Multinationals are setting up regional headquarters that are little more than sales agencies that do little for the national economy, according to The Australian Business Foundation.
Report author Lyndal Thorburn said there are advantages in attracting multinational companies, but the companies must be willing to invest in local research and development.
"Australia will be short-changed if it continues its policy of trying to become a regional headquarters hub. The policy had to change to one that attracted centres of excellence rather than simply branch outlets that could be shut down at a moment's notice," she said.
The report, based on interviews with 30 multinationals and a survey of 56 suppliers, is the first to fully explore the economic merits of multinationals in Australia.
It found multinationals that invested in local research, and had some autonomy from their headquarters, were best-placed to offer benefits to the economy.
"It is crucial for Australia to access new technologies and management knowhow in order to be internationally competitive," the report said.
Pharmaceuticals, biotechnology, food, education, health and information technology were areas where Australia had an opportunity to use multinationals to benefit the economy.