Columbia International Affairs Online: Policy Briefs

CIAO DATE: 02/2012

FDI stocks are a biased measure of MNE affiliate activity: A response

Mira Wilkins

January 2012

Columbia Center on Sustainable Investment


For decades, the literature has often equated FDI and MNEs, using the words “FDI” and “MNE” interchangeably. A book on the “theory of FDI” can be expected to be on the “theory of MNEs.” So, too, if this very publication, Columbia FDI Perspectives, were renamed “Columbia MNE Perspectives,” it is doubtful that the contents would change. Virtually, every student of MNEs would agree that this is a false equation. The formulation should be, MNEs undertake FDI, but MNEs also do many other things, including transferring technology, undertaking research and development, and producing and marketing goods and services. MNEs expect a return on their investment in the business package, not merely on the FDI they undertake.