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The Universe of the Largest Transnational Corporations  2007


This publication is part of a new series of current studies on FDI and development published by UNCTAD. The series aims to contribute to a better understanding of how transnational corporations (TNCs) and their activities impact on development. The present study quantifies and analyses the past and current trends on the degree of internationalization of the largest TNCs as well as TNCs from developing economies. It aims at stimulating discussion and further research on the subjects addressed.

The study was prepared by J. François Outreville under the overall guidance of Anne Miroux and Hafiz Mirza. Jovan Licina provided research assistance, Katia Vieu provided secretarial assistance and desktop publishing was done by Teresita Ventura.
The text benefited from comments and feedback by Torbjörn Fredriksson, Masataka Fujita, Jeremy Clegg, Kalman Kalotay, Guoyong Liang, Michael Lim, Nicole Moussa, Shin Ohinata and Thomas Pollan.

Executive summary

TNCs comprise firms from developed countries and, increasingly, developing countries as well. However, when assets, sales and employment of firms from developing economies are compared with those of their counterparts from developed countries, it is clear that the degree of internationalization of the former is lower. An analysis of the evolution of the composition of the world’s top 100 largest TNCs and top 50 TNCs from developing economies shows how the geographical and sectoral components have evolved and how some developing economies have emerged as significant actors in international production.

I. Introduction
II. The universe of the largest TNCs: 2004 snapshot

The universe of TNCs is large, diverse and expanding. By the early 1990s, there were an estimated 37,000 TNCs in the world, with 170,000 foreign affiliates. Of these, 33,500 were parent corporations based in developed countries. Today, there are an estimated 77,000 TNCs in the world, with more than 770,000 foreign affiliates. These affiliates generated an estimated $4.5 trillion in value added, employed some 62 million workers and exported goods and services valued at more than $4 trillion (UNCTAD, 2006).

a. The top 100 TNCs
b. The top 50 TNCs from developing economies
c. TNCs from Central Europe, South-East Europe and the Commonwealth of Independent States
III. The growing importance of TNCs over the period 1993–2003

The largest 100 TNCs ranked by foreign assets had about $3.4 trillion in global assets in 1993, of which about $1.3 trillion was held outside their respective home countries. These firms accounted for an estimated one third of the combined outward FDI of their countries of origin. All were headquartered in developed countries and 85 per cent originated from the Triad. In 2003, 85 per cent of the top 100 TNCs were still headquartered in the Triad, but came from 19 countries instead of 12 in 1993.

a. The top 100 TNCs from 1993 to 2003
b. The top 50 TNCs from developing economies, 1993-2003
c. Performance indicators
IV. Measures of size and concentration

The most widely used indexes are the k-firms concentration ratio (CRk) and the Herfindhal (or Herfindhal–Hirschman) Index (H) measured by the sum of market shares (i) of all n firms (box 2). We can apply these measures to the top 100 firms for the largest TNCS and the top 50 firms for developing economies.
Casual observation reveals that the importance of the five and 10 largest TNCs among the world’s 100 largest have remained relatively stable over time. In contrast, the concentration ratio of the top-ranked firms in the 50 TNCs based in developing economies has evolved over time, resulting in more and more concentration

V. The transnationality index over the period 1993-2003

a. TNI values over the period 1993-2003
b. Evolution by region and country
c. Shifts across sectors
VI. How transnational are TNCs?
a. The geographical extensity dimension
b. A graphical approach to transnationality
c. Other perspectives
VII. Most favoured Locations by TNCs
VIII. Conclusions
IX. References
X. Annexes

1. The largest TNCs in the World Investment Report
2. How to measure market concentration of firms?
3. How to measure the average TNI?
4. Selected TNCs from developing economies
5. The motor vehicle industry: Ford and Toyota, two distinct expansion strategies
6. A simplified model of location-specific advantages

1. The largest 100 non-financial TNCs, foreign assets, foreign sales and foreign employment, 1990-2003
2. The top 50 TNCs based in developing economies, foreign assets, foreign sales and foreign employment, 1995-2003
3. The sales-to-assets ratio of the largest TNCs, 1993-2003
4. The sales-to-employment ratio of the largest TNCs, 1993-2003
5. Average TNI, 1993-2003
6. Regional distribution of the affiliates of the largest 100 TNCs

1. Snapshot of the largest TNCs: assets, sales and employment. 2004
2. Performance ratio for a subset of TNCs, 1993 and 2003
3. Ranking the largest TNCs by foreign sales and foreign employment, 2003
4. K-firms concentration ratios, 1992-2003
5. Herfindhal index and Number Equivalent, 2003
6. Top 10 most transnational firms by country of origin, 1993, 1998 and 2003
7. Country composition of the world's top 100 TNCs by transnationality index and number of entries, 1993, 1998 and 2003
8. Composition of the top 50 by region and by transnationality index, number of entries and number of countries, 1993, 1998 and 2003
9. Industry composition of the top 100 TNCs, 1993, 1998 and 2003
10. Industry composition of the top 50 TNCs, 1993, 1998 and 2003
11. Rank correlations among the transnationality indices
12. The 50 most transnational TNCs, ranked by the surface of the quadrilateral calculated with four measures of transnationality
13. Distribution of the locations of affiliates of the largest TNCs by region, 2003
14. Regional composition of directors on the boards of 42 of the largest 100 TNCs, grouped by home region/country, 2003
15. Rank correlations between countries popularity rank, size and good governance

Box figure
4.1. The TNI value of selected TNCs from developing economies, 1993-2003

Box tables
5.1. Ford Motor and Toyota: data for 2004
6.1. Estimation results of the model with Two-Stage Least Squares

Annex tables
1. Selected indicators of FDI and international production, 1990-2003
2. The world's top 100 Largest TNCs, ranked by foreign assets, 2003
3. The world's top 100 Largest TNCs, ranked by foreign assets, 2004
4. The top 50 TNCs from developing countries, 2003
5. The top 50 TNCs from developing countries, 2004
6. The top 25 TNCs from Central Europe, 2002
7. The top 10 TNCs from South-East Europe and the CIS, 2003
8. Transnationality indices for the World's largest TNCs, 2003
9. The most favoured locations for FDI by the top 100 TNCs, 2003

Annex figure
1. Annual average growth rates of total real gross domestic product

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