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TRANSCRIPT
Multinational Enterprises (MNEs) and Globalization
Ray Mataloni
Presentation to Goldschmidt Fellows 01/11/2017
Outline
• How MNEs affect the U.S. economy– U.S. MNEs operating here and abroad– Foreign MNEs operating here
• Where to find the data on BEA’s website• Q&A
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Two senior reporters on globalization
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Louis Uchitelle
http://www.nytimes.com/by/louis-uchitelle http://topics.wsj.com/person/W/david-wessel/1566
David Wessel
A favorite question of Louis and David
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Where are U.S. MNEs hiring workers?
Worldwide employment of U.S. MNEs
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0
5,000
10,000
15,000
20,000
25,000
30,000
1999 2004 2009 2014
Thou
sand
s of e
mpl
oyee
s
USA Abroad
0.7% annual growth rate
3.8% annual growth rate
Source: BEA, December 2016 Survey of Current Business
A follow up question
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Do U.S. MNE workers abroad represent lost U.S. jobs?
BEA statistics alone can’t answer the question
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Source: BEA, March 2004 Survey of Current Business
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2
3
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5
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What the academic studies say
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Excerpt from a David Wessel article
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“At some companies, hiring to sell or make products abroad means more research or design jobs in the U.S.”
Source: David Wessel, “Big U.S. Firms Shift Hiring Abroad, The Wall Street Journal, April 19, 2011.
Excerpt from a recent BEA research paper
• Production sharing between U.S. parent companies and their foreign subsidiaries increases demand for headquarter services (HQ) in the United States.
• Specifically, a 1-percentage point increase in production sharing tends to be associated with a– 0.17-percentage point increase in subsidiaries’ demand for HQ
services• This effect is stronger (0.33) in high-tech manufacturing than in low-tech
manufacturing (0.06).
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Source: Marilyn Ibarra-Caton and Raymond Mataloni, “Headquarter Services in the Global Integration of Production” (under review at the Journal of International Management)
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Where are U.S. MNEs hiring workers abroad?
Foreign employment of U.S. MNEs
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0
1,000
2,000
3,000
4,000
5,000
6,000
1999 2004 2009 2014
Thou
sand
s of e
mpl
oyee
s
Asia Europe Latin America Other
7.4% annual growth rate
3.5% annual growth rate
Source: BEA
Destination of sales by foreign subsidiaries
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Asia
LocalTo USATo other
Latin America
LocalTo USATo other
Source: BEA
Excerpt from a David Wessel article
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“`As a greater percentage of our sales have been outside the U.S., we have seen our work force outside the U.S. grow,’ says Jim Dugan, spokesman for construction-equipment maker Caterpillar.”
Source: David Wessel, “Big U.S. Firms Shift Hiring Abroad, The Wall Street Journal, April 19, 2011.
Excerpt from a David Wessel article
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“`We’re globalized around markets, not cheap labor. The era of globalization around cheap labor is over…Today we go to Brazil, we go to China, we go to India, because that’s where the customers are.’”
Source: Jeffrey Immelt, CEO of GE, quoted in David Wessel, “Big U.S. Firms Shift Hiring Abroad, The Wall Street Journal, April 19, 2011.
Now let’s look at foreign MNEs in the USA
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Excerpt from a Louis Uchitelle article
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“Companies from abroad […] now have a large enough presence in the American corporate sector to strengthen or weaken the economy by their behavior.”
Source: Louis Uchitelle, “Foreign Investors Turning Cautious on Spending in U.S.,” The New York Times, August 4, 2002.
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How important are foreign-owned companies in the U.S. economy?
They accounted for 5.2% of U.S. private employment in 2014.
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Source: BEA, August 2016 Survey of Current Business
Role of foreign-owned companies in the U.S. economy
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0%
5%
10%
15%
20%
25%
30%
U.S. employment U.S. output U.S. capitalinvestment
U.S. export ofgoods
U.S. R&D
Source: BEA (data cover 2014)
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How do foreign-owned companies affect the U.S. economy?
Related research
• Here, too, published BEA data cannot fully answer this question but microdata from BEA surveys can be used by researchers to do so. Research has shown that foreign-owned firms advance U.S. economic growth because they:– Pay higher wages (Doms and Jensen 1998)– Are more productive (Doms and Jensen 1998)– Have a higher propensity to export (Bernard, Jensen, and Schott
2009)
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Summary
• Published data from BEA surveys can be used to show the activities of:– U.S. and foreign MNEs in the United States– U.S. MNEs abroad
• Microdata from the BEA surveys can be used by researchers to examine the impact of MNEs on the U.S. economy.
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