REGIONAL COOPERATION AND ECONOMIC INTEGRATION

Table 2: Selected indicators of global transnationalisation
Item
SOME ASPECTS OF TRADE STATISTICS AND REPORTING
Value at current prices
(billions of dollars)
Annual
growth
rate
(%)
1982 1990 2006 2007 2007
FDI inflows 58 207 1 411 1 833 29,9
Inward FDI stock 789 1 941 12 470 15 211 22,0
Sales of foreign affiliates 2 741 6 126 25 844 31 197 20,7
Gross product of foreign affiliates 676 1 501 5 049 6 029 19,4
Exports of foreign affiliates 688 1 523 4 950 5 714 15,4
Employment of foreign affiliates 21 524 25 103 70 003 81 615 16,6
GDP (in current prices) 12 083 22 163 48 925 54 568 11,5
Exports of goods and services 2 395 4 417 14 848 17 138 15,4
Source: UNCTAD (2008), World Investment Report 2008, UN, New York and Geneva, p. 10, Table I.4.
The sustained growth of foreign direct investments, foreign affiliates and related indicators
reflect the importance of foreign direct investments and transnational companies in the
world trade and world economy. For our research the most important variables are flows
and stock of foreign direct investments of parent companies, sales of foreign affiliates
and export of foreign affiliates (Table 2). Flows of foreign direct investments have risen
dramatically since 1990. Consequently, average annual growth in the stock of global FDI
(at 12,8%) has outpaced that for world nominal gross domestic product (4,8%) and that
for world merchandise trade (8,1%) over the past two decades. These large increases in
global FDI and activities of TNCs were underpinned by a number of factors, including: the
liberalization of trade, investment and capital markets, the deregulation and privatization
of service industries and increased competitive pressures stemming from globalisation and
technological change. Another important development underlying global direct investment
has also been the break-up of eastern block of former socialist countries when TNCs could
for the first time to expand their activities all around the world. In recent years, there were
also emergence of companies based in developing economies and economies in transition
as active outward investors.
Data shows (Table 2) that in 1982 FDI flows were less than 60 billion USD, while the
total world exports (2,4 trillion USD) were almost equal to sales of foreign affiliates (2,7
trillion USD). In 1990 FDI flows were above 200 billion USD, while sales of foreign
affiliates were 6,1 trillion USD and significantly above the total world exports of 4,4
trillion USD. In 2007, when FDI flows exceeded 1,8 trillion USD, the sales of foreign
affiliates dramatically increased on 31,2 trillion USD while total world exports were 17,1
trillion USD and were only 55% of these sales. It can be observed that the sales of foreign
affiliates of transnational companies (international production) increased world-wide from
2,7 trillion USD in 1982 to 6,1 trillion USD in 1990 to 25,8 trillion in 2006 and to 31,2
trillion USD in 2007, and that these sales are nowadays nearly twice as high as world
exports, what means that firms sell more through foreign affiliates than trough traditional
export. The analysis shows that after 1990 firms export more through FDIs than through
traditional, cross-border exportation. Thus, outward direct investment and international
production are now more important than exporting (Bjelić, 2008a), in terms of the delivery
of goods and services to foreign markets.
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