What counts as an FDI project? What is the best way to quantify investment inflows? There are few hard and fast answers to these questions, as the term ‘foreign direct investment’ has numerous definitions, and opinions differ especially as to what constitutes the ‘direct’ portion of the phrase. This makes an accurate, scientific measurement of FDI projects difficult; yet understanding precisely how much investment – and what type – a region is receiving is central to understanding how to retain and support existing investors as well as attract new ones.

Faced with this quandary, the Canadian province of Quebec set out to better inform its accounting method by commissioning a consultancy, WAVTEQ Ltd, to conduct a survey of organisations involved in FDI attraction and promotion. The survey included the leading companies providing FDI data and investment promotion organisations (IPOs) known to have a uniform accounting method as well as IPOs from Canada and the US.


The information gathered from the survey shows that while the official definition of FDI is that 10% or more of equity has to be foreign, the majority of organisations in the survey only account for investments which have foreign equity of more than 50%: 55% of respondents have more than 50% foreign equity, while 45% have between 10% and 49%. All of the organisations surveyed were shown to track foreign investment, while one-third of agencies also track inter-provincial or inter-state investment (agencies from Canada and the US).

Comprehensive information

The information gathered on the companies making foreign investment is comprehensive. All of the agencies record the investing company name and country of origin of the investor and nearly all also include the parent company name. More than 80% include the company website and nearly three-quarters include company contacts and the origin city. Looking just at IPOs, nearly half record the account manager for the company. It is important to note that not all information captured within the accounting method is reported officially. A significant amount of the information is for internal use only.

Interestingly, nearly 70% of organisations surveyed include both announced investment and opened investments, with this figure being 50% for IPOs. UK Trade and Investment (UKTI) and investment tracker fDi Intelligence include announced projects if the intention is to set up within the year, and for Alberta Finance and Enterprise the investment has to start within two years. It should be noted that within the survey, only organisations from Canada include immigrant investment and none of the organisations included talent attraction in their accounting method.

Industry classifications

A key part of the accounting method is how to record the industry of the investment. FDI generally does not fit into standard industrial classifications. Indeed, the site selection criteria for a significant proportion of mobile/footloose investment projects is determined more by the business activity/function than the industry of the investor. Examples include customer support centres, headquarters and logistics. It is therefore not surprising that recording business activities/functions is the most common industry method used by the survey organisations.

More than 60% of organisations also include standard industry codes to classify investment projects. For IPOs, more than three-quarters use industry codes. Enterprise Florida includes six-digit North American Industry Classification System codes and four-digit Standard Industrial Classification (SIC) codes, while UK agencies use five-digit SIC codes. As standard industry codes are generally outdated in classifying emerging industries and technology sectors, nearly half of organisations surveyed also include a brief project description of each investment.

In terms of industry coverage, more than half of the respondents do not include retail or real estate investments. Within Canada, Alberta was the only agency surveyed which included investments from all sectors, including retail, real estate and infrastructure.

In terms of recording information on the location of investment, nearly all of the organisations surveyed include the city and state/province of the investment and nearly three-quarters also include the administrative region/county of the investment. More than 60% record the site address of the investment site. A few organisations are also recording GPS co-ordinates of the investment (such as Invest Northern Ireland and Trendeo).

Capital investment recording

All of the organisations in the survey record the total capital investment being made by foreign enterprise, not that proportion which is transferred overseas as FDI capital. Likewise, for joint-venture investments, all of the organisations in the survey track the total amount of capital investment in the new enterprise, not that proportion being provided by the foreign firm.

As the total amount of capital investment is tracked, not the proportion which is FDI, there is a fundamental methodological difference to official/Unctad (United Nations Conference on Trade and Development) FDI data. This is the primary reason why official data cannot be compared to data from IPOs and private sector companies tracking FDI.

Furthermore, because the organisations in our survey track announced as well as opened investments, the capital investment included in the accounting method is the investment to be realised over a number of years in the future. This is another major difference with official FDI data, which only includes FDI which has actually taken place in that year.

In terms of the timeframe for recording capital investment, an equal proportion of organisations (45%) include the total investment being made with no timeframe for when the investment will take place and investment to be realised within three years. Looking at IPOs, two-thirds include the investment amount to be realised in three years.

Different approaches

Other notable results from the survey include the accounting method used by Alberta. Alberta only accounts for investments of more than $5m. The province includes projects which will start construction within two years, but these projects do not have to be operational within two years. Alberta specifies and publishes the time period for construction of the new operation for each project.

Enterprise Florida also has an interesting approach, whereby they record the capital investment in both year 1 and year 3 and may also extend this to 4 years depending on client phase-in and if incentives apply.

In terms of what is included as capital investment,  90% of organisations include all types of capital investment and do not segment the total by type of capital investment.

Non-capital investment

The majority of organisations (70%) in the survey do not include payroll costs in their capital investment accounting method, and if they are included payroll costs are for all job positions, not specific positions.

