​UNCTAD compiled 'Transnationality Index' consists of which of the following three ratios?​

Correct option is A

Transnationality Index (TNI), developed by UNCTAD (United Nations Conference on Trade and Development), measures the degree of internationalization of multinational enterprises (MNEs). It calculates the average of three specific ratios:

1. Foreign assets / Total assets

2. Foreign sales / Total sales

3. Foreign employment / Total employment

These three dimensions represent how extensively an MNE is involved in foreign economies relative to its global operations, covering key aspects of capital investment, market engagement, and human resources deployment. The higher the TNI, the more transnational or globally integrated a company is considered.

Information Booster:

​The Transnationality Index is an important tool used in international business and economic analysis. It captures the extent to which a company is integrated into the global economy. By averaging the three key ratios (foreign assets, foreign sales, and foreign employment, each as a share of their global total), UNCTAD provides an indicator that reflects the geographical spread of a corporation’s operations. The index is particularly useful in comparing MNEs across sectors or countries and analyzing trends in globalization.

Additional Knowledge:

(b) Foreign assets/Total assets; Foreign sales/Total output and Foreign employment/Total employment

• Incorrect: "Foreign sales/Total output" is not a valid component. TNI uses "Total sales", not "Total output", since sales data provides a more direct financial measure for international operations.

(c) Foreign assets/Total GDP; Foreign sales/Total GDP and Foreign employment/Total GDP

• Incorrect: These ratios relate firm-level data (foreign assets, sales, employment) to macroeconomic data (GDP), which is not aligned with the TNI methodology that compares foreign operations to the firm’s own global total.

(d) Foreign assets/Total output; Foreign sales/Total sales and Foreign employment/Total GDP

• Incorrect: This mixes firm-level data with macro-level indicators (like GDP), which is not the basis of the TNI. Also, “foreign assets/total output” is not used, as output isn’t a standardized measure across industries.