TNCs are leaders in terms of the volume of foreign assets and their transnationalization index, 2008.
|
A country |
Industry |
Assets abroad, billion dollars |
Sales abroad, billion dollars |
Personnel at foreign companies, thousand people. |
Transnationalization index, %* |
|
|
General Electric |
electrical equipment | |||||
|
Royal Dutch/Shell Group |
British |
oil | ||||
|
Vodafone Group |
British |
telecommunications | ||||
|
British Petroleum |
British |
oil | ||||
|
Toyota Motor Corporation | ||||||
|
Exxon Mobil |
oil | |||||
|
oil | ||||||
|
Germany |
electricity, gas, water supply. | |||||
|
Electricity de France |
electricity, gas, water supply. | |||||
|
Ford Motor |
* The “transnationalization index” (or transnationality) characterizes the degree of foreign (external) business activity of a particular corporation and is calculated as the arithmetic average of three indicators (in%): a) the ratio of foreign assets to the amount of assets; b) the ratio of foreign sales to total sales; c) the ratio of those employed abroad to the total number of employed. UNCTAD experts also proposed calculating a “comprehensive indicator of transnationalization”, combining five main criteria (sales, production, employment, assets and investments).
Compiled By World Investment Report, 2009: Transnational Corporations, Agricultural Production and Development. UN. N.-Y. and Geneva, 2009.
For TNCs, the growing scale of transnationalization means expanding the scope of activity and accelerating the turnover of capital, and with this its accumulation, the greatest freedom of competitive maneuver within the boundaries of the world market compared to national companies, etc. Employment at foreign branches of TNCs is growing. Overall, jobs are created in developing countries and countries with transition economy more than in developed ones.
Among the largest TNCs in terms of the volume of foreign assets, we should note General Electric, Vodafone, Royal Dutch/Shell, Exxon Mobil, etc. (Table 16).
For many TNCs, foreign assets constitute a very significant share of all company assets (Vodafone - 90%; Exxon Mobil - 70%; Nestlé - 70%, etc.). The most significant share of sales abroad in the total volume of product sales is typical for British Petroleum, Total, Exxon Mobil, Vodafone, Toyota, etc. In terms of the number of employees at foreign enterprises, the American Wal is the leader among non-financial TNCs March Stories" (wholesale trade), German "Siemens" (electrical equipment), Swiss "Nestlé" (food industry), American "IBM" (software), etc.
The highest transnationalization index is distinguished by the activities of chemical and pharmaceutical TNCs, as well as companies in the food and electronics industries. Often the most “transnationalized” are corporations from countries with a fairly narrow domestic market, which are looking for competitive advantages abroad. Such companies, for example, include the Swiss Roche and Nestlé (index 86–90%). But in recent years, the transnationalization index of corporations has increased to 80%: British Petroleum (oil industry), Vodafone Group (telecommunications), ArcelorMittal (metallurgy), Ford Motor (automotive industry), etc.
Despite the noted increase in transnationalization, attention should be paid to the fact that the influence of TNC activities continues to increase not only on the economic life of developing countries, but also on the economy developed countries. So, for example, the share foreign companies in production and employment in most OECD countries is constantly increasing. A kind of record holder is Ireland, where the share of foreign firms in the early 2000s. accounted for 2/3 of its industrial production and employed almost 50% of the total population employed in the country's economy.
Volumes of foreign investments by TNCs. Multinational companies expand their international activities by acquiring other companies or establishing subsidiaries in other countries, organizing joint ventures or entering into other types of associations. For such operations it is not necessary to resort to the export of capital and reinvestment of profits earned abroad. It is possible to absorb another company by receiving a loan at the place where the acquisition transaction took place. Other methods are also used, incl. appropriation of local fixed capital to pay off debt, etc. In other words, data on international capital movements (foreign investment flows) essentially do not provide a complete picture of how TNCs are expanding their activities. Yet foreign direct investment (FDI) is the most reliable information about the pace of this process, as well as the areas where capital is directed.
Thus, during the period from 1967 to 1976, the volume of foreign investments by TNCs increased less than three times (from 105 billion to 287 billion dollars). But just 20 years later, in 1996, the total accumulated volume of foreign direct investment (FDI) in the world increased to $2.7 trillion, and in 2000, the $6 trillion mark was exceeded, in 2004. – $9 trillion. If in the mid-1990s. Approximately 39 thousand foreign investors, including the world's largest multinational corporations and 270 thousand foreign branches controlled by them, were involved in placing capital abroad in the late 1990s. investments were already made by about 65 thousand TNCs and their branches, and in 2008 - already more than 82 thousand TNCs and about 810 thousand their branches. As noted above, currently only the foreign activities of TNCs approximately correspond to 10% of world GDP and account for about 1/3 of world exports. And the volume of foreign direct investment by companies in 2008 amounted to $1.7 trillion. A record level was noted in 2007 – $1.98 trillion (Table 17).
