The Hindu Business Line : ONGC, RIL slip in Unctad rankings of TNCs from developing countries

Oil and Natural Gas Corporation (ONGC) and Reliance Industries have slipped in Unctad’s latest ranking by foreign assets of the top 100 non-financial transnational corporations (TNCs) from developing countries.

While ONGC has moved down to 32nd position as against 19th last year Reliance Industries, which was at 92th position, does not figure in the top 100 list put out by Unctad in its World Investment Report (WIR) 2008. Rankings by foreign assets in WIR 2008 relate to position as of 2006.

New entrant

The latest listing however has a new entrant in Ranbaxy Laboratories, which has moved to the 99th slot. Also, three Indian companies — Tata Communications, Bharti Airtel and Suzlon Energy — have found a place in the 50 largest infrastructure TNCs of developing and transition economies, ranked by foreign assets, 2006.

No Indian company has yet made it to the world’s top 100 non-financial TNCs by foreign assets. India is aspiring to be in the league of developed countries by 2020.

According to the WIR, the production of goods and services by an estimated 79,000 transnational corporations (TNCs) and their 7,90,000 foreign affiliates continued to expand in 2007.

The value-added activity of foreign affiliates worldwide accounted for 11 per cent of global gross domestic product (GDP) in 2007 and sales amounted to $31 trillion — a 21 per cent increase over 2006.

Attractive destinations

Meanwhile, the results of Unctad’s World Investment Prospects Survey 2008-10, based on 226 responses to queries sent to the world’s largest TNCs, showed that five very large countries are considered by large TNCs as the most attractive destinations for future foreign investment. These are China, India, the US, the Russian Federation and Brazil. Their rankings are unchanged from last year’s survey.

However, the Russian Federation and Brazil have risen noticeably in attractiveness. It is noteworthy that four of the five top destinations are emerging economies known collectively as BRICs (Brazil, Russia, India and China)

Among the 15 most attractive economies for location of FDI, Vietnam again ranks 6th, Germany and Indonesia have improved to 7th and 8th respectively. Australia, the UK, Poland and France have declined slightly in the rankings but still remain in the top 15. Newcomers to the top 15 are South Africa, Canada and Turkey.

Geographical spread

The regions and countries of origin of the world’s largest TNCs have changed little over the past ten years. While the “triad” — the European Union, Japan and the US — is still home to most of the world’s largest TNCs, the geographic distribution of firms from developing economies is still in favour of South, East and South-East Asia. Another striking aspect of foreign operations is the widening geographical spread, or the number of countries hosting foreign affiliates.

On average, the largest TNCs have affiliates in 41 foreign countries while companies from developing economies have foreign affiliates in only nine host countries. Developing country TNCs have expanded mostly in their own regions, although the top locations for the foreign affiliates are the UK and the US.