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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


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
Hong Kong117,700226,76633,62527,916250286,100275,9006.728,1506,899
South Korea787,6001,099,0667,0554,29860250,600214,2004.016,90048,423

Appendix 2

list of developing nations

CountryGDP (OER)GDP (PPP)FDI in-flowsFDI out-flowsNon-fin MNCsFin MNCsExportsImportsUnemploymentGNI pcPopulation
Costa Rica19,40044,579861−43006,1841,7366.604,6604,016


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  1. 1
  2. 2

    The data are available from and enterprise/world investment report/largest TNCs

  3. 3

    Information obtained from the database of Austria’s Oesterreichische National Bank

  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).

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Published Online: 2014-2-11
Published in Print: 2014-4-1

©2014 by Walter de Gruyter Berlin / Boston

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