Multinational firms engage in foreign direct investments and own or control the value addition activities in various countries. The multinational firms have a large company in one country that produces and sell goods in different countries worldwide (Slaughter, 2010). They are at the intersection of the production of goods, global trade, and cross-border investment, therefore coordinating and internalizing the economic activities of the world economy. The ownership of the multinational firms can be private, public or controlled nationally but they remain to be internationally owned and recognized to be originating from a specific country. For example, Nokia is an international brand, but its country of origin is Finland.

Most multinational firms enter into the international markets through the acquisition of an existing company. They also enter the market through sequential entry and joint ventures with the firms that are already operating in the market. The multinational firms invest through the foreign direct investments which involve the creation of long-term relationships in the interest in a particular economy. The multinational firm, therefore, has specific roles in the global economy and affect the global economy in both positive and negative ways.

Multinational firms have significant roles in the global economy. The developing countries’ economy and the global economy have had considerable improvement since the emergence of the multinational companies. These firms provide marketing opportunities since their products are available worldwide and some have established brands that make people want to associate themselves with the company (Slaughter, 2010). They also facilitate the improvement of research and development hence producing the quality product that meets international market standards hence consumers have quality and safe products. Multinational firms encourage the use of modern technology and offer technical assistance to the developing countries thus bridging the gap between the developing and the developed countries.

According to UNCTAD (2013), the report on World Investment Report of 2013 shows the multinational firms’ significance in the global economy as of 2012; the firms contributed to a total GDP of 71,707 billion dollars. The Foreign direct investment inflow and outflow were valued at 1,351 and 1,391 billion dollars respectively. Among the top ten foreign investors, the U.S is the largest foreign direct investor in the world with over 329 billion dollars in 2012. The amount of value added products was a total of 6,607 billion dollars which was an increase as compared to the previous year. This significant change indicated that the emergence of multinational firms contributes to the global economy. Furthermore, multinational companies control approximately a quarter of the world’s economy. They have higher sales than the combined sales