When sizing up foreign direct investment, it is important not just to look at the value or volume of flows and stocks, but to look at performance and contribution in the host economy as well.

The latest OECD figures available with this type of information are for 1996. At that time, foreign firms accounted for 15% of total output in OECD countries and employed some 10% of the population.

The figures have been rising since 1985 for most countries. Ireland is the country with the highest share of foreign subsidiaries in output and employment, with 66% and 48% respectively. Its situation could hardly be in greater contrast to that of Japan, where subsidiaries of foreign firms account for just 3% of output and just 1% of employment.

The role of foreign affiliates in Finland, Germany, Turkey and the United States is also small in relation to the importance of domestic firms.

©OECD Observer No 219, December 1999