Small and medium-sized transnational corporations: Trends and patterns of foreign direct investment

Abstract

This paper provides an analysis of small and medium-sized transnational corporations (TNCs). Statistical evidence is provided on trends and patterns of foreign direct investment (FDI) by small and medium-sized enterprises (SMEs). There are virtually no countries for which consistent and systematic FDI data are available by firm size, but data complied by or made available to the author for the UNCTAD Programme on Transnational Corporations allow an analysis of broad characteristics, trends and patterns. FDI by SMEs is more concentrated in developed countries than that by large TNCs. However, small and medium-sized TNCs, especially those from Japan, are increasingly investing in developing countries. Although absolute size of FDI is still small, SMEs account for a large share in terms of the number of investment cases and the number of parent firms. South and East Asia became the primary host region of small and medium-sized TNCs during the 1980s and early 1990s. The industrial distribution of FDI by SMEs in developing countries is quite wide, but concentrated in electrical goods, chemicals, textiles and some services industries. SMEs also engage in non-equity investments.