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

  • Robert E. Lipsey

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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File URL: http://www.nber.org/papers/w3623.pdf
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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: Feb 1991
Date of revision:
Publication status: published as The Annals of the American Academy of Political and Social Science, No. 516 , pp. 76-90, (July 1991).
Handle: RePEc:nbr:nberwo:3623
Note: ITI IFM
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Web page: http://www.nber.org
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  1. 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.
  2. 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.
  3. 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.
  4. Robert E. Lipsey, 1989. "The Internationalization of Production," NBER Working Papers 2923, National Bureau of Economic Research, Inc.
  5. 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.
  6. Robert E. Lipsey & Irving B. Kravis, 1986. "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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