U.S.-Owned Affiliates and Host-Country Exports

U.S.-owned manufacturing affiliates in foreign countries tended to become more export-oriented between 1966 and 1977. The shift toward exporting characterized affiliates in most industries and most countries.The bulk of U.S.-owned production abroad continues to be for local sale in most industries and areas. Exporting to the U.S. remains a small part of affiliate activities in almost all cases. The most export-oriented were subsidiaries in machinery industries in Southeast Asia which were also the only ones outside Canada that sold a substantial part of their production in the U.S. In most industries and most countries U.S.-owned companies led the rise in exports and increased their shares in the exports of their host countries. This role of U.S. subsidiaries was particularly notable in Southeast Asia,and in those countries was concentrated in the machinery industry. The increasing share of U.S. affiliates in host-country exports was quite a general phenomenon, however, and high rates of affiliate export growth were associated with rapid growth of host country GDP and exports.

Prices and Terms of Trade for Developed-Country Exports of Manufactured Goods

The purpose of this paper is to contribute some new measurements to t112 discussion of trends in the terms of trade between manufactured goods exports of developed countries and primary product exports of developing countries. The new measures are manufactured goods price indexes that are derived from price data rather than from unit value data and include some corrections for quality change. Our calculations indicate that the prices of manufactured goods exported by developed countries to developing countries have risen over twenty years or so by 75 per cent, as compared to the 140 per cent shown by the generally used UN unit value indexes. The decline in terms of trade for these goods relative to primary products has been almost 50 per cent over this period. Over tile last hundred years, fluctuations in the terms of trade of manufactured goods relative to primary products !lave been very wide, as far as we can tell from the inadequate measures we have. Impressions about trends have been highly dependent on choices of beginning and end years. There is very little evidence for a long-run trend in either direction.

Export and Domestic Prices Under Inflation and Exchange Rate Movements

It is almost invariably taken for granted in theoretical descriptions of the international price mechanism and in the construction of trade models that a country's export price for a particular product is identical to its domestic price. Any impact of foreign or domestic events on prices is expected to fall identically on the export and the domestic price for a good. In contrast to these conventional assumptions, the few empirical studies of international prices have shown that there are fairly substantial and long-lasting divergences between export and domestic price changes for the same or closely related products. If there can be divergences between export and domestic prices, a type of relative price mechanism may be at work: the depreciating country should find export prices rising relative to domestic prices of the same goods. Since a producer can shift more easily from domestic to export sales of a product than from production of home goods to production of export goods we should expect the changes within commodities between domestic sales and exports to occur more rapidly. Since the evidence is strong that there are divergences between export and domestic prices, we wish to trace through the effects of foreign price changes and exchange rate changes on export and domestic prices and see whether a mechanism of the hypothesized type exists. In this paper we concentrate our attention on price movements, but offer some evidence that the response of exports to these price divergences is in the expected direction.

The Competitiveness and Comparative Advantage of U.S. Multinationals, 1957-1983

The share in world exports of manufactured goods of U.S. multinational firms, including their majority-owned overseas affiliates, has been nearly stable since 1966. This stability, over a period in which the export share of the U.S. as a geographical entity was declining for the most part, suggests that it was not declines in the competitiveness of American firms' management and technology that were responsible for the deterioration of the U.S. trade position. That view is reinforced by the fact that a good deal of the change in U.S. export shares can be explained by changes in U.S. prices relative to those of other countries. The comparative advantage of both the U.S. and U.S. multinational firms, especially the latter, has been in chemicals, machinery, and transport equipment, industries with relatively fast growth in worldwide exports. The growth of U.S. exports in 1966-77 fell far short of what it would have been if the U.S. had retained its share in each industry. The growth of U.S. multinationals' exports fell a little short of that implied by constant-shares but surpassed that of the U.S. as a country in almost every industry. After 1977, both the U.S. and its multinationals kept up with their constant share growth rates and the U.S. even ran a bit ahead. The multinationals' position as exporters, now supplying almost half their exports from their majority-owned overseas affiliates, seems to have been quite insulated from changes in U.S. policies and circumstances.

Is the U.S. a Spendthrift Nation?

The belief