- New Horizons in International Business series
Edited by Lorraine Eden and Wendy Dobson
6. Foreign ownership and total factor productivity* Someshwar Rao and Jianmin Tang INTRODUCTION Multinational enterprises (MNEs) are playing an increasingly dominant role in the world economy. Activities of MNEs increased at a considerably faster pace than world GDP in the 1990s (Figure 6.1). Total global inward foreign direct investment (FDI) stock increased from about US$800 billion in 1982 to over US$7 trillion in 2002. Sales and exports of foreign aﬃliates in 2002 were over US$20 trillion, compared to just over US$3 trillion in 1982. Currently over 50 000 MNEs, with more than 300 000 foreign aﬃliates, are operating in every corner of the globe. They employ over 50 million people all over the world. About 90 per cent of MNEs are from developed countries, but the share of emerging economies has been rising steadily. For instance, the share of emerging economies in global outward direct investment stock increased from 4.3 per cent in 1985 to 9.8 per cent in 2000. The activities of MNEs, however, are highly concentrated. For instance, the top 100 global MNEs account for between 10 to 15 per cent of the total sales, assets, exports and employment of all MNEs in host countries. In both developed and developing countries, the importance of FDI has increased steadily over the last two decades. Exports of foreign aﬃliates account for close to 35 per cent of world exports of goods and non-factor services. The ratio of inward FDI stock to GDP of...
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