Table 17
To classify corporations as transnational, the following criteria are usually used:
- · the number of countries in which the corporation operates (the minimum ranges from two to six or more countries);
- · a certain number of countries in which the corporation’s production facilities are located;
- · a certain amount of capitalization that the corporation has achieved;
- · a minimum share of foreign operations in the corporation's income or sales (usually 25%);
- · ownership of at least 25% of voting shares in three or more countries;
- · international composition of personnel and senior management of the corporation.
It is enough for a company to have at least one of the listed characteristics to fall into the category of transnational corporations. Some large companies possess all these characteristics at the same time.
IN modern world the line between transnational and ordinary corporations is quite arbitrary, since as the globalization of the economy develops, the internationalization of sales markets, production, and property occurs. Due to the fact that researchers use different quantitative criteria for identifying TNCs, the scientific literature provides very different data on the number of TNCs and the scale of their activities. Based on the scale of their activities, all TNCs are divided into large and small. The conditional criterion is the size of the annual turnover: for example, in the 1980s, only those that had an annual turnover of more than 1 billion dollars were classified as large TNCs. If small TNCs have on average 3-4 foreign branches, then for large TNCs their number is measured tens and even hundreds.
The variety of TNCs operating in the world can be classified according to a number of criteria. The main ones are: country of origin, industry focus, size, level of transnationalization. The practical significance of the classification of TNCs is that it allows one or another to more objectively assess the advantages and disadvantages of locating specific corporations in the host country.
Country of origin.
The country of origin of a TNC is determined by the nationality of the capital in its controlling stake and assets. As a rule, it coincides with the nationality of the home country of the parent company of the corporation. For TNCs in developed countries it is private capital. For TNCs in developing countries, a certain (sometimes significant) part of the capital structure may belong to the state. This is due to the fact that they were initially created on the basis of nationalized foreign property or state enterprises. Their goal was not so much to penetrate the economies of other countries, but to create the basis for the development of national industry and the rise of the country's economy.
Industry focus.
The sectoral orientation of a TNC is determined by the main area of its activity. On this basis, we distinguish between commodity-based TNCs, corporations operating in basic and secondary manufacturing industries, and industrial conglomerates. Currently, transnational corporations maintain their position in the basic sectors of the mining and manufacturing industries. These are areas of activity that require significant investment. In 2003, on the list of the world's 500 largest multinational corporations, 256 operated in the electronics, computers, communications, food, beverage and tobacco products, pharmaceutical and cosmetic products, as well as in the field of commercial services, including the Internet.
Multinational corporations perform abroad different kinds Research and development work: adaptive, ranging from basic auxiliary processes to modification and improvement of imported technologies; innovative, related to the development of new products or processes for local, regional and global markets; technological monitoring carried out by a specially created division (department) in the branch that monitors the development of technologies in foreign markets and learns from leading innovative enterprises and clients. The choice of one or another type of R&D and their industry specialization depend on the region and level of development of the host country. For example, in South-East Asia Innovative R&D is dominated by computers and electronics; in India, by the services sector (especially software), in Brazil and Mexico - with the production of chemicals and transport equipment.
For transnational corporations of the conglomerate type, in order to determine their specialization, they distinguish the so-called industry A, which the United Nations characterizes as having a significant amount of foreign assets, the largest number of foreign sales and the largest number of employees abroad. It is in this industry that the largest amount of corporate investment is directed, and it is this industry that generates the largest profit for the corporation. The basis for classifying a particular industry of a TNC as industry A is the calculation of index B - the transnationalization index for individual industries of the corporation. This index is recommended by UNCTAD (a body of the UN General Assembly).
The transnationalization index is calculated using the following formula:
In relation to TNCs in general economic sense This indicator is that it can be used to determine what role a particular TNC plays in the global economy. This is an integral indicator calculated as a percentage. Based on its value, one can determine and compare the activity of TNCs abroad and in the domestic market of the home country. As a rule, the higher the B index, the more diversified the activities of TNCs abroad. It is interesting to note that there is no direct relationship between the size of TNCs and the level of transnationalization. Moreover, often smaller TNCs are more transnational. According to UNCTAD, in a sample of 50 small and medium-sized TNCs, the transnationalization index was 50%.
The size of the transnational corporation.
