How Internationalised are EU Transnationals?1

The aims of the paper are: (a) to analyse the possible motives behind international location strategies of companies with particular emphasis on why companies may locate in many foreign countries; (b) to develop two complementary methods of assessing the degree of internationalisation and introduce two related indices; (c) to give empirical estimates for the two indices and particularly for the largest EU transnational companies (TNCs); and (d) to analyse the possible impact on countries and sectors and draw relevant policy implications. The assessment is based on the international location of the TNCs’ affiliates or subsidiaries. The companies are all those appearing in the list of the world’s largest companies and the main focus is on those originating from EU countries.The paper starts with a discussion of companies’ location strategies abroad and with an analysis of the reasons why they may want to spread their network of foreign direct activities. A methodology section introduces two indices one based on the degree of foreign projection of the company and the other designed to capture the degree of international locational spread of affiliates/subsidiaries.Three sets of empirical estimates follow. The first one presents a comparative analysis by countries for the years 1997 and 2000 and for the largest companies originating from the EU countries. The second set analyses sectoral patterns in the degree of internationalisation. The third set of estimates relates to a longitudinal study of the locational pattern of the largest UK TNCs in manufacturing and mining from 1963 to 1997. The paper ends with a discussion of the possible impact as well as policy implications of the locational pattern emerging from the study.JEL: F2; L2; L6; L8