FOREIGN ACTIVITIES OF THE LARGEST TNCs FROM DEVELOPING ECONOMIES HAVE GROWN NOTICEABLY

While the "triad" -- the European Union, Japan, and the United States -- is still home to most of the world´s largest transnational corporations (TNCs), the most significant change in recent years is the increasing number of firms from developing economies on the list of the world´s 100 largest TNCs(1) , reveals World Investment Report 2007: Transnational Corporations, Extractive Industries and Development(2). Seven TNCs on the 2007 list are from developing countries, compared with five for 2006. The report ranks both the world´s top 100 TNCs and the top 100 TNCs from developing economies. (Firms are ranked by foreign assets. Tables 1 and 2 show the top 25 from each list).

The transnational activities of the world´s largest TNCs continued to increase in 2005 but, comparatively, the foreign activities of the 100 largest TNCs from developing economies have grown even more noticeably. Their foreign sales and employment rose by 48% and 73%, respectively, in 2005 (the most recent year available) compared to 2004. But the relative importance of their foreign operations compared with their domestic activities has remained more or less stable, the report notes. The most important focus for TNCs from developing economies remains the electrical/electronic equipment and computer industries, although the petroleum sector rose in value in 2005 (the most recent year for which data are available), confirming the growing role of TNCs from developing economies in the extractive industries.

The geographic spread of TNC operations shows that companies from developing economies have, on average, foreign affiliates in fewer host countries than their counterparts from developed countries. Developing-country TNCs have expanded mostly in their own regions, although the top locations for their foreign affiliates are the United Kingdom and the United States, with China now ranked third (figure 1).

ANNEX

Tables and figures

Table 1. The world´s top 25 non-financial TNCs ranked by foreign assets, 2005(Millions of dollars and number of employees)


Source: UNCTAD, World Investment Report 2007

Note: a TNI, the Transnationality Index, is calculated as the average of the following three ratios: foreign assets to total assets, foreign sales to total sales and foreign employment to total employment. Ranking is based on the top 100 TNCs.
b II, the"Internationalization Index", is calculated as the number of foreign affiliates divided by the number of all affiliates (Note: Affiliates counted in this table refer to only majority-owned affiliates). Ranking is based on the top 100 TNCs.
Note: In some companies, foreign investors may hold a minority share of more than 10 per cent.

Table 2. The world´s top 25 non-financial TNCs from developing countries, ranked by foreign assets, 2005 (Millions of dollars and number of employees)


Source: UNCTAD, World Investment Report 2007

Note:a TNI, the Transnationlaity Index, is calculated as the average of the following three ratios: foreign assets to total assets, foreign sales to total sales and foreign employment to total employment. Ranking is based on the top 100 TNCs.
b II, the"Internationalization Index", is calculated as the number of foreign affiliates divided by the number of all affiliates (Note: Affiliates counted in this table refer to only majority-owned affiliates). Ranking is based on the top 100 TNCs.
Note: In some companies, foreign investors may hold a minority share of more than 10 per cent.

Figure 1. The top 30 locations for foreign affiliates of the 100 largest TNCs form developing and transition economies, 2005


Source: UNCTAD, World Investment Report 2007