MNCs income greater than origin GDP Can anyone explain why the net income of some MNCs overwhelmingly surpass the GDP of countries/regions, where their sources of labor/raw materials are located? Accompanying references are welcome.
P.S. :- My academic training is in history, and am not really familiar with nitty-gritty aspects of economics. Apologies, if this is a stupid question.
The most simple answer I could give is this; they have more revenue and less costs.
A multinational company, has branches all over the Earth and utilizes these and their resources to their fullest extend, with utmost efficiency.
Kindly note how a company is much easier to run than a nation, with regards to uncertainty, risk - danger and of course, budget management.
On the politics side of things, which is arguably less naive;
It is a structuralist theory that MNCs are a tool of developed nations that sucks the life force out of developing nations (by obtaining their resources and bringing profits with them), therefore there is also a relation of causality, between the great net income of an MNC and the lower GDP of such nations.
With this theory, I have to say, I'm fairly skeptical.
If you'd like to read on the politics of such matters, I'd suggest Theodore Cohn's &quot;Global Political Economy: Theory and Practice&quot;. In fact, any Political Economy textbook that dwells on the global economy will probably contain a chapter or two concerning multinational companies.