Hi,I understand nothing about economy,but I was wondering about this,say that you have 2 countries,one is your home and the other is a richer country where you have a bigger chance of success,if you open up a business in your home country,just one store,but have more sales and so on in the other country,where you have for example 15 stores,does your home country earn more (because the company is based in your country) or does the other country earn more,where more of your business is? I suppose that its the second one,but I am not sure. Also,this is kind of a same question in a different way,but lets say that you have your national shop chain like walmart and it has 1500 stores around the entire country,but there could also be 1500 stores from a different country’s chain,let’s say some German like Aldi or Lidl,who would you as a country benefit more from? (since the German one would also probably sell more German products,than your own,which also may affect everything)
There are different statistical indices that measure different things. One is the Gross Domestic Product (GDP), which - in simplified terms - measures the aggregate value of all goods and services produced within a country, including by foreigners (or domestic branches of foreign firms). Another parameter is the Gross National Product (GNP), which measures the aggregate value of all goods and services produced by the nationals of a country, including abroad. So in your example, the presence of Aldi and Lidl in the UK would increase (all else equal) the British GDP but the German GNP. Whether GDP or GNP is the decisive measurement of a country’s wealth depends on the purposes you want to measure wealth for; for some purposes, GDP is more meaningful, for others GDP.
Thanks,sorry for a slow reply,so basically what I am interested in is which would bring more cash in for a country? That is the cash that goes in the budget and therefore everywhere else,health,military,etc…Gdp or Gnp?
So you want to know which of the two scenarios does more to increase the country’s tax revenue? That’s a question that cannot be answered in general for all scenarios, since it depends on each country’s tax laws and the economic conditions of the country and the firms concerned. To stick with the example of a German company being active in the UK: Each sale will generate VAT revenue for the country where the sale takes place. In addition, the presence of the company in the host country will necessitate hiring employees there, and these employees pay income taxes and consume their salaries, presumably in the country where they reside, so that will add more to the tax revenue. On the other hand, the presence presumably generates profit for the company concerned, and these profits are typically taxed in their home countries. It can’t be said in general which of the two countries benefits more.
…I’d suggest that your question is quite dense and obtusely written. Punctuation would help. Also, in the future, maybe it would be good to think about your specific question ahead of time so that the syntax and meaning can be made more clear when you do post it. Someone once said something to the effect of, “We can learn much from nature, but the answers depend upon the questions we ask.” Probably the same thing holds true here at SDMB. Just sayin’
Like everyone else here, I’ll try and answer your question as I understand it.
Aside from the United States, most countries do not tax overseas profits. So if a company from those countries opens stores in a different country, the first country usually doesn’t see an increase or decrease in revenue directly from the company- those stores don’t matter to them. However, if the profits the company produces are received by someone living within their borders, that does get taxed in the vast majority of cases, if only by a tiny amount.
In theory, since that profit originated from a different economy somewhere else, having it transferred to a citizen of your own country is a good thing, it acts in a way like a positive trade balance. But if you lean too heavily on that person, they’re quite capable of leaving, so you’re not going to get major amounts of funding.
Of course, as a country, you aren’t presented with this as an either/or sort of choice. If there is money to be made within your borders people will open stores there, and if they can make money opening stores overseas they’ll do that, if a choice has to be made because of limited capital it will be on a case by case basis with little or no input from either government.
Sorry,English is not my native language and I use punctuation,but I don’t put a space after the comma, like , this, but still I think that I speak it a lot better compared to a lot of native English speaking people who can’t differentiate your and you’re and so on. (not related to you,but in general)
Anyway thanks everyone,I understand now.
FYI, the space only goes after the comma, like that.
Not being snarky, but it would help a lot in reading your writing and you seem to care about doing it right.