APPENDIX A - Sources of Data on Foreign Direct Investment

Summary

There are two national sources of data on Japanese FDI: the balance of payment statistics of the Bank of Japan (BOJ) and notification data collected by the Ministry of Finance (MOF). BOJ statistics are compiled on actual investment transactions by Japanese residents, on a calendar year basis, in overseas branches, subsidiaries or associated companies in which Japanese parents' ownership exceeds 10 per cent. These data are available only in aggregate form, with no national or industrial breakdowns. MOF statistics, which do provide such breakdowns, are anticipatory, compiled at the time the Ministry is notified by firms of their intentions to invest, subject to approval of the host government. Because these data are collected before the transaction occurs, they overstate actual investment. U.S. Department of Commerce (U.S. DOC) data measures actual capital flows by U.S. firms that own at least 10 per cent of the voting equity of a foreign enterprise. This measure of FDI includes retained earnings.

Comparisons between Japanese and American foreign direct investment must, therefore, be made with caution and are best confined to general ratios and trends rather than to levels. Data from host governments also vary considerably because of the variety of methods used to track investment inflows. They are, therefore, of limited assistance in reconciling differences in home country data.