A classification attribute that is determined according to the UNCTAD methodology by the size of their foreign assets. It is this parameter that underlies the diversification of TNCs into the largest, large, medium and small. Large ones include TNCs with assets over $10 billion. The vast majority of the total number of TNCs (over 90%) belong to medium and small corporations. According to the UN classification, these include companies with less than 500 employees in their country of residence. In practice, there are TNCs with a total number of employees of less than 50 people. The advantage of small TNCs is their ability to quickly adapt to changing market conditions. They can act in alliance with large TNCs, forming various kinds of concerns.
In the world literature on organization and management, distinctions are made between multinational, global, international and transnational companies themselves. The essence of these differences is presented in the table.
Table 1. Types and main characteristics of TNCs
12/05/2012 – In our opinion, in Belarus, in order to increase the influx of foreign direct investment (FDI), it is necessary to more actively attract the world's leading transnational corporations to work in the domestic market. According to the United Nations Conference on Trade and Development (UNCTAD), the ranking of the world's 100 largest non-financial TNCs by level of foreign assets and the TNI transnationality index is as follows (see).
The ten largest global non-financial TNCs by level of foreign assets in 2007 are as follows (see Figure 1): General Electric(energy, USA) – the size of foreign assets amounted to $420.3 billion; Vodafone Group Plc(telecommunications, UK) – $230.6 billion; Royal Dutch/Shell Group(oil and gas sector, Netherlands/UK) – $196.828 billion; British Petroleum Company Plc(oil and gas sector, UK) – $185.323 billion; ExxonMobil(oil and gas sector, USA) – $174.726 billion; Toyota Motor Corporation(automotive industry, Japan) – $153.406 billion; Total(oil and gas sector, France) – $143.814 billion; Electricite De France(housing and communal services, France) – $128.971 billion; Ford Motor Company(automotive industry, USA) – $127.854 billion and E.ON AG(housing and communal services, Germany) – 123.443 billion dollars.
Figure 1. The world's largest TNCs by level of foreign assets, million dollars.
In the second ten leaders of TNCs in terms of the level of foreign assets, the companies are located as follows: ArcelorMittal(metallurgy, Luxembourg) – $119.491 billion; Telefonica SA(telecommunications, Spain) – $107.603 billion; Volkswagen Group(automotive industry, Germany) – $104,382 billion; ConocoPhillips(oil and gas sector, USA) – $103.457 billion; Siemens AG(production of electrical equipment, Germany) – $103.055 billion; DaimlerChrysler AG(automotive industry, Germany/USA) – $100.458 billion; Chevron Corporation(oil and gas sector, USA) – $97.533 billion; France Telecom(telecommunications, France) – $97.011 billion; Deutsche Telekom AG(telecommunications, Germany) – $96.005 billion and Suez(housing and communal services, France) – $90.735 billion.
Transnationality Index(Transnationality Index, TNI) reflects the transnationality of the corporation and is calculated as the average of three indicators: specific gravity foreign assets, the share of sales abroad and the share of foreign personnel.
The top ten global non-financial TNCs according to the TNI index in 2007 are as follows (see Figure 2): Xstrata PLC(mining, UK) – TNI index was 94.1%; Linde AG(chemical industry, Germany) – 89.5%; Arcelor Mittal (metallurgy, Luxembourg) – 89.4%; Pernod Ricard SA(food and drinks, France) – 88.8%; WPP Group Plc(business services, UK) – 88.1%; Vodafone Group Plc (telecommunications, UK) – 87%; Nestle S.A.(food and drinks, Switzerland) – 86.6%; AkzoNobel(pharmaceuticals, the Netherlands) – 85.2%; Nokia(telecommunications, Finland) – 84.2% and Thomson Reuters Corporation(information services, Canada) – 83.8%.
Figure 2. Global TNCs are leaders in the TNI transnationality index, %
In the second ten leaders of TNCs according to the TNI index, the companies are located as follows: Anglo American(mining, UK) – 83.7%; Astrazeneca Plc(pharmaceuticals, UK) – 83.2%; Hutchison Whampoa Limited(diversified holding, Hong Kong) – 82.7%; Lafarge SA(production of mineral products, France) – 82.6%; Philips Electronics(production of electrical equipment, the Netherlands) – 82.4%; Honda Motor Co Ltd(automotive industry, Japan) – 82.3%; Cemex S.A.(production of mineral products, Mexico) – 82.2%; Inbev SA(food and drinks, the Netherlands) – 81.9%; Volvo AB(automotive industry, Sweden) – 81% and Liberty Global Inc(telecommunications, USA) – 80.8%.
