![]() We find labor income is the largest direct pathway, with wages and benefits accounting for $0.25 of each dollar of revenue. The final two pathways are negative and positive spillovers, which we do not assess comprehensively beyond the examples of environmental impact and contributions to total factor productivity growth (unaccounted for in additional labor or capital input). Using this data set, we identify eight pathways through which economic value from corporations flows to households and the economy (Exhibit 2). For much of this paper, we narrow our focus to a subset of large corporations in the OECD with revenue exceeding $1 billion-about 5,000 companies in all, which together had $40 trillion in revenue and represented $17 trillion in gross value added in 2018. The overall business sector in the OECD, described above, includes companies of all types and represents $44 trillion in gross value added. Economic value flows from companies to households via eight pathways, of which labor income and consumer surplus are the largest direct pathways This steadiness masks significant underlying shifts, notably including the growth of corporations over $1 billion in revenue, which increased their global revenues by 60 percent relative to their home country’s GDP since 1995. The size of the business sector varies only slightly within each of the major economies, and their share has remained steady for the past 60 years. Companies underpin 85 percent of technology investment and 85 percent of labor productivity growth since 1995, a larger proportion than their GDP contribution. Please email us at: in GDP per capita, the contribution of the entire business sector has tripled since 1960 on average in major OECD economies, in proportion with their overall economic growth. If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. The remainder comes mainly from government, non-profit activity, and household incomes from real estate (Exhibit 1). Among OECD economies, business activity – the value added from businesses of any size or formality including corporations, partnerships, and sole proprietorships – accounts for 72 percent of GDP. The business sector overall contributes 72 percent of GDP in the OECD, and corporations with more than $1 billion in revenue account for an increasingly large share of thatĪ starting point for our research is the steady contribution of business to the economy. For both analyses, we seek to understand the situation today and how it has changed over the past 25 years. This clustering transcends traditional sectoral views and highlights the similarities and differences between companies in how they affect households. The second is an algorithmic clustering of companies into eight “archetypes,” based on what they do and their impacts on society. We identify patterns in what different types of companies do and how they do it, and how the mix of these companies and their patterns of economic impact have changed.Īt its core are two analyses: The first maps all the pathways through which a dollar of company revenue reaches households-not just traditional measures of labor and capital income but also less-discussed aspects such as consumer surplus and supplier payments. ![]() In this discussion paper, the first in a series on companies in the 21st century, we assess how the economic value that companies create flows to households in the 37 OECD countries, and how these flows have shifted over the past 25 years. Yet there is little clarity or consensus about how the business activity of companies impacts the economy and society. The role of companies in the economy and their responsibilities to stakeholders and society at large has become a major topic of debate.
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