SSE/EFI Working Paper Series in Economics and Finance
No 369:
Outward FDI and Home Country Exports: Japan, the United States, and Sweden
Robert E. Lipsey, Eric Ramstetter and Magnus Blomström ()
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.
Keywords: Multinational firms; trade; (follow links to similar papers)
JEL-Codes: F14; F23; (follow links to similar papers)
21 pages, March 22, 2000
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