Looking just at IPOs, more than half will include payroll in their capital investment statistics, but it is generally only included when the company informs them. It is also interesting to note that the EU investment incentives programme awards incentives based on capital investment, and payroll can be included as part of capital investment.

In terms of other types of capital investment included in the calculation of investment value, more than half of organisations – and most of the IPOs – include leasehold improvements as part of their capital investment calculation when they get the information. R&D expenses are also included by nearly half of organisations.

Job creation

More than 90% of organisations include direct job creation in their accounting methods. Most of the IPOs – with exception of those in Canada – also include safeguarded jobs. The survey agencies in the US also include safeguarded jobs.

Alberta is one of the few organisations not recording job creation figures. All survey organisations record the total jobs created, not the number created in specific job categories. More than half of surveyed organisations, and nearly three-quarters of IPOs, include the total number of jobs to be created within three years.

Qualification/validation of investments

More than 90% of organisations in the survey qualify that planned investment is definitely going to take place. UKTI has an independent auditor from the UK government that will audit a sample of UKTI project announcements to ensure that they are taking place.

To qualify that announced projects will take place a number of criteria are used. The most common criteria are corporate press releases (80% of respondents) followed by full project information provided by the investor (nearly two-thirds of respondents). Other commonly used criteria include provision of a local mailing address, a company registration number, and a written declaration from the company that the investment is taking place. Agencies do not require all criteria to be fulfilled to include a project.

In terms of qualifying that an investment has actually been realised, half of organisations qualify that announced investments have been realised and half do not. However, 70% of IPOs validate that investments have been realised.

Some organisations (such as Invest British Columbia and Ernst & Young) do this on a partial basis by contacts with companies and monitoring press reports, but not for all projects. Invest Northern Ireland conducts a post-project evaluation for every project. UKTI has an independent study conducted once a year and also conducts blind research throughout year. Piedmont Triad used information from local government to validate that the company is paying taxes.

Performance evaluation

There has been a clear shift in the policy of investment promotion organisations in recent years toward attracting quality investment. While the shift has yet to feed through to the FDI targets of leading IPOs, the accounting methods of IPOs are changing to accommodate a greater focus on the quality of investment. This was revealed during the survey with two-thirds of IPOs evaluating the strategic importance or benefits of investment projects in their accounting method. In terms of the indicators used to evaluate the strategic importance or benefits of a project, more than half of IPOs include R&D operations, more than 40% include regional headquarters, and one-third of IPOs evaluate average salary levels.

In terms of monitoring the role of the IPO in winning or facilitating the investment, two-thirds of IPOs in the survey do this. The Canadian agencies were largely the exceptions. Enterprise Florida verifies with local agencies which investments they have been involved in. UKTI takes this a step further. It conducts a performance impact monitoring survey (PIMS), which it outsources to a marketing company. Companies are interviewed and asked what the impact of UKTI was in their decision and how UKTI can do better. PIMS was only introduced one year ago. Invest in France uses meetings it has had with investors as a key metric to evaluate if it has had a role in winning the investment. Invest Northern Ireland has as one of its metrics its share of contestable projects in the UK that Northern Ireland attracts to evaluate the performance of the agency. This approximates to market share indicators used by private sector companies.

In terms of investments recorded in the accounting method, most IPOs record only investments which the agency has been involved in. The larger agencies also record non-involved investments, allowing them to have a complete view of FDI in their location. However, only just over one-third of IPOs have an FDI reporting database and customer relationship management which they share with their partners. UKTI has the most developed system, with a uniform database which all the regions use to input successes. It also uses this system to distribute leads to the relevant region. Also of interest, Alberta is the only organisation which tracks and reports on projects which are now on hold.


This study was commissioned by Quebecs Ministry for Economic Development to provide recommendations for a uniform accounting method for Quebec. The study conducted a review of existing methods in Québec, a review on the literature on FDI accounting methods, and a detailed survey to understand the practices of other organisations. The survey included companies providing FDI databases, leading investment promotion organisations known to have developed a uniform accounting method, and a selection of national, regional and metro agencies.

The following organisations were surveyed:

Economic development organisations

Alberta Finance and Enterprise (Canada), Enterprise Florida (US), Invest British Columbia (Canada), Invest in France, Invest Germany, Invest Northern Ireland (UK), Piedmont Triad Partnership (US), Thames Gateway (UK), UK Trade and Investment

Private sector companies

Ernst & Young, fDi Intelligence, Trendeo

International organisations


Survey questionnaires were completed for all of the organisations listed above with the exception of Alberta Finance and Enterprise and Unctad. Alberta does not have an FDI database, but does produce a comprehensive annual report of all investments in Alberta. Unctad tracks FDI financial flows, rather than companies or projects, and therefore the accounting method is very different to economic development organisations and private sector companies tracking FDI.

All organisations surveyed include private and public companies in their accounting method. More than half also include non-profit companies and co-operatives, while more than one-third of organisations also include investment by sovereign wealth funds and individual entrepreneurs. The government of Alberta is unique in that it also tracks every investment project made by the public sector in Alberta of more than $5m in value.