FDI statistics explained at Bahrain workshop

The workshop was held at the Diplomat Hotel and attended by more than 45 people from Bahrain and the Gulf. Three experts from the Paris-based MENA-OECD Investment Programme outlined the latest standards and parameters for measuring FDI. The international body has recently revised the basic concepts and definitions of direct investment which were first established in 1995.

'Understanding the new policies and standards could help policy makers recognise which areas of their economies are most attractive. This will help them focus their development efforts on the most rewarding sectors,' said Gerrit van den Dool, a senior economist at the OECD.

In Dool's presentation, he explained the major improvements in the new OECD benchmark definition of FDI. He said good progress has already been made. As a result of these changes, policy makers are now able to know the 'origin' of the capitals invested in their countries.

According to Dool, indicators on this progress include: better defined FDI relationships, establishing a set of practical criteria to identify Special Purpose Entities (SPEs), and better understanding of the effects of netting.
Ayse Bertrand, a manager at the International Investment Statistic of the OECD, said that not many countries can completely abide by the new rules owing to their complexity. 'However, if people understand the regulations better, they can use the statistics to improve the way the flow of FDI is reported,' she said.

Bahrain is the first country in the Middle East to calculate its own FDI. In 2006, Bahrain's FDI rose by more than $1.8bn - bringing it to almost triple its size in 2005.