In addition, in the list of the 100 largest non-financial global TNCs, in addition to the listed countries, there are companies from Italy (Eni Group, Fiat Spa), Australia (Rio Tinto Plc, BHP Billiton Group), Norway (Statoil Asa, Telenor Asa), South Korea (LG Corp ., Samsung Electronics Co., Ltd), Ireland (CRH Plc), Malaysia (Petronas - Petroliam Nasional Bhd) and China (CITIC Group).
According to the UN Conference on Trade and Development, in 2009, the total volume of foreign direct investment in the world, against the backdrop of the global economic crisis, decreased by 38.7% to $1,040.3 billion (in 2008, the total volume of FDI was 1,697 .4 billion dollars).
Moreover, the reduction in FDI inflows affected all groups of countries. Thus, foreign direct investment in developed countries of the world decreased by 41.2% to $565.6 billion, in developing countries - by 34.7% to $405.5 billion, and in countries with transition economies - by 39.4% to $69.3 billion
At the same time, in conditions of a sharp deterioration in access to international capital markets, the total volume of cross-border mergers and acquisitions (M&A) in 2009 decreased compared to 2008 by 66% to $239.9 billion. In turn, the number of new international investment projects also decreased significantly, although to a slightly lesser extent (by 23%).
In general, the decline in FDI inflows in developed countries is due to a reduction in the number and volume of M&A transactions and a fall in the volume of reinvested capital (due to a decrease in business profitability). In addition, many subsidiaries returned previously received loans and borrowings to their parent structures. Also, in the context of the global financial crisis, the volume of transactions of private equity funds decreased ( private-equity funds).
In turn, FDI inflows to developing countries fell in 2009 for the first time after continuous growth over the past six years. Shrinking corporate profits and falling demand, as well as better prospects for investment in stock market(due to a noticeable drop in stock prices) led to a decrease in asset purchases by strategic foreign investors. In addition, a number of investment plans were revised downwards, and some M&A transactions were cancelled.
It remains to be added that in Belarus the largest M&A transaction is the purchase by a Russian concern “ Gazprom» 100% of the gas transport enterprise Beltransgaz for $5 billion.
Introduction.
Globalization has become the most important feature of the modern world system, in which economic development within the national framework and foreign economic relations are inextricably linked with each other. “A country cut off from global markets will always lose in the modern world,” say economists E. Sigal, A. Popov, S. Ryabov, N. Chekhovsky. “Marx returns” // RBC, - No. 5, - 2008, - P.226. - 42 pages. Characteristic feature globalization are international flows. Basically, these are flows of capital and information that circulate between transnational corporations (TNCs).
The transnational economy was formed and took shape in the second half of the 20th century and now its importance for the economy, political and social situation in the world is only increasing. The consequences of the actions of TNCs are increasingly felt by all countries, including Russia, which is moving along the path of integration with the world system.
The world economy today is represented primarily by a transnational economy. The problems of the formation of transnational corporations and the impact on the national and world economy are among the most significant in the context of intensified world economic relations. The leading role of TNCs as subjects of international economic relations is recognized by both Western and Russian science.
International corporations, on the one hand, are a product of rapidly developing international economic relations, and on the other hand, they themselves represent a powerful mechanism for influencing them. By actively influencing international economic relations, international (transnational) corporations form new relations and modify their existing forms.
Theoretical foundations of transnational economics.
Definition of a transnational corporation (TNC). Activities of TNCs.
There is no single definition of transnational corporations. But in almost all definitions, transnational corporations are considered as corporations that carry out activities of an international nature and, therefore, are subjects of international economic relations.
IN AND. Lenin, when studying the development of capitalism, noted that productive forces, in the process of their concentration, outgrow the “limited framework of national-state divisions,” forming transnational corporations. Lenin V.I. Complete works. - T. 26. - M. - 1976. - P. 162.
According to UN definition Multinational corporations are those firms with international operations in two or more countries that manage their divisions from one or more centers. At the same time, the main condition for classifying a corporation as transnational is the removal of its activities (production, sales, etc.) beyond national borders.
Currently, it is customary to distinguish the following types of subjects of the transnational economy - transnational corporations:
· horizontally integrated corporations with enterprises producing the majority of products. For example, car production in the USA or the Fast Food chain.
· vertically integrated corporations, uniting under one owner and under unified control the most important areas in the production of the final product. In particular, in oil industry Crude oil production is often carried out in one country, refining in another, and the sale of final petroleum products in third countries.
· diversified transnational corporations, which include national enterprises with vertical and horizontal integration. A typical example of a corporation of this type is the Swedish corporation Nestle, which has 95% of its production abroad and is engaged in restaurant business, food production, sales of cosmetics, wines, etc.
