Reflections on Multinational Enterprises in a Globally Interdependent World Economy

Yair Aharoni

Chapter Chapter 3 in Foreign Direct Investments from Emerging Markets, 2010, pp 37-60 from Palgrave Macmillan

Abstract: Abstract The importance, diversity, and scope of the operations of multinational enterprises (MNEs) in the global economy have grown exponentially. In 1960, the value of worldwide sales of foreign affiliates was about one-half of world exports. By 1982, the worldwide sales of foreign affiliates totaled US$2.7 trillion, roughly comparable to worldwide exports of goods and nonfactor services of US$2.4 trillion. By 2007, worldwide affiliate sales stood at US$31 trillion, which was almost twice as much as world exports of US$17 trillion (UNCTAD 2008, 10). Two-thirds of world trade involves MNEs and their affiliates as buyers or sellers, and one-third takes place among units of the same MNE corporate system. In 1982, the ratio of outward foreign direct investment (OFDI) to worldwide gross fixed capital formation was just 1%. In 1999, it had risen to approximately 14% (UNCTAD 2000, 4), and in 2007 it stood at 16.2% (UNCTAD 2008, 10). World foreign direct investment (FDI) outward stock, expressed as a percentage of world gross domestic product in current prices, increased rapidly, from 4.8% in 1982 and 10.8% in 1990, to 28.6% in 2007 (UNCTAD 2008, 10). In fact, global FDI inflows reached a historic high of $1,979 billion in 2007 (UNCTAD 2009). Amid a global financial and economic crisis, inflows declined by 14% to $1,697 billion in 2008 (UNCTAD 2009). This decline continued into 2009, with added momentum: preliminary data suggest that in the first quarter of 2009, inflows fell a further 44% compared with their level in the same period of 2008. A slow recovery is expected in 2010, gathering speed in 2011. The crisis has also changed the investment landscape, with developing and transition economies’ share in global FDI flows surging to 43% in 2008 (UNCTAD 2009).

Keywords: Foreign Direct Investment; Home Country; Domestic Firm; Multinational Enterprise; Small Open Economy (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-11202-5_3

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230112025

DOI: 10.1057/9780230112025_3

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().