Can anyone explain why the net income of some MNCs overwhelmingly surpass the GDP of countries/regions, where their sources of labor/raw materials are located? Accompanying references are welcome.

P.S. :- My academic training is in history, and am not really familiar with nitty-gritty aspects of economics. Apologies, if this is a stupid question.

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    $\begingroup$ How do you define overwhelmingly? Also most companies nowadays use sources from all over the world, for example Apple will have design in California but manufacturing in China and utilize labor of distributors in all countries it’s present... There are no stupid questions, and in this case I can see even some interesting question being at the core but as you are asking it it’s simply not answerable you need to provide some details and clarity and also decide how do you want to assign MMC to particular geographical area - doing so based on narrow use of resources/labor is not very fortunate $\endgroup$ – 1muflon1 Jun 30 '20 at 19:38
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    $\begingroup$ Some specific examples might help this question a lot. $\endgroup$ – Brian Z Jun 30 '20 at 19:40
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    $\begingroup$ @the_rainbox you don’t need to excuse yourself I think that given the question your answer is good one I just gave you plus one but I wanted to give OP feedback because the question as it is now is poor fit for the SE model and also in general outside SE it would be question that’s framed in a way that would rather obscure than illuminate due to the problems of even assigning MNC some geographic location that the question glosses over $\endgroup$ – 1muflon1 Jun 30 '20 at 19:57
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    $\begingroup$ @1muflon1 Your politeness (or desire to avoid confrontation) clouds your judgement. $\endgroup$ – Giskard Jun 30 '20 at 21:27
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    $\begingroup$ @1muflon1 I can only speak for myself, but I don't understand the core of the question, and I find that the answer makes unconnected unsourced claims. $\endgroup$ – Giskard Jul 1 '20 at 1:11

The most simple answer I could give is this; they have more revenue and less costs.

A multinational company, has branches all over the Earth and utilizes these and their resources to their fullest extend, with utmost efficiency.

Kindly note how a company is much easier to run than a nation, with regards to uncertainty, risk - danger and of course, budget management.

On the politics side of things, which is arguably less naive;

It is a structuralist theory that MNCs are a tool of developed nations that sucks the life force out of developing nations (by obtaining their resources and bringing profits with them), therefore there is also a relation of causality, between the great net income of an MNC and the lower GDP of such nations.

With this theory, I have to say, I'm fairly skeptical.

If you'd like to read on the politics of such matters, I'd suggest Theodore Cohn's "Global Political Economy: Theory and Practice". In fact, any Political Economy textbook that dwells on the global economy will probably contain a chapter or two concerning multinational companies.


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