Distinctive feature TNCs of our days are the international nature of their activities, but not so much on the basis of the country of origin of capital, but rather on the basis of the area of its activity. The decisive question is not so much from which countries capital comes, but where it flows, where it operates, and where it makes profits. The overwhelming majority of modern international corporations represent only one nationally isolated capital, and not at all multinational capital.
By organizational structure Transnational corporations, as a rule, are diversified concerns. The parent company acts as the operational headquarters of the corporation. On the basis of large-scale specialization and cooperation, it carries out technical and economic policy and control over the activities of foreign companies and branches.
An international corporation is characterized by the following main features:
· she is an active participant in the development of the world economy, processes of the international division of labor;
· it is characterized by relative independence of the movement of capital from processes occurring within national borders;
· it objectively regulates world economic relations, carrying out its operations in order to extract high profits.
One of the main features of the transnational economy is the export of capital, which in turn is one of the main forms of internationalization of the capital of national corporations. As capital is exported, economic entities turn into a set of corporations operating in various countries peace. The internationalization of the production of surplus value represents an essential form of manifestation of the internationalization of the capital of an international corporation.
Transnationalization Index.
When analyzing TNCs, the concept of “transnationalization index” is used. There are two types of transnationalization index:
1. The company transnationalization index reflects the degree of involvement of a particular TNC in the production of goods and services abroad. It is calculated as the sum of three quantities:
· share of assets abroad in the total assets of TNCs;
· share of sales abroad in the total sales volume of this TNC;
· the share of personnel abroad in the total number of personnel of this corporation.
2. The index of transnationalization of countries assesses the importance of foreign TNCs for a particular country. It is calculated as the sum of four quantities:
· the share of foreign direct investment in all capital investments within the country;
· the ratio of foreign direct investment accumulated in the country to the country's GDP;
· the share of branches of foreign corporations in the country's GDP;
· the share of people employed at these branches in the total number of people employed in the country.
Financial transnational corporations.
Most of the world's TNCs are non-financial companies. Financial corporations, due to their specific nature, are often classified as a separate group of TNCs. In fact, these are all the leading banks and financial groups in the world, since most of them have foreign branches.
The differences between transnational banks (TNBs) and transnational financial groups are increasingly blurred. This is a consequence of the fact that, on the one hand, many TNBs are parts of transnational financial groups, and on the other hand, the leading TNBs, which formally retain the names of banks, are actually financial groups that are able to provide clients with a full range of services financial market(eg Bank of America).
In addition to commercial banks, investment banks are widespread among TNBs and within transnational financial groups. They specialize in intermediation between investors and investees, especially in the arrangement and placement of new issues of securities, as well as in advising on mergers and acquisitions.
In the context of globalization, a significant part of the world's goods and services is produced by enterprises controlled by foreign companies. Companies that organize cross-border value chains (global value chains - see 2.2) through foreign direct investment (FDI) are usually called transnational corporations (TNCs). The most authoritative international organization for the study of FDI and TNCs, UNCTAD, classifies such corporations as companies of any legal form (that is, not always corporations) that own at least 10% of shares (equity participation) in firms (enterprises) that are located in two and more countries.
Indicators of transnationalization of the world and national economy
According to UNCTAD, in 2012, the world's accumulated FDI stock reached 23 trillion. dollars, and the assets they controlled, including the assets of local partners involved in foreign branches, were even larger and were estimated by experts at more than 86 trillion. dollars. The sales volume of foreign branches of TNCs amounted to approximately 26 trillion. dollars, the volume of added value produced by these branches exceeded 9% of world GDP, and their exports were estimated at 7.5 billion dollars, accounting for a third of all world trade. The foreign branches of TNCs employ about 72 million people, which is not too much - 2% of the economically active population of the world, since FDI, even in labor-intensive industries, is usually represented by more highly productive enterprises compared to national competing companies.
When considering the contribution of TNCs to the world economy, their special importance is usually emphasized in the transfer of knowledge through the training of local personnel and the introduction of local entrepreneurs to new technologies and management methods. For many countries, FDI represents a valuable source of capital that does not actually have to be repaid, unlike borrowed funds.
Ultimately, TNCs are actively participating in the modernization of the global economy. However, in a number of less developed countries, the activities of TNCs are perceived ambiguously, incl. their negative attitude towards local corruption (although this does not prevent foreign investors from adapting to it), but especially their practice of transfer prices, in particular, undervaluing exported products to save on export duties.
