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Abstract
Exploring the Borderline Between Direct Investment and Other
Types of Investment: The U.S. Treatment, by Ralph H. Kozlow
Presented at the Fifteenth Meeting of the IMF Committee on Balance of
Payments Statistics Canberra, October 21-25, 2002.
This paper discusses the classification in the U.S. international economic
accounts of borderline cases between direct investment and other types
of investment. In the fifth edition of the Balance of Payments Manual
(BPM5), one of the key steps forward was in the provision of uniform guidelines
for identifying direct investment and distinguishing it from other types
of investment. BPM4 had defined direct investment only in terms of general
conceptual criteria, whose implementation was likely to vary from country
to country, resulting in bilateral asymmetries in the classification of
investments. Thanks to the more specific guidance in BPM5, gross inconsistencies
are now less of a problem. However, borderline cases, not specifically
treated in BPM5 (or in its companion volumes or the OECD Benchmark Definition)
still exist. These may have become more numerous and more significant
over time, as multinational firms have grown in size and in organizational
complexity.
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Last changed: June 9, 2003
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