These lectures mainly talk about operations of U.
S. MNCs, world investment report from 2011 to 2017 and trends in multinational activity. As readers, we’re supposed to try to understand the patterns of world investment of developed, developing, transition economies, and how have they changed during these years. Also, we should read and try to analyze the world investment report and learn the trends in multinational activity. Overall, the topic of these lectures can help us have a basic understanding of the world investment, there are many concepts to understand, which can help us learn the topics better in the later study. Operations of U.
S. MNCs:Operations of U.S. Multinational Companies (MNCs) have witnessed a slow-growth period during the first decade 21st century. Benchmark statistics, which only covered the operations of non-bank MNCs, start to record those operations occurred among bank MNCs nowadays.According to the selected statistics for U.S. MNCs, the global face-value added has experienced a lower growth (3.
1%) at annual rates from 1999 to 2009, compared with the annual percent growth from 1989 to 1999. In this lower combined increase rate, foreign affiliates (7.0%) contributed much more value added than their U.S.
parents (1.7%). These foreign growths, however, do not happen evenly in all kinds of markets. Emerging markets, such as China, India, Brazil, and Eastern Europe, have seen faster growth than the other types of markets.Host-country customers are the primary source of sales (60.
8%) of the foreign affiliates, so the local customers are inevitably the most important target of expanding production in the U.S. MNCs. Affiliates located in the high-income countries accounted for 73% of the value what all affiliates have added. However, on the other hand, the share of these high-income countries decreased 10% points during the 2000s.
Besides, compared to the whole U.S. businesses, U.S.
MNCs are more likely to be super large companies with more than 10,000 employees.On the other hand, the exports and imports of MNC-associated U.S. goods represented heavily of total U.
S. exports and imports of goods. In addition, the U.S. parent companies and most of the foreign affiliates they owned promoted a 10.3% increase in combined value addition in 2010.World investment report (from 2011 to 2017)Report 2011. After the financial crisis started in 2008, the whole economics were hit badly and went to a big depression.
When it came to 2010, it was good to see that the global industrial trade and output had been back to the levels before the crisis. Although $1.24 trillion amount of the global foreign direct investment (FDI) flows which was still below their average before the crisis by 15%, UNCTAD optimistically estimated that the global FDI would be back to its pre-crisis level in 2011 and be close to its 2007 peak in 2013.
Besides, developing and transition economies took up 50% of the top-20 host economies for FDI in 2010 and accounted for more than 50% of global FDI flows. However, compared with those economies, the developed countries attracted less and less global FDI flows. On the other hand, with international production expanding, assets of transnational corporations (TNCs) and foreign sales, employment were all increasing. TNCs’ production worldwide produced nearly %16 trillion value-added in 2010, about ¼ of global GDP. Foreign affiliates of TNCs took up 1/3 of world exports and more than 10% of global GDP.
Report 2012. Like a bumper harvest, all major economic groupings got good FDI inflows increase in 2011 with 21% increase flows to developed countries ($748 billion), 11% increase FDI in developing countries ($684 billion, 45% of global FDI), 25% increase FDI in transition economies ($92 billion, 6% of global FDI). Report 2013. Although the global FDI fell to $1.
35 trillion by 18% in 2012, the developing economies kept a steady upward trend and produced about 1/3 of global FDI outflows. And it was the first time that developing economies beat the developed countries and attracted 52% of global FDI flows. In addition, developed countries were responsible for the biggest fall in FDI inflows.Report 2014.
Global FDI grew after the 2012 slump with inflows rising to $1.45 trillion by 9% in 2013. FDI flows to developing countries reached a new high ($778 billion, 54% of the total) while developed countries got 9% increase to $566 billion (39% of global flows). And the transition economies kept the balance of $108 billion.Report 2015. The fragility of global economic, elevated geopolitical risks and policy uncertainty for investors led to the decrease of global FDI inflows by 16% to $1.
23 trillion in 2014. In 2014, fifty percent of top 10 FDI recipients in the whole world are developing economies. Especially, China, which became the largest recipient of FDI. However, FDI flows to developed countries were still at low levels. In a word, developing and transition countries played a more important part in investments.Report 2016.
In 2015, global FDI U.S. recovered greatly by 38% to $1.76 trillion, reaching the highest level since the financial crisis of 2008-2009. Corporate reconfigurations made some contribution to the growth in FDI. And developed economies nearly doubled the inward FDI flows to $962 billion, benefiting from the strong growth in inflows of Europe and the United States. Meanwhile, FDI flows to developing countries kept growing and broke their last year’s record with new high by 9% to $765 billion. And their outward FDI flows also increased by 33% to $1.
1 trillion.Report 2017. In 2016, global FDI flows didn’t change a lot, falling 2% to $1.
75 trillion. Actually, this indicated a weak economic growth. But, more importantly, the pattern of the world investment had some changes. Developed economies attracted an increased share of global FDI inflows by 59% and 5% increase in flows while developing economies lost their ground.Trends in Multinational ActivityU.
S. businesses do more direct investment overseas than foreign businesses do direct investment in the U.S.
, and it seems that the U.S. businesses earn more money on their foreign investments than the foreign companies do on the U.S.. As for the employment growth in the U.S.
, foreign investment comes to be a very important source. The policy in the U.S.
cannot influence the multinational firms simply, there’re many factors can make a difference, like costs and tariffs or non-tariff barriers. In addition, the firm-specific assets of FDI engaged firms should help bring benefits for them to venture abroad, such as management strategies and superior production techniques. There are usually two categories when multinational enterprises undertake investment, horizontal investment and vertical investment.
Horizontal investment plays an important role in promoting FDI between developed countries, and tariff-jumping also plays an important role in motivating horizontal FDI. As for vertical investment, by shifting some stages of production abroad, it can make use of the costs of differences in factor. However, vertical investment also brings many worries about the potential negative influences of globalization and erosion of domestic job opportunities. In general, FDI always occurs in developed countries, and, horizontal investment plays a much more important role than the other.