Individual countries are involved in outward FDI in different ways (in Russian statistics For exported direct investment, the term FDI (foreign direct investment) is used. It is dominated by developed countries (see Table 1), especially Western European ones - in several small European countries the scale of the national economy is comparable to the foreign production of goods and services controlled from their territory, although this control is often exercised not by their own, but by those operating on their territory foreign TNCs. From large countries The UK still holds the lead after the USA. Less developed countries have developed many of their own TNCs in recent decades, especially China, although Russia is not too far behind it. Special attention should be paid to offshore companies (see 11.1), which are major exporters FDI is largely due to “round-tripping investnent”, i.e. those who return to their countries from offshores, having acquired foreign jurisdiction there and saving on taxes.
Table 1
Export and volume of accumulated exported foreign direct investment in the world
A country |
Countries' stock of FDI abroad |
FDI exports in 2012 |
FDI accumulated abroad in relation to the GDP of FDI exporting countries in 2012, % |
||||
|
billion dollars |
billion dollars |
billion dollars |
|||||
|
The whole world |
|||||||
|
EU-27 (including reciprocal FDI) |
|||||||
|
Great Britain |
|||||||
|
Germany |
|||||||
|
Netherlands |
|||||||
|
Ireland |
|||||||
|
Other developed countries |
|||||||
|
Switzerland |
|||||||
|
Australia |
|||||||
|
Other countries |
|||||||
|
British Virgin Islands |
|||||||
|
Singapore |
|||||||
|
Brazil |
|||||||
*Grade
Imports of FDI, as well as exports, are dominated by developed countries, especially EU member states (see Table 2). In essence, TNCs have ensured here informal corporate integration along with formal integration at the state level, cementing the structures created by politicians through cross-border production ties of TNCs. This is important to take into account within the framework of post-Soviet integration, where mutual FDI is not yet very large, although it is growing rapidly - it accounts for less than 7% of all FDI within the CIS.
table 2
Import and volume of accumulated imported foreign direct investment in the world
A country |
FDI accumulated in countries from abroad |
Import of FDI in 2012 |
Accumulated FDI from abroad in relation to the GDP of FDI importing countries in 2012, % |
||||
|
billion dollars |
billion dollars |
billion dollars |
|||||
|
The whole world |
|||||||
|
EU-27 (including reciprocal FDI) |
|||||||
|
Great Britain |
|||||||
|
Germany |
|||||||
|
Netherlands |
|||||||
|
Ireland |
|||||||
|
Other developed |
|||||||
|
Switzerland |
|||||||
|
Australia |
|||||||
|
Other countries |
|||||||
|
Brazil |
|||||||
|
Singapore |
|||||||
|
Brit. Virgin Islands |
|||||||
*Grade
Source: UNCTAD. World Investment Report. New York and Geneva.2013.R. 213-220.
When assessing the foreign activity of TNCs, the transnationalization index is popular. It is calculated as the average of three indicators: the share of foreign assets in the total assets of a TNC, the share of sales abroad in the total revenue of this company, and the share of foreign personnel in the total number of employees of this TNC. However, it must be taken into account that the highest indices are observed among TNCs of small countries, where successful companies very quickly outgrow the boundaries of the domestic market (see Table 3).
Table 3
Home countries of the world's 100 leading non-financial TNCs in 2012
A country |
Number of TNCs |
Their total foreign assets, billion dollars. |
Average transnationalization index |
Largest national TNC |
|
General Electric |
||||
|
Great Britain |
Royal Dutch Shell |
|||
|
Germany |
||||
|
Switzerland |
||||
|
Anheuser-Busch InBev |
||||
|
Luxembourg |
||||
|
Hutchison Whampoa |
||||
|
Norway |
||||
|
Hon Hai Precision Industries |
||||
|
Australia |
BHP Billiton Group |
|||
|
AP Moller Maersk |
||||
|
Brazil |
||||
|
Malaysia |
Petronas Petroliam Nasional |
|||
|
Teva Pharmaceutical Industries |
||||
|
Netherlands |
Koninklijke Philips Electronics |
|||
Source: UNCTAD. World Investment Report. New York and Geneva. 2012.
There are tens of thousands of different TNCs in the world, for which it is impossible to develop a universal classification. However, some types can be distinguished.
Types of TNCs
TNCs are divided into global and regional. The latter limit their foreign expansion to one or two regions where they have more comfortable conditions for doing business due to territorial proximity, absence of language barriers, ethnocultural homogeneity, similarity of the institutional environment, etc. The most common are those regional TNCs whose FDI is limited to the territory of one regional integration group, for example, the EU. Regional TNCs include large firms in the early stages of internationalization, for example, most Russian TNCs.
