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Foreign Direct Investment in the U.S. and U.S. Trade

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  • Robert E. Lipsey

Abstract

Foreign-owned manufacturing firms' shares of U.S. trade grew from almost nothing in the 1960s to 7 or 8 per cent of trade in manufactured goods by the 1980s. It has changed little in the past decade, except for fluctuations related to changing U.S. exchange rates. Foreign-owned firms are less export-oriented than U.S. parent companies, overall and in the same industries, and more dependent on imports, relative to their sales. The foreign affiliates' comparative advantage relative to U.S. parent firms and U.S. firms in general is concentrated in chemicals and metals industries. Foreign-owned firms in machinery and transport equipment do relatively little exporting from the U.S. in comparison with U.S.-owned firms. The trade of the foreign-owned firms, as measured by exports/sales and imports/sales ratios and by export/import ratios, fluctuates more than that of U.S. firms. In particular, foreign affiliates seem to be more responsive than U.S. parents to exchange rate changes, shifting their production between sales in the U.S. and exports and their inputs between U.S. production and imports as the value of the dollar rises and falls.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3623.

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Date of creation: Dec 1991
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Handle: RePEc:nbr:nberwo:3623

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  1. Magnus Blomstrom & Robert E. Lipsey & Ksenia Kulchycky, 1988. "U.S. and Swedish Direct Investment and Exports," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 257-302 National Bureau of Economic Research, Inc.
  2. Lipsey, Robert E & Weiss, Merle Yahr, 1981. "Foreign Production and Exports in Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 488-94, November.
  3. Robert E. Lipsey, 1989. "The Internationalization of Production," NBER Working Papers 2923, National Bureau of Economic Research, Inc.
  4. Irving B. Kravis & Robert E. Lipsey, 1992. "Technological Characteristics of Industries and the Competitiveness of the U.S. and its Multinational Firms," NBER Working Papers 2933, National Bureau of Economic Research, Inc.
  5. Magnus Blomstrom & Irving B. Kravis & Robert E. Lipsey, 1988. "Multinational Firms and Manufactured Exports from Developing Countries," NBER Working Papers 2493, National Bureau of Economic Research, Inc.
  6. Robert E. Lipsey & Irving B. Kravis, 1988. "The Competitiveness and Comparative Advantage of U.S. Multinationals, 1957-1983," NBER Working Papers 2051, National Bureau of Economic Research, Inc.
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Cited by:
  1. repec:pra:mprapa:38207 is not listed on IDEAS
  2. bouoiyour, jamal & El Mouhoub, Mouhoud & Hanchane, Hichame, 2008. "Investissements directs étrangers et croissance économique : Estimation d’un modèle à erreurs composées
    [Foreign direct investment and economic growth: Estimation of error component model]
    ," MPRA Paper 38208, University Library of Munich, Germany.
  3. M. T. Alguacil & V. Orts, . "Inward Foreign Direct Investment and Imports in Spain," Working Papers on International Economics and Finance 02-01, FEDEA.
  4. James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
  5. Overesch, Michael, 2007. "The Effects of Multinationals? Profit Shifting Activities on Real Investments," ZEW Discussion Papers 07-071, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Sun Bae Kim, 1992. "Foreign direct investment: gift horse or Trojan horse?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue mar20.

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