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Conflict or Indifference: US Multinationals in a World of Regional Trading Blocs

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  • Louis T. Wells, Jr.

Abstract

Managers of US multinational corporations generally respond with a "big yawn" to warnings that the world trading system might evolve into a set of protectionist regional blocs. Their lack of fear is justified, since both their past strategies and their more recent, supposedly global strategies have resulted principally in regional systems of production facilities. The gains from manufacturing and trading among more widely dispersed facilities seem lower than the costs of managing such a complex system. As a result, US multinationals' trade in manufactures stays mostly within the region of production, and would be little affected by the emergence of powerful trading blocs. The strategies of most US multinationals would be threatened only if regional blocs restricted foreign investment. This seems unlikely, given the history of regional trade groups, and restrictions on new investment would probably harm Japanese competitors more than US multinationals, which have already established ... Les dirigeants des multinationales américaines manifestent une indifférence quasi générale face à la menace que représente pour le système mondial des échanges l'établissement de blocs protectionnistes régionaux. Cette absence de crainte de la part de ces responsables n'est pas surprenante car leurs stratégies passées et celles plus récentes, que l'on qualifie souvent de "globales", étaient et sont, en réalité, largement basées sur des systèmes de production régionaux. Il s'avère que les bénéfices industriels et commerciaux réalisés à partir d'unités de production plus dispersées sont moins importants que les coûts d'exploitations de tels sytèmes. C'est pourquoi la plupart des échanges industriels des multinationales américaines s'effectuent sur une base régionale et risquent d'être peu affectés par la création de blocs d'échanges régionaux. Les stratégies de l'ensemble des multinationales ne seront menacées que si les blocs régionaux limitent les investissements ...

Suggested Citation

  • Louis T. Wells, Jr., 1992. "Conflict or Indifference: US Multinationals in a World of Regional Trading Blocs," OECD Development Centre Working Papers 57, OECD Publishing.
  • Handle: RePEc:oec:devaaa:57-en
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    File URL: http://dx.doi.org/10.1787/258656276864
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    References listed on IDEAS

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    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. W. Max Corden, 1988. "Debt Relief and Adjustment Incentives," IMF Staff Papers, Palgrave Macmillan, vol. 35(4), pages 628-643, December.
    3. Jeffrey D. Sachs, 1989. "Developing Country Debt and Economic Performance. The International Financial System," NBER Chapters,in: Developing Country Debt and Economic Performance, Volume 1: The International Financial System, pages -12 National Bureau of Economic Research, Inc.
    4. Alain Ize & Guillermo Ortiz, 1987. "Fiscal Rigidities, Public Debt, and Capital Flight," IMF Staff Papers, Palgrave Macmillan, vol. 34(2), pages 311-332, June.
    5. Jeffrey D. Sachs, 1989. "Introduction to "Developing Country Debt and the World Economy"," NBER Chapters,in: Developing Country Debt and the World Economy, pages 1-34 National Bureau of Economic Research, Inc.
    6. Jeffrey D. Sachs, 1989. "Developing Country Debt and the World Economy," NBER Books, National Bureau of Economic Research, Inc, number sach89-3.
    7. Philippe Callier, 1989. "Debt Relief and Adjustment Incentives in a Financially Open Economy: Comment on Corden," IMF Staff Papers, Palgrave Macmillan, vol. 36(2), pages 514-522, June.
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    Cited by:

    1. Robert E. Baldwin, 1995. "The Effects of Trade and Foreign Direct Investment on Employment and Relative Wages," OECD Jobs Study Working Papers 4, OECD Publishing.
    2. Deborah L. Swenson, 1996. "Explaining Domestic Content: Evidence from Japanese and U.S. Auto Production in the U.S," NBER Working Papers 5495, National Bureau of Economic Research, Inc.

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