No. 762 - Looking beyond the curtain: pass-through capital and round-tripping in Italy's foreign direct investment

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by Nadia Accoto and Giacomo OddoApril 2023

This paper quantifies and analyses the share of Italy's foreign direct investment (FDI) corresponding to pass-through capital and round-tripping by country and sector, based on data from the survey conducted by the Bank of Italy for the purpose of compiling the balance of payments statistics. Pass-through capital is the capital entering and exiting a given country; round-tripping refers to capital invested abroad that then returns to the country of origin.

Over the period 2018-20, pass-through capital amounted on average to about 10 per cent of Italy's outward FDI. It was mainly attributable to multinational groups based in other EU member states, which channeled investment to other countries (both EU and non-EU) through their Italian affiliates. Round-tripping accounted for an average of 11 per cent of inward FDI, half of which intermediated via Luxembourg and the United Kingdom.