ABSTRACT
Multinational enterprises (MNEs) lie at the heart of international economic integration and international production. According to UNCTAD (2007), in 2006 over 78,000 MNEs owned more than 780,000 foreign affiliates. Most MNEs have a home base in the triad countries of North America, Europe or Japan. In 2005, for example, 91 per cent of UNCTAD’s list of top 100 MNEs were based in the triad, the home base of 58,000 MNEs. As a rule of thumb, MNEs account for two-thirds of world trade. About half the share of MNEs, or one-third of total trade, is intra-firm trade: that is, cross-border transactions within the boundaries of a single firm. The purpose of this chapter is not to make the case for or against MNEs but to explore their nature and role as well as accounting for their emergence. It begins by addressing the issue of what exactly constitutes a multinational enterprise. This is followed by analysis of how multinational MNEs are in practice. The concluding section introduces major theories regarding the evolution of MNEs.
