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

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Lipsey, Robert E. & Ramstetter, Eric & Blomström, Magnus, 2000. "Outward FDI and Home Country Exports: Japan, the United States, and Sweden," SSE/EFI Working Paper Series in Economics and Finance 369, Stockholm School of Economics.
  • Handle: RePEc:hhs:hastef:0369
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    References listed on IDEAS

    as
    1. Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-1797, November.
    2. Fors, Gunnar & Svensson, Roger, 1994. "R&D in Swedish Multinational Corporations," Working Paper Series 406, Research Institute of Industrial Economics.
    3. 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.
    4. Robert E. Lipsey, 1999. "Foreign Production by U.S. Firms and Parent Firm Employment," NBER Working Papers 7357, National Bureau of Economic Research, Inc.
    5. 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.
    6. repec:hhs:iuiwop:490 is not listed on IDEAS
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    Cited by:

    1. Antalóczy, Katalin & Éltető, Andrea, 2002. "Magyar vállalatok nemzetköziesedése - indítékok, hatások és problémák
      [The internationalization of Hungarian companies - motives, effects and problems]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 158-172.
    2. John Devereux & Zadia M. Feliciano, 2013. "Robert E. Lipsey," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(2), pages 375-380, June.
    3. Pradhan, Jaya Prakash, 2007. "How Do Indian Multinationals Affect Exports from Home Country?," MPRA Paper 19022, University Library of Munich, Germany.

    More about this item

    Keywords

    Multinational firms; trade;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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