Geography Reference
In-Depth Information
BOX 1.1
SOME FACTS AND FIGURES: THE
GROWING NUMBERS OF MNEs
At the end of the 1960s there were approximately 7000 MNEs,
which were accounted for almost entirely by just fifteen coun-
tries. By 2006, there were an estimated 78,000 MNEs in the
global economy with some 780,000 foreign affiliates (UNCTAD
2007). Over the last few years the number of MNEs in the global
economy has been increasing at a rate of 1000-2000 per annum,
while the number of foreign affiliates has risen by 10,000-20,000
per year. The numbers of MNEs in 2006 represented a 23 per
cent increase with respect to the same number in 2000, and a
13 per cent increase in the number of foreign affiliates (UNCTAD
2007).
As well as employment, over recent decades the levels of
output and trade which are associated with multinational firms
have also increased much more rapidly than the growth of global
trade. Foreign direct investment has been growing at twice the
speed of world trade, which itself has grown at twice the rate of
world income. The result is that foreign direct investment grew
by almost six-fold between 1970 and 1999 (Bobonis and Shatz
2007), with 30-40 per cent of US trade currently accounted for
by intra-firm trade flows (Lai and Zhu 2006). The 78,000 multina-
tional firms operating in the global economy in 2006 accounted
for an estimated $4.8 trillion in value-added and $4.7 trillion in
exports (UNCTAD 2007). In order to get a sense of the relative
importance of multinational investment, in 2006 the global GDP
was over $45 trillion (World Bank 2007) and global exports were
$14.1 trillion (UNCTAD 2007): MNEs therefore accounted for
over 10 per cent of global GDP, and approximately one third of
global exports, as well as 12.6 per cent of global domestic fixed
capital formation (UNCTAD 2007). The 780,000 foreign affiliates
of MNEs also employed an estimated 73 million workers. This
number has not only tripled since 1990 (UNCTAD 2007), but
increased by some 20 million from 53 million (UNCTAD 2003)
just since 2002. The total number of workers employed in foreign
affiliates now represents around 3 per cent of the global work-
force (UNCTAD 2007). Recent estimates (Spence 2011) suggest
that 31 per cent of US economic growth since 1990 is accounted
for by MNEs.
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