companies)

Easier solutions are available for IN companies and for
companies having only foreign subsidiaries
CBS - Israel
November 2009
THANKS FOR YOUR ATTENTION
CBS - Israel
November 2009
Balance sheet of A (consolidated)
Assets
$
Liabilities
Own assets
Fixed assets
Financial assets
Total own assets of A
Own liabilities
2,500
3,000
80
Financial assets
20
CBS - Israel
1,000
Own funds
2,000
Total own liabilities and own funds
of A
3,000
Consolidated liabilities of foreign
CAs (Company B)
Fixed assets
TOTAL ASSETS
External financing
500
Consolidated assets of foreign CAs
(Company B)
Total consolidated assets of foreign
CAs
$
100
3,100
External financing
25
Own funds (FDI)
75
Total consolidated liabilities and
own funds of foreign CAs
TOTAL LIABILITIES
100
3,100
November 2009