Last Updated: 2025-09-18
The GAFI offers a novel metric to assess the economic importance of a country to a multinational enterprise (MNE). Traditional measures, such as direct investment or trade activity, often misrepresent the strategic value of country-specific activity, either by overstating or understating their role depending on the nature of subsidiary operations. GAFI addresses these discrepancies by calculating the share of total MNE affiliates in a country, adjusted for the MNE’s ownership percentage. It incorporates a composite measure of number of employees, revenue, and assets at the country level. This methodology recognizes that the strategic value of affiliates increases with ownership level, providing a more balanced view of their economic importance.
The index ranges from 0 (low importance) to 1 (high importance), allowing for nuanced insights into the geographic dispersion of corporate affiliates, which is a key determinant of corporate performance. To handle missing data in affiliate-level variables, GAFI employs a multiple-input bootstrapping algorithm. This algorithm approximates complete data by accounting for smooth time trends and changes across variables, thus ensuring the robustness and reliability of the index in international business analysis.
The dataset covers the over 541,000 subsidiaries of the 2,000 largest firms at the international level in 129 countries in the period 2007-2019.
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