Transnational Companies And A Changing Structure Of International Trade

Predrag Bjelic, Ivan Markovic and Ivana Popovic Petrovic

Montenegrin Journal of Economics, 2012, vol. 8, issue 4, 61-77

Abstract: Transnational companies had become the most important players in global business having significant impact on international trade. In the paper we will show the main changes and rising importance of TNCs` foreign affiliates in world trade, referred to as the process of the transnationalization. Even if the history of TNCs is a century and a half long, their importance is particularly significant in the last few decades. One of the important tendencies is rising intra-company trade, the trade between parent companies and their foreign affiliates, but also the process of phasing out the production and moving of some of the production phases abroad even outside the TNC, known as off shoring. Even if the TNCs are important sources of private capital true foreign direct investments we have to notice rising importance of the state-owned TNCs, mostly from developing and transnational economies. TNCs are very important global actors but are particularly important for some national economies where their affiliates have significant influence on national turnover. In the final segment of the paper we will analyse using quantitative methods the interdependence of share of TNC in national economy and imports content of exports. For this purpose statistical methods of Correlation and Linear Regression were used. Our analysis is based on the data for 9 OECD countries and we can expect a high level of positive association between these two variables, especially in the economies where the activity of TNCs is strong.

Date: 2012
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