Table of Contents

  1. Introduction
  2. MNEs' Global Activities After the Crisis
  3. A Theoretical Framework: Rugman (2003)
  4. Offshoring, Nearshoring, Onshoring

1. Introduction

MNEs' Global Activities Before the 2008 Crisis

Period: 1990 2003 2007 2008
Number of MNEs A mere 3000 MNEs 63,000 MNEs operated away from home country and market through 821,000 subsidiaries 79,000 TNCs (Transnational companies) engaged in international production, with about 790,000 affiliates abroad
Employees in MNEs 90 million people (of whom some 20 million in the developing countries)

MNEs' Global Activities Before the 2008 Crisis

Period: 1990 2003 2007 2008
Output in MNEs US$16 trillion in global sales, twice the value of global exports and 25 % of the world's gross product Value added by TNCs: $6 trillion and total sales at $31.2 trillion, compared to world exports of $17 trillion.
FDI The total FDI stock reached over $15 trillion in 2007 FDI outflows to Developed (57%), developing (37%). The gap between developed and developing countries is $ 342 billions
Origins US, Japanese, Western European companies are the major investors in Europe, Asia, and North America Foreign affiliates accounted for an estimated 11 per cent of world GDP in 2007 compared to 7 per cent in 1990
Source: UNCTAD, 2010

Some definitions

  • Developed countries: the member countries of the OECD (other than Chile, Mexico, the Republic of Korea and Turkey), plus the new European Union member countries which are not OECD members (Bulgaria, Cyprus, Latvia, Lithuania, Malta and Romania), plus Andorra, Bermuda, Liechtenstein, Monaco and San Marino.
  • Transition economies: South-East Europe and the Commonwealth of Independent States.
  • Developing economies: in general all economies not specified above. For statistical purposes, the data for China do not include those for Hong Kong Special Administrative Region (Hong Kong SAR), Macao Special Administrative Region (Macao SAR) and Taiwan Province of China.

Some definitions

  • Low-income economies: GNI per capita of $1,045 or less in 2013
  • Middle-income economies: GNI per capita of more than $1,045 but less than $12,746
  • High-income economies: GNI per capita of $12,746 or more

Global intra-industry trade is no longer confined to rich countries

2. MNEs' Global Activities After the Crisis

2. MNEs' Global Activities After the Crisis

  • FDI by TNCs from developing countries reached $454 billion – another record high
  • Together with transition economies, they accounted for 39 per cent of global FDI outflows, compared with only 12 per cent at the beginning of the 2000s
  • Increasingly, developing-country TNCs are acquiring foreign affiliates of developed-country TNCs in the developing world
  • TNCs from Six developing and transition economies ranked among the 20 largest investors in the world in 2013

Top 20 home economies, 2012 and 2013 (bn $)

Source: UNCTAD

2. MNEs' Global Activities After the Crisis

  • FDI flows to developing economies reached a new high at $778 billion, accounting for 54 per cent of global inflows, although the growth rate slowed to 7 per cent, compared with an average growth rate over the past 10 years of 17 per cent.
  • Developing Asia continues to be the region with the highest FDI inflows, significantly above the EU, traditionally the region with the highest share of global FDI.
  • FDI inflows were up also in the other major developing regions, Africa (up 4 per cent) and Latin America and the Caribbean (up 6 per cent, excluding offshore financial centres).

FDI In and Outflows (% share in world flows)

2. MNEs' Global Activities After the Crisis

  • Although FDI to developed economies resumed its recovery after the sharp fall in 2012, it remained at a historically low share of total global FDI flows (39 per cent), and still 57 per cent below its peak in 2007.
  • Thus, developing countries maintained their lead over developed countries by a margin of more than $200 billion for the second year running.
  • Developing countries and transition economies now also constitute half of the top 20 economies ranked by FDI inflows. Mexico moved into tenth place. China recorded its largest ever inflows and maintained its position as the second largest recipient in the world.

FDI inflows, global and by group of economies, 1995–2013 (Billions of dollars)

Source: UNCTAD

World FDI inflows in a longitudinal perspective

Source: WDI Data Bank

FDI inflows by countries

Source: WDI Data Bank

3. A Theoretical Framework: Rugman (2003)

Rugman (2003)

"The Reality of Globalization: The Rise of the Regional Multinational," Templeton Executive Briefing, 2003.

  • Divides world into three areas: North America, Europe and Asia-Pacific
  • Identifies four types of Fortune 500 companies:
Categories: Home region oriented Host region oriented Bi-regional Global
Criterion: more than 50% of total sales in home region more than 50% of total sales in a host region more than 20% of total sales in two regions, but less than 50% in any one region more than 20% of total sales in all three regions

Home-Region Oriented MNEs (Rugman, 2003)

Host-Region Oriented MNEs (Rugman, 2003)

Biregional MNEs (Rugman, 2003)

Global MNEs (Rugman, 2003)