The Internationalization of Companies and Their Impact on National Economies in the Digital Age

Valentin Sava and Manuela Violeta Tureatca
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Valentin Sava: Dunarea de Jos University of Galati, Romania
Manuela Violeta Tureatca: Dunarea de Jos University of Galati, Romania

Economics and Applied Informatics, 2021, issue 2, 55-62

Abstract: 1) Background: The establishment and functioning of multinational companies is the most important element of the world economy at present, and the article presents the main characteristics of these companies, which through the subsidiaries they make contribute both to the economic and social development of the areas in which they are located, establishing relationships that influence the future of the various countries around the globe. 2) Methods: Thus, the article highlights the factors that led to the formation of multinational companies, both as a historical evolution and in terms of the interests of the actors involved in their organization and implementation.The article also presents the typology and role of affiliated companies, their involvement in the productive process and the role they play in the economies of host countries as well as the resources that can be used for their constitution as origin and impact concerning the national interests of the countries where subsidiaries are located.The paper addresses the impact of multinational firms 'operations on the resident economies of the mother companies and, secondly, the importance of economic, social and environmental developments in the subsidiaries' countries, emphasizing in particular the negative issues which have started to prevail in recent years. 3) Results: In this regard, the most popular manifestations of international tax evasion are reviewed: transfer prices, opacity of bank operations, transfer of benefits between subsidiaries and the existence of tax havens revealed by journalistic investigations, which hold the poster head in the news worldwide.Tax losses in national budgets caused by international tax evasion practiced by multinational companies represent the most serious damage to the life of the population of the host country, as it significantly reduces public revenues for education and training, economic development and technical and scientific progress, the development and modernization of infrastructure, preservation and protection of the natural environment.4) Conclusion:In order for multinational companies respect the rights of the populations and countries, various projects regarding international regulations have been formulated, but the compliance with these regulations can only be achieved through the creation of international judiciary courts with decision-making and enforcement power.

Keywords: multinational companies; subsidiary; tax optimization; international tax evasion; foreign direct investment; transfer prices (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ddj:fseeai:y:2021:i:2:p:55-62

DOI: 10.35219/eai15840409192

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