• Second, by virtue of foreign ownership, at least some of the profits of foreign multinationals will be repatriated back to the home country. Thus the profit streams in the conventional multicountry model have to be reallocated from the host to the home country, after provision is made for them to be taxed in either the home or host country. This reallocation leads to a distinction between GDP – the income generated in a region – and GNP – the income received by residents of a region. The latter forms the basis of (although is not identical to) the welfare measure in FTAP.