How important is foreign direct investment?

John Cantwell, Christian Bellak

Research output: Contribution to journalArticlepeer-review

14 Scopus citations


The degree of multinationality of an economy's production is determined by the extent of production in other economies by domestically-owned firms, and by production located in the economy in question by foreign-owned firms. In the absence of direct measures, international production (that is, production under foreign ownership) is normally measured at a national level by outward and inward foreign direct investment (FDI) stocks. Unfortunately, the existing practice of reporting FDI stocks on a historical cost basis (i.e. book values) is unsatisfactory, because it does not take into account the age distribution of stocks, thus making accurate international comparisons of FDI stocks almost impossible (see e.g. Cantwell, 1984, 1992; Bellak and Cantwell, 1996). We have re-estimated the FDI stocks of Japan, Germany, the US and the UK at replacement values using a perpetual inventory model (PIM). The results cast doubt on some of the conventional wisdoms about international production, derived from historic cost data.

Original languageEnglish (US)
Pages (from-to)99-106
Number of pages8
JournalOxford Bulletin of Economics and Statistics
Issue number1
StatePublished - Feb 1998
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Statistics and Probability
  • Social Sciences (miscellaneous)
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty

Fingerprint Dive into the research topics of 'How important is foreign direct investment?'. Together they form a unique fingerprint.

Cite this