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Who Really Owns the Factory? Mapping the Corporate Control of Global Trade

In my previous post, we looked at where value is created in the global economy. We saw how a "German" car is actually a European collaborative effort. But that map leaves one critical question unanswered: Who owns the factory?

Does a country own its own production, or is it merely a host for foreign capital? To answer this, I dove into the OECD Activity of Multinational Enterprises (AMNE) database. By distinguishing between domestic and foreign-owned firms, we can reveal the "hidden architecture" of corporate control.

1. The Sovereignty Gap: Who Relies on Foreign Capital?

The first metric I calculated is the Foreign Penetration Ratio: the percentage of a nation's total Gross Value Added (GVA) that is generated by foreign-controlled affiliates.

The results reveal a stark divide in the global economy between "Sovereign Giants" and "Global Hubs."

Fig 1: The "Hubs" vs. The "Giants" — Share of National Value Added by Foreign Firms (2020)

Key Insights:

  • The "Hub" Model (Top of Chart): Countries like Ireland (43.8%), Hong Kong, and Singapore are effectively platforms for global capital. Their high ratios indicate that their economic engines are driven primarily by foreign multinationals.
  • "Factory Europe" (Middle): Notice the cluster of Central European nations: Slovakia (32.0%), Czech Republic (33.2%), and Hungary (32.5%). This confirms their role as the integrated manufacturing engine for Western Europe (primarily German automakers).
  • The "Sovereign" Giants (Bottom): In contrast, massive economies like Japan (3.8%), China (4.3%), and the USA (typically <10%) appear at the bottom. While they receive huge dollar amounts of investment, their domestic economies are so vast that foreign firms remain a small slice of the pie.

2. The "Dual Economy": Local vs. Export Platforms

Knowing that foreign firms are present is one thing. Knowing what they are doing is another. Are they here to sell to locals (Market Seeking), or are they using the country as a launchpad to export elsewhere (Efficiency Seeking)?

To find out, I calculated the Export Intensity Gap. This compares the percentage of output exported by foreign firms (Red) versus domestic firms (Blue).

Fig 2: The Export Platform Phenomenon — Foreign firms export significantly more than locals.
The Insight: In key manufacturing hubs like Ireland, Slovakia, and Vietnam, we see a massive "Export Gap." Foreign firms export 60-80% of what they make, while domestic firms export less than 20%.

This data visualizes the "Dual Economy" phenomenon. In these countries, foreign affiliates operate as "islands" of high-efficiency manufacturing connected to the global market, often with limited links to the domestic consumer economy. They are not built to serve the host country; they are built to serve the world from the host country.

3. The Matrix of Control: A Sectoral Deep Dive

National averages can hide the truth. To understand where this foreign control is concentrated, I generated a heatmap of Foreign Penetration by Sector. This visualization transforms the data into a "texture" of the global economy.

Fig 3: The Matrix of Control — Red indicates high foreign dominance (>80%), Blue indicates domestic control.

Reading this heatmap reveals three distinct economic architectures:

  • The "Vertical" Global Sectors (Right Side): Look at the far right of the heatmap. Sectors like Motor Vehicles (C29) and Pharmaceuticals (C21) form solid vertical bands of red/orange. This means these industries are highly globalized everywhere. It is rare to find a purely domestic car industry today.
  • The "Horizontal" Dependency (Bottom Rows): Look at Ireland (IRL) and Hungary (HUN) at the bottom. Their rows are predominantly orange and red across many sectors. This indicates broad-based foreign integration—from services to manufacturing, their entire economic model is plugged into global value chains.
  • The "Automotive Cluster" Hotspot: If you look specifically at the intersection of Slovakia (SVK) and Motor Vehicles (C29), you see a deep red block (often >90%). This confirms Slovakia’s status as the world’s per-capita car production leader, a sector almost entirely driven by foreign capital.

Conclusion

Combining TiVA (flows) and AMNE (ownership) gives us a complete picture. "Factory World" is not just about moving parts across borders; it's about strategic control. For the "Hub" economies at the top of our chart, national prosperity is deeply linked to their ability to remain attractive to these global corporate networks.

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