Key differences between methods of measuring foreign direct investor involvement in service industries – case study of Poland

Abstract

Polish enterprises (or registered in Poland) are increasingly investing abroad, as shown by the data of the National Bank of Poland. Their investments have increased significantly since Poland’s accession to the European Union in 2004. This indicates the attractiveness of foreign markets (mainly European) for Polish companies, as well as their ability to take advantage of the opportunities offered by the freedom of capital movement in the EU. Due to the growing role of services in the economy, I investigate what part of these investments goes to services. The answer to this question seems simple, due to the availability of data on FDI, published by the central bank, but the specifics of service provision make the analysis of this phenomenon much more complex. The aim of this paper is to indicate different methods of measuring the involvement of direct investors in service industries abroad, on the example of Poland. The added value of the paper is the comparison of all these methods, as many papers use diverse sources, not always indicating the differences between them. The lack of a uniform method makes the studies de facto incomparable, although internally consistent. The involvement of Polish direct investors abroad can be analyzed either basing on the balance of payments data or on the Foreign Affiliates Trade in Services Statistics (FATS) system specially designed for the examining of trade in services. In 2019 the WTO has released one more collection useful for research on trade in services by mode of supply, namely the TISMOS (Trade in Services data by Mode of Supply) dataset. This database uses estimates, in addition to trade data from countries’ balance of payments and FATS, where data are not available. However, these are not comparable data sets because of the important methodological differences underlying their production. I outlined the key differences between the ways of collecting information on direct investment abroad in the paper and presented data for Poland