Traditionally, TNCs internationalize their business in stages, establishing a foothold domestic markets, they then begin foreign trade activities, which over time are supplemented by FDI, the geography of which they also gradually expand. But recently, especially in modern service industries, more and more companies are appearing that become transnational “from birth.” This is explained by the fact that it is not the company that acquires experience in foreign economic activity, but the people representing it (owners, hired managers), and in the context of globalization, new companies are often founded by specialists who have already gained such experience in other TNCs.
A typology based on the nationality of TNCs is also widespread, but it often encounters difficulties. An example would be multinational companies that are formed through a complete merger of national companies (a classic example is the Dutch-British Unilever). In addition, some TNCs become the property of foreign investors, including portfolio investors (for example, the Finnish Nokia). All this can lead to the phenomenon of TNC migrants (in particular, ArcelorMittal, owned by Indian entrepreneur L. Mittal, is now considered a European company). As a rule, the “nationality” of such TNCs is determined by the country where the main decisions are made, i.e. where the actual headquarter is located).
Strategy and structure of TNCs
What are the main motives for direct investment abroad for TNCs? According to the eclectic model of FDI (see 30.3), there are four main groups of motives:
- expansion (capture, retention) of foreign markets;
- increasing the efficiency of production of goods and services by creating foreign branches (through reducing costs, primarily labor and tax);
- ensuring access to foreign resources (raw materials, qualified specialists, infrastructure);
- addition of assets that are fundamentally new for the company (in particular, companies with R&D departments that ensure the development of new technologies).
Sometimes these motives are combined. There may also be more specific motives for FDI. For example, entrepreneurs from less developed countries often use foreign assets to insure against losses in the event of possible confiscation of their business in their home country, as is the case with many Russian FDIs. Another option is to increase the company's bargaining power, since the lobbying capabilities of TNCs are usually greater than those possessed by national companies due to the former's ability to maneuver their assets geographically.
Investment expansion abroad is carried out in various forms. The two basic ones are the purchase of existing companies (mergers and acquisitions) and investments from scratch (greenfield). However, in the first case, investments are usually made in modernization and expansion.
Please note that financial sources FDI can be not only transfers of funds across the border, but also reinvestment of profits received locally and even cross-border loans from the parent company to foreign subsidiaries of TNCs. Therefore, reinvested profits and loans from parent companies are included in FDI statistics.
Firms where a foreign investor owns 10-50% of shares (shares) are called associated, and firms where there is at least 50% control are called subsidiaries. They are independent legal entities, but TNCs can create their branches abroad (they do not have legal entity) and foreign representative offices (have the right to a very limited range of operations). All of them are often called foreign affiliates, or more precisely, enterprises affiliated with TNCs.
But the affiliation of these companies is not always clear. to the final owner- after all, even several parent TNCs can be backed by the same owners, who, together with their foreign branches, can act as a virtually single diversified conglomerate (an example could be the Ukrainian Privat group) or as a group actually independent companies, united only by family ties (for example, more than a dozen Indian TNCs of various industries, owned by different members of the Tata family clan). An additional difficulty when analyzing the owners of TNCs is the growing use of offshore companies, holdings and special purpose entities (vehicles, SPV/SPE) to control them.
In addition to TNCs in the traditional sense, in recent years more and more FDI has been carried out by various private equity funds. On the one hand, they establish control over the acquired companies, acting as TNCs, and on the other hand, they make transactions for reasons that are more characteristic of portfolio investors. Thus, direct investment funds usually buy assets for a period of 3-5 years, and even the reorganization of enterprises and their restructuring ultimately pursue one goal - the resale of assets to make a profit.
Close to them are sovereign funds created mainly by Asian countries and usually at the expense of part of the official gold and foreign exchange reserves of certain countries in order to invest these assets abroad in profitable long-term investments, including direct ones (gold and foreign exchange reserves themselves are invested only in low-risk portfolio investments - see chapter 35). Although sovereign wealth funds currently account for less than 1% of the world's FDI stock because they are more likely to make portfolio investments, there is great interest in them because the motives for their direct investment are markedly different even from those characteristic of almost a thousand large state-owned TNCs that have invested for there is an order of magnitude more funds abroad. In the case of sovereign wealth funds, concerns have been raised about the close connection of their FDI with the foreign policies of the respective states.
Activities of TNCs in Russia
Russia, like many other European countries, began to be actively involved in cross-border direct investment flows at the end of the 19th century, but the Bolshevik revolution of 1917 interrupted this process. It cannot be said that the dominance of a planned administrative-command economy with the absence of large private enterprises and foreign economic relations monopolized by the state completely excluded the USSR from international capital migration, but the country lagged significantly behind many states in terms of the degree of economic transnationalization.
