TRANSNATIONALITY INDEX

2Transnational Corporation Any corporation that is registered and operates in more than one

country at a time; also called a multinational corporation. A transnational or multinational corporation has its headquarters in

one country and operates wholly or partially owned subsidiaries in one or more other countries.

The subsidiaries report to the central headquarters. The motives for establishing a corporate presence in other countries

are Desire for growth Desire to escape the protectionist policies of an importing country Preventing competition by acquiring competitive companies in

other countries To reduce costs

3United Nations Centre on Transnational Corporations ( UNCTC )

In 1974, The United Nations established the Programme on Transnational Corporations.

Between 1974 and 1992, it was carried out by the United Nations Centre on Transnational Corporations (UNCTC).

The UNCTC was the focal point, within the United Nations system, for all matters related to transnational corporations (TNCs) and foreign direct investment (FDI).

The Centre's main office was located in New York.

In 1993, after a brief period in the United Nations Department of Economic and Social Development (1992-1993), the Programme on Transnational Corporations was transferred to the United Nations Conference on Trade and Development (UNCTAD) in Geneva and is now being implemented by UNCTAD's Division on Investment, Technology and Enterprise Development.

4TRANSNATIONALITY INDEX (TNI)

The Transnationality Index (TNI) is a means of ranking multinational corporations that has global presence

It is calculated as the arithmetic mean of the following three ratios Ratio of foreign assets to total assets Ratio of foreign sales to total sales Ratio of foreign employment to total employment

The Transnationality Index was developed by the United Nations Conference on Trade and Development

Multinational corporations are also ranked by the amount of foreign assets that they own. However, the TNI ranking can differ markedly from this.

The conceptual framework underlying this index helps to assess the degree to which the activities and interests of companies are embedded in their home country or host countries

5Contd…

A high TNI value may raise questions about a home country’s locational advantages (a small market, for example) or indicate strong international competitiveness on the part of the home country firms.

A drawback of this index is that it does not take into account the size of the home country, nor does it distinguish between companies whose activities are concentrated in a few foreign countries and companies whose activities are spread across numerous host countries.