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Reasons for internationalisation

Statistics on TNCs

International partnerships have become a pillar in the global R&D landscape. In many countries, the rapid rise in international cooperation has spawned activities that now account for more than 10 percent of government R&D expenditures. Industrial firms increasingly have used global research partnerships to strengthen core competencies and expand into technology fields critical for maintaining market share. Since 1990, companies worldwide have entered into more than 5,100 known multifirm R&D alliances involving strategic high-technology activities. About one-third of these alliances were between U.S. firms and European or Japanese firms. Alliances were created most often to develop and share information technologies.

According to UNCTAD's World Investment Report 1995, the world's MNCs/TNCs - 40,000 parent firms and 250,000 foreign affiliates - account for two-thirds of the world trade in goods and services, and foreign direct investment, one-third in intra-firm transactions (i.e., transactions between branches of a single MNC) and the other one-third in inter-firm transactions.

While some 34,353 TNCs, with 93,311 affiliates, are based in the industrialized economies, some 3,788 with 101,139 affiliates are based in the developing economies.

World sales generated by foreign affiliates of TNCs amounted to $5.2 trillion in 1992, exceeding the $4.9 trillion of world exports of goods and non-factor services in that year. During 1991-1993, the world FDI stock grew twice as fast as world trade and which again was one and a half times faster than world output. The world outward FDI stock at the end of 1994 is estimated to be $2.4 trillion, with the industrialised countries as a whole accounting for about three-quarters of this. The WIR projects FDI outflows in 1995 at $230 billion, with 15% of this originating in developing countries. The United States was both the largest source of outward investment ($46 billion in 1994, down from $69 billion in 1993) and the largest inward flows ($49 billion in 1994, up from $41 billion in 1993). The stock of FDI in the US in 1994 is estimated to be more than $500 billion or 7% of its gross domestic product (GDP), while the outward FDI of US TNCs is $610 billion (9% of its GDP) or about a quarter of the world FDI stock. But the FDI flows continue to be concentrated in a few countries of the South, with China's $34 billion inflows in 1994 being the second largest and accounting for 40% of all flows into the developing world. The Asia-Pacific region (which now accounts for some 70% of developing country FDI stock) got $61 billion in 1994. While China and South-East Asia were at the forefront, the Pacific Island economies and South Asian countries are lagging behind, according to the WIR 1995.

Statistics on the world's top 200 TNCs

Of the World's 200 largest TNC's as listed in a publication, 124 firms are from 6 APEC economies, as shown in Table 1 below:

Table: 1: The World's 200 Largest TNCs: Home Country, Revenues and Profits

Data for 1995; Revenue and Profit Figures in US$ billions

Source: Le Monde Diplomatique , April 1997, p. 16