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Profits of multinational firms abroad: measurement and impact on their home country

Author

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  • Laurence Nayman
  • Vincent Vicard

Abstract

This panorama measures the national income linked to the activity abroad of multinational enterprises, recorded in the foreign direct investment (FDI) income item of the balance of payments. These FDI income flows have been more dynamic than the other current account items (goods, services, other primary income and secondary income) so that their share in world flows doubled between 1995 and 2015. They contribute positively to the current account balance of high-income countries, but negatively to that of the rest of the world. As a result, they add to the gross national income (GNI) of high-income countries. The predominant role of tax havens in FDI income flows underlines the significance of tax issues in the measurement and analysis of multinationals activity.

Suggested Citation

  • Laurence Nayman & Vincent Vicard, 2018. "Profits of multinational firms abroad: measurement and impact on their home country," Panorama du CEPII, CEPII research center, issue 1.
    • Handle: RePEc:cii:cepipa:2018-01
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    More about this item

    Keywords

    FDI income; multinational firms; tax havens; current account; balance of payments;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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