Keywords

Balance of payments • Trade balance • Capital account/Current account • Debit and credit entries • Micro – macro accounting • Accounting principles • Value added • FDI data • Global 500 • Exports/Imports • Multinational • Firm’s annual reports

Introduction

In this chapter we first discuss the different motivations firms may have to engage in international business activities. Having clearly described why firms cross borders, and the different options these firms have to generate value added in a host country, we discuss the different ways to measure this. We show that different indicators are used to measure the international business activities of firms, both at the level of the individual firm, and of the country. We also discuss indicators of international capital mobility and some conceptual issues, like the difference between net- and gross capital flows, as well as between stocks and flows.

Learning objectives

• Getting acquainted with the basic terminology on types of multinational activity and trade as commonly used in international economics and business

• Understanding the different data sources that can be used to assess the amount of international business activity and capital mobility

• Familiarize yourself with data on the largest firms and countries of the world

• Critically evaluate the advantages and disadvantages of key indicators used in international economics and business

• Understanding the importance and limitations of bookkeeping