Direct investment provides recipient countries with financing and other resources, adding to economies’ potential for output growth. However, the quality and availability of direct investment data at the individual country and global levels can be improved. Ralph Kozlow, Division Chief, and Emmanuel Kumah, Deputy Division Chief in the IMF’s Statistics Department, talk about a new IMF initiative—the Coordinated Direct Investment Survey (CDIS)—to improve the coverage and comparability of foreign direct investment data.
IMF Survey: What are you hoping to accomplish with the CDIS initiative? Have economies been receptive?
Kozlow: The CDIS is an IMF initiative to provide data on countries’ direct investment positions by individual counterpart country—that is, it will show the source and destination of investment by individual country. All participating countries will collect and report data to the IMF on the geographical distribution of the stock of foreign direct investment in their economies, or “inward” direct investment—separately for equity and debt investment, by partner country—for December 31, 2009. Investing economies that can provide the data will also collect and report information on the stock of “outward” direct investment, separately for equity and debt investment, by partner country.
Our plans are to release initial results from the CDIS in late 2010 or early 2011, and comprehensive data should become available later in 2011. With this partner country dimension—the from-whom-to-whom dimension—countries will have access to data provided by their partner direct investment countries. The database that the IMF will release will enable countries to identify differences between their own direct investment data and the data compiled by partner countries, thereby highlighting areas where follow-up could lead to significant data improvements.
The CDIS initiative has been very strongly supported. To date, over 130 countries have responded positively to the invitation by the IMF’s Managing Director to participate. This initiative builds on the success of the IMF-sponsored Coordinated Portfolio Investment Survey (CPIS), which is now conducted annually with more than 70 countries participating. I should also note that the IMF’s interagency partners—including the Organization for Economic Cooperation and Development, the United Nations Conference on Trade and Development, the Statistical Office of the European Communities, and the European Central Bank, have strongly supported this initiative.
IMF Survey: Why are data on direct investment so difficult to compile? Or is it that countries don’t want to share this type of information?
Kozlow: The main difficulty with compiling high-quality direct investment data is that it requires that countries’ national agencies undertake enterprise surveys, and this, in turn, often poses several challenges. For instance, national statistical compilers need a good legal basis to conduct enter prise surveys if they are to achieve high response rates. Also, adequate resources for data collection, data editing, compilation, and dissemination are required. Good quality data also rest on compilers having a good understanding of direct investment concepts and definitions.
Countries that currently compile data on direct investment positions report these data to the IMF on a global basis, as needed in the context of producing international investment position statistics. Under the new initiative, they will provide geographical detail. However, data for certain individual partner countries may have to be suppressed to avoid revealing confidential data pertaining to one or a small number of reporting enterprises.
IMF Survey: Who are the main users of direct investment data?
Kumah: The main ones are policymakers in government (principally in ministries of finance and industry, and central banks), international organizations, research organizations, and academic institutions. Clearly, with the increasing interest in globalization and, in particular, in learning more about the benefits as well as risks of cross-border investment, the number of users is growing.
IMF Survey: Is this survey a one-off exercise or are there plans to conduct such surveys on a more regular basis?
Kozlow: At this point, this is a one-off exercise, but prospects are good that it will become an annual exercise. A decision will be taken in the next one to two years on whether to conduct it on a regular basis, as is the case for the CPIS. The Fund’s interagency partners, participating countries, and the IMF Committee on Balance of Payments Statistics will be consulted on this question.