The Role of Transnational Corporations: Theory and Evidence

Abstract

U.S.-based transnational corporations (TNCs) and single-nation corporations (SNCs) are shown to occupy two distinct competitive regimes in a dual economy. TNCs are located predominantly in the technologically advanced industries, and invest more intensively in research and development, selling effort, and new plant and equipment. Intra-group asset-intensive TNC competition produces-higher and more homogeneous inter-industry rates of return for the group. One source of this result is significantly greater returns to capital strategies (capital and investment intensities) that suggests a greater ability to target investment to highly lucrative industrial sub-sectors.