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Outward FDI and Home Country Exports: Japan, the United States, and Sweden

  • Lipsey, Robert E.

    (National Bureau of Economic Research)

  • Ramstetter, Eric

    (The International Centre for the Study of East Asian Development)

  • Blomström, Magnus

    ()

    (The European Institute of Japanese Studies)

Within Japanese multinational firms, parent exports from Japan to a foreign region are positively related to production in that region by affiliates of that parent. A firm that produces a million Yen more in a region also tends to export about a million yen more to that region, given the parent's home production in Japan and the region's size and income level. This relationship is similar to that found for Swedish and U.S. multinationals in parallel studies. A Japanese parent's worldwide exports tend to be larger, relative to its output, the larger the firm's overseas production. In this respect also, Japanese firms resembled U.S. multinationals. A Japanese parent's employment, given the level of its production, tends to be higher, the greater the production abroad by the firm's foreign affiliates. Japanese firms' behavior in this respect is similar to that of Swedish firms, but contrasts with that of U.S. firms. U.S. firms appear to be reducing employment at home, relative to production, by allocating labor-intensive parts of their production to affiliates in developing countries. Swedish firms seem to be allocating the more capital-intensive parts of their production to their foreign affiliates, most of which are in high-wage countries. We conclude that in Japanese firms, supervisory and ancillary employment at home to service foreign operations outweighs any allocation of labor-intensive production to developing countries.

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Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 369.

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Length: 21 pages
Date of creation: 22 Mar 2000
Date of revision:
Handle: RePEc:hhs:hastef:0369
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  1. Fors, Gunnar & Svensson, Roger, 1994. "R&D in Swedish Multinational Corporations," Working Paper Series 406, Research Institute of Industrial Economics.
  2. Robert E. Lipsey & Merle Yahr Weiss, 1975. "Exports and Foreign Investment in the Pharmaceutical Industry," NBER Working Papers 0087, National Bureau of Economic Research, Inc.
  3. Blomström, Magnus & Fors, Gunnar & Lipsey, Robert E., 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Working Paper Series 490, Research Institute of Industrial Economics.
  4. Magnus Blomstrom & Robert E. Lipsey & Ksenia Kulchycky, 1987. "U.S. and Swedish Direct Investment and Exports," NBER Working Papers 2390, National Bureau of Economic Research, Inc.
  5. Robert E. Lipsey, 1999. "Foreign Production by U.S. Firms and Parent Firm Employment," NBER Working Papers 7357, National Bureau of Economic Research, Inc.
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