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Global Economy Journal

The Official Publication of the International Trade and Finance Association

Ed. by Sawyer, W. Charles

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Volume 14, Issue 1 (Apr 2014)

Issues

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

Nikolay Anguelov
  • Corresponding author
  • Department of Public Policy, University of Massachusetts – Dartmouth, North Dartmouth, MA, USA
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Published Online: 2014-02-11 | DOI: https://doi.org/10.1515/gej-2012-0001

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.

Keywords: multinational corporations; FDI; GDP

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About the article

Published Online: 2014-02-11

Published in Print: 2014-04-01


http://transnationale.org/companies/general_electric.php

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

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

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

UNCTAD/World Investment Report, 1999, figure 4.

UNCTAD World Investment Report 2011, figure 1.3.

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

Refer to Appendices 1 and 2.

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

Measured in current US dollars.

Measured in thousands of current US dollars.

Recorded in thousands of people.

http://www.unctad.org/Templates/Page.asp?intItemID=2443&lang=1

http://www.data.worldbank.org/data-catalog/world-development-indicators

https://www.cia.gov/library/publications/the-world-factbook/geos/af.html

http://www.unctad.org/Templates/Page.asp?intItemID=2441&lang=1

http://www.imf.org/external/pubs/ft/fandd/basics/gdp.htm

Mandel (2008).

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

Sanchanta and Takahashi (2010).

http://news.bbc.co.uk/2/hi/uk_news/politics/8470776.stmt


Citation Information: Global Economy Journal, ISSN (Online) 1524-5861, ISSN (Print) 2194-5659, DOI: https://doi.org/10.1515/gej-2012-0001.

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