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Licensed Unlicensed Requires Authentication Published by De Gruyter February 11, 2014

Does the Presence of Multinational Corporations Affect a Country’s Gross Domestic Product?

  • Nikolay Anguelov EMAIL logo
From the journal Global Economy Journal

Abstract

This article investigates how using different measures of GDP can lead to conflicting development policies when it comes to industrial recruitment. The results suggest that often-employed policies of competing for inward FDI may not benefit GDP annual growth. A distinction is made between official exchange rate (OER) GDP and purchasing power parity (PPP) GDP. Both measures are employed as dependent variables in separate cross-sectional, time-series regression analyses of 60 nations. A measure of multinational corporation (MNC) concentration per nation is developed and included in the model to examine whether the investing nations benefit from the outward FDI of their firms. The data analysis shows that to be true particularly for developing nations that had top-ranked MNCs incorporated within their borders between 2005 and 2009. The findings challenge industrial recruitment policies and suggest that FDI outflows may be more contributive to GDP growth than FDI inflows. The findings also show conflicting results as to which factors contribute to GDP annual growth when both GDP measures are examined, thus raising questions about metrics fit and interpretations of previous studies.

Appendix 1

list of developed nations

CountryGDP (OER)GDP (PPP)FDI in-flowsFDI out-flowsNon-fin MNCsFin MNCsExportsImportsUnemploymentGNI pcPopulation
Australia700,700638,731−24,246−31,1371186,89098,1005.129,48020,090
Austria304,500267,05310,87011,14500102,700101,2004.437,0608,185
Belgium364,700324,29934,37932,65814255,700235,00012.036,34010,364
Canada1,115,2001,111,84625,69227,53622315,600256,1007.033,10032,805
Finland193,200161,0994,7504,2231061,04045,1708.938,4805,223
France2,110,2001,811,56189,949114,97813441942010.134,94060,656
Germany2,781,9002,498,47147,43975,893126893,300716,70010.635,11082,431
Hong Kong117,700226,76633,62527,916250286,100275,9006.728,1506,899
Ireland196,4003,602,894−31,68914,31310103,80060,6504.342,0304,016
Israel123,400164,1904,8182,9460034,41036,84010.720,2506,277
Italy1,723,0001,694,70619,97541,82633336,400329,3008.630,55058,103
Japan4,505,9004,009,3272,77545,78193538,800401,8004.738,950127,417
Kuwait74,70044,6752345,1240027,42011,1202.230,9402,336
Luxembourg31,00027,2705,9809,0390013,40016,3004.569,2200
Netherlands594,800498,70347,791131,81655293,100252,7006.039,88016,407
Norway283,900193,6605,41321,9662076,64045,9604.362,3104,593
Singapore116,800124,00115,46011,218100174,000155,2003.431,8904,426
South Korea787,6001,099,0667,0554,29860250,600214,2004.016,90048,423
Spain1,123,7001,026,34025,02041,82942172,500222,00010.425,45040,341
Sweden354,100267,2479,91326,21111121,70097,9705.642,0709,002
Switzerland365,900241,265−9,5151,11643130,700121,1003.456,8007,489
UK2,192,6001,825,8371,76,00680,833135347,200439,4004.838,80060,441
US11,170,00012,332,296104,77315,3682411795,0001,476,0005.538,800295,734

Appendix 2

list of developing nations

CountryGDP (OER)GDP (PPP)FDI in-flowsFDI out-flowsNon-fin MNCsFin MNCsExportsImportsUnemploymentGNI pcPopulation
Afghanistan7,20032,3822710004463,75940.0028029,929
Argentina183,300516,95815,0661,3110033,78022,06014.804,46039,538
Brazil794,1001,552,54218,1462,5173095,00061,00011.503,970186,113
Bulgaria26,60071,3813,916310009,13412,23012.703,4907,450
Cameroon17,00040,744225−9002,4451,97930.0091016,380
Chad5.514,756−9900036550160.004409,826
Chile115,300186,7336,9842,1830029,20022,5308.505,93015,981
China2,228,9008,091,85172,40612,261100583,100553,4009.801,7401,306,314
Costa Rica19,40044,579861−43006,1841,7366.604,6604,016
Ecuador36,20056.7994930007,5607,65011.102,92013,364
Egypt98,300302,8035,376921011,00019,21010.901,20077,506
Estonia13,10022,2392,869691005,7017,3189.609,7601,333
Fiji2,8005,36415710006098357.603,5500.893
Grenada500440700004620812.505,2100.09
Hungary109,200162,2897,7092,1790054,62058,6805.9010,26010,007
India785,5003,602,8947,6222,9852069,18089,3309.207401,080,264
Libya38,80065.6751,0581280018,6507,22430.006,2905,766
Malawi2,1007,5075210050352158.0021012,159
Malaysia130,110289,6064,6042,97260123,50099,3003.005,21023,953
Maldives8002,5579000903920.012,6100.349
Mexico768,4001,064,89922,3516,47470182,400190,8003.208,080106,203
Mongolia1,9005,2301850008531,0006.708102,792

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  1. 1
  2. 2

    The data are available from UNCTAD.org/programmes/investment and enterprise/world investment report/largest TNCs

  3. 3

    Information obtained from the database of Austria’s Oesterreichische National Bank www.oenb.at

  4. 4

    Finland, Belgium, and Austria are examined by Gosh and Wang (2010).

  5. 5

    UNCTAD/World Investment Report, 1999, figure 4.

  6. 6

    UNCTAD World Investment Report 2011, figure 1.3.

  7. 7

    UNCTAD, Global Investment Trend Monitor, No. 11, January 23, 2013.

  8. 8

    Refer to Appendices 1 and 2.

  9. 9

    FDI inflows and outflows are measured in billions of current US dollars, i.e. not adjusted for inflation.

  10. 10

    Measured in current US dollars.

  11. 11

    Measured in thousands of current US dollars.

  12. 12

    Recorded in thousands of people.

  13. 13
  14. 14
  15. 15
  16. 16
  17. 17
  18. 18
  19. 19

    For a discussion on monopolistic competition and anti-trust regulation, see Perloff (445–8).

  20. 20
  21. 21
Published Online: 2014-2-11
Published in Print: 2014-4-1

©2014 by Walter de Gruyter Berlin / Boston

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