This article analyses indirect FDI, denoting investment
projects, in which the ultimate owner is different from the
immediate investor. Reasons for the existence of this type of
investment projects can be mostly corporate strategies and tax
considerations. The development impact of indirect FDI is not
necessarily negative; however it varies by the key types of
indirect FDI (delegation of power to regional headquarters,
nearshoring, concealed investment, and round tripping). It also
depends on how the project money is transhipped: through an
affiliate abroad, or through a special purpose entity.
Government polices may influence largely the extent and
development impact of indirect FDI, especially through tax
policies. The phenomenon deserves more attention in the future,
as currently indirect FDI is an under-researched topic.
