The growing complexity of the financing and ownership structures of multinational enterprises leads to control chains that extend across a plurality of countries. This paper proposes a method based on probabilistic techniques to reconstruct the global network of foreign direct investment and determine its actual final destination (ultimate host economy) for each country; the model is also potentially useful for supplementing official statistics.
Starting with the International Monetary Fund's bilateral data on 2019, the global network of foreign direct investment is reconstructed. The application to Italy of the probabilistic model significantly diminishes the role of the Netherlands and Luxembourg as the main recipients of direct investments, reported in official statistics based on the immediate counterpart, in favour of countries such as the United States, Germany and France.