Foreign TNCs in Russia
Throughout almost the entire Soviet period, the access of foreign TNCs to operate in the Russian market was severely limited (for example, by the scope of concessions during the NEP or the creation of joint ventures in 1989-1991) or completely closed. A significant step towards liberalizing the activities of TNCs in Russia was the adoption in 1991 of the Law “On Foreign Investments in the RSFSR”, and then the Federal Law dated 07/09/1999 No. 160-FZ “On Foreign Investments in Russian Federation", corresponding modern ideas about FDI. In particular, it provides foreign investors with national legal regime(that is, equal to what is valid for Russian companies). However, as in the rest of the world, there are exceptions from the national regime for foreign investors, mainly in the areas of defense, security and mining, which is enshrined in the federal law of April 29, 2008 “On the procedure for making foreign investments in business entities with strategic importance to ensure the defense of the country and the security of the state.”
In the late 1980s - early 1990s. In our country, high expectations were associated with foreign TNCs for the transfer of knowledge and modernization of the domestic economy, but at the same time, the participation of foreign investors in privatization was greatly limited. As a result, in the 1990s. The scale of FDI in Russia was relatively small compared to the countries of Central and Eastern Europe, but in the last decade the situation has changed radically and Russia has become and still remains one of the world leaders in FDI inflows. If, according to the Bank of Russia, in 2000, accumulated FDI in the country amounted to only $32 billion, then by the end of 2012 it grew to $498 billion, second in volume only to FDI accumulated in the United States, leading countries EU, China and Brazil.
Until now, the motives for conquering the relatively large Russian sales market are dominant among foreign TNCs. True, with all the existing restrictions (which have even intensified in recent years), the extraction of raw materials has also attracted significant foreign investment.
In general, the role of foreign business varies greatly among individual sectors of the Russian economy. At the same time, quantitative estimates (for example, the share of FDI in the total volume of investments in the industry or the share of foreign firms in terms of product sales) do not always provide an adequate picture, since leading foreign TNCs can, through competitive pressure, significantly transform the industry even without significant investments. Nevertheless, the list of leading Russian firms controlled by foreign investors is in many ways indicative. More than 30 companies from various countries have sales volumes in Russia exceeding 50 billion rubles. (see Table 4). Foreign business made a significant contribution to the development of Russian telecommunications and network trade, and in recent years, assembly plants of Western European, American and East Asian concerns have greatly transformed the domestic automotive industry. A key role belongs to foreign TNCs in the Russian tobacco industry; their importance is great in some sectors of the food and chemical industries. The importance of foreign subsidiaries in the Russian banking business and electric power industry is gradually growing.
Table 4
Leading Russian companies under the control of foreign investors
Firm |
Sales volume in 2012, billion rubles. |
Home country of the actual investor |
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|
oil and gas |
Great Britain |
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|
VimpelCom** |
telecommunications |
Norway (Telenor) |
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|
Volkswagen |
automotive |
Germany |
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|
trade |
||||
|
METRO Cash & Carry |
trade |
Germany |
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|
tobacco |
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|
automotive |
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|
Philip Morris |
tobacco |
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|
Procter & Gamble |
chemical |
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|
El Dorado |
trade |
Czech Republic (PPF) |
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|
banking |
France (Societe Generale) |
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|
Denmark (Carlsberg) |
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|
Autoframos |
automotive |
France (Renault) |
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|
SIA International |
trade |
USA (TPG Capital) |
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|
LG Electronics |
electro-technical |
The Republic of Korea |
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|
automotive |
The Republic of Korea |
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|
Home Credit Bank |
banking |
Czech Republic (PPF) |
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|
Nestlé Russia |
Switzerland |
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|
E.ON Russia |
electric power industry |
Germany |
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|
Leroy Merlin East |
trade |
|||
|
trade |
||||
|
Enel OGK-5 |
electric power industry |
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|
Samsung Electronics |
electrical engineering |
The Republic of Korea |
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|
Coca-Cola HBC Eurasia |
Greece (Coca Cola Hellenic) |
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|
Ford Motor |
automotive |
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|
Tele2 Russia |
telecommunications |
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|
UniCredit Bank |
banking |
|||
|
Raiffeisenbank |
banking |
|||
|
Ilim Group |
woodworking and pulp and paper |
USA (50% from International Paper, via Switzerland) |
* In 2011, 50% of the shares belonged to BP, since 2013 under full Russian control.
** In mid-2013, 56% of the shares, including 48% of voting shares, belonged to the Russian Altimo, but in 2012 more than 50% belonged to foreigners, primarily Telenor, which now owns 33% of the shares, in including 43% of voters.
