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Main Page arrow News arrow The Significance and Influence of Multinational Corporations on the Global Economy

The Significance and Influence of Multinational Corporations on the Global Economy

23 June 2023
A multinational company is defined as a company that operates production facilities and holds assets in at least one country other than its home country.
However, there are different criteria used to define multinational companies. Some definitions highlight that a multinational company is one that owns and/or controls income-generating assets in multiple countries through foreign direct investment, enabling it to produce goods and services outside its country of origin and engage in international production. One can also define a multinational company as a unified entity with a head office and subsidiaries operating in multiple countries. The managers of these subsidiaries are citizens of various countries and are under the control of the head office. These definitions emphasize that multinational companies should own branches in at least two countries and maintain a management team composed of managers of different nationalities.

As stated in the Report of the 22nd Congress of the International Chamber of Commerce held in İstanbul in 1969, a multinational enterprise is classified as such when one or more of the following conditions are met: its production in foreign countries exceeds at least 25-30 percent of its total production, the profits generated from foreign countries constitute a significant proportion of its total profits, or the number of personnel employed in foreign countries reaches a substantial proportion of its entire workforce.

Multinational companies' increasing significance and influence can be attributed to several factors in recent years. Global economic integration, the pervasive influence of the market economy, and the liberalization of international trade and financial activities have all contributed to this trend. As a result, multinational companies now hold more significant sway in shaping national trade policies and international relations than ever before. It is evident that these companies, in collaboration with governments and international institutions, have emerged as the primary actors driving and defining the global economy.

The Multinational Company Ecosystem: An Exploration in Eight Headings
The "World Investment Report 2022" by UNCTAD reveals that global foreign direct investment flows, which experienced a decline below USD 1 trillion during the initial year of the COVID-19 pandemic, have rebounded. In 2021, these flows increased by 64 percent, reaching USD 1.58 trillion.

However, the significance of multinational companies extends beyond mere numerical figures. The responsibilities of these companies are inherently multidimensional, necessitating the consideration of the breadth and depth of the ecosystems they influence. This ecosystem's size and impact areas can be categorized into eight distinct headings.

Glocalization in Employment: Multinational companies drive economic growth by offering substantial employment opportunities in their host countries. By hiring local workers familiar with the local culture, they gain valuable insights into the local community's demands; furthermore, they cultivate a multicultural approach to conducting business by transferring knowledge and employees from the operating region.

•Investment and Capital Flows: Developing countries worldwide actively encourage foreign companies to invest in their economies through incentive policies to attract more capital. The presence of multinational companies not only brings technical expertise but also provides access to foreign markets, creating fresh business opportunities. Foreign direct investments not only contribute to the economic growth of countries but also invest in local markets, establish production facilities, transfer technology, and contribute to the development of local supply chains.

•Exports and Imports: Multinational companies engage in exporting their products and services to various countries while also importing goods and services from different nations. This dynamic interaction sustains international trade and fosters greater economic integration among countries.

•R&D, Innovation, and Technology Transfer: As key players in technology transfer, multinational companies exert significant influence on the competitiveness and welfare levels of the countries in which they operate through their investments in capital and technology-intensive sectors. By promoting the dissemination of new technologies and innovative practices, these companies contribute to the growth of local economies by transferring knowledge, training, and technology to local businesses and employees. Substantial investments in R&D activities further bolster their pivotal role in developing new products, processes, and technologies. This transfer alone fosters increased innovation and global competitiveness.

•Managing Environmental Impacts: In the present era of sustainability, multinational companies play a crucial role in extending their actions and measures to mitigate environmental impacts internationally. They serve as influential examples within the countries they operate, showcasing their commitment to areas such as energy efficiency, water conservation, waste management, and carbon emission reduction. Furthermore, they pioneer the globalization of sustainable practices, setting the stage for broader adoption worldwide.

•Contribution to Social and Economic Development: Multinational companies play a vital role in driving social and economic development in their operating regions. They actively contribute to social progress by creating jobs, promoting inclusion in local supply chains, supporting education, and fostering talent development.

•Global Value Chains and Collaboration: As vital participants in global value chains, multinational companies assume an active role in developing a culture of collaboration among suppliers and other stakeholders. All stakeholders can collectively contribute to environmental and social sustainability objectives by building value chains rooted in sustainability principles.

•Investing in and Financing Projects: Multinational companies actively support sustainable development by investing in and financing projects that prioritize sustainability. These investments encompass vital areas like renewable energy, clean water, education, and healthcare, promoting the sustainable growth of local communities and nations.

Operating Across Three Continents: Our Presence Extends to 30 Countries

With over 30 years of experience in construction, real estate, healthcare, energy, and petrochemicals, Rönesans Holding is actively engaged as a prominent contractor and investor on a global scale. According to the 2022 ENR data, we are ranked 24th among the top international contracting companies in the world and 8th in Europe. However, what truly matters to us is our ability to conduct business across a wide geography encompassing nearly 30 countries on three continents. 

As we continue to construct the infrastructure of tomorrow in diverse regions worldwide, our priorities remain the same, adding value to people's lives and focusing on a sustainable future. 

We steer our operations in alignment with international standards of corporate governance, customer satisfaction, sustainability, and corporate social responsibility. By undertaking innovative projects, we prioritize sustainability and strive for sustainable growth, adhering to universal principles of competition.

Together with our esteemed partners, we have so far successfully realized a cumulative investment of EUR 7.2 billion in Türkiye. Rönesans Holding, in collaboration with partners such as the International Finance Corporation (IFC), a member of the World Bank Group, executes groundbreaking projects in every country in which we operate, leveraging our knowledge, competence, and cutting-edge technology.

In our endeavors, Rönesans Holding works closely with numerous engineering companies and universities from Türkiye and around the globe, ensuring a continuous development cycle by actively seeking feedback even in specialized areas.

Our main objective is to become one of the top 10 contracting companies in the world. We are committed to creating a better world by prioritizing people and acknowledging our responsibility as a global enterprise.


About Rönesans Group

Rönesans Holding, the conglomerate's top investment entity headquartered in Ankara, is the 38th largest international contracting company globally and the 9th largest in Europe. With operations spanning 30 countries across Europe, Central Asia, and Africa, including subsidiaries such as Ballast Nedam in the Netherlands and Heitkamp Industrial Solutions GmbH in Germany, Rönesans has been operating as the main contractor and investor successfully for 30 years in construction, energy, healthcare, real estate development and industrial investments. Putting resilience and growth through innovation at the core of the company, with a priority on sustainability and social development, Rönesans has developed projects supporting students with scholarships, academic platforms and initiatives; been a signatory of the UN Global Compact since 2015; and a signatory of the UN Women’s Empowerment Principles since 2016.

Under the leadership of its president, Erman Ilıcak, Rönesans, along with its partners GIC, Meridiam Infrastructure, Sojitz, Samsung C&T, TotalEnergies, and IFC of the World Bank Group (minority shareholder in the group), has invested more than EUR8 billion into pioneering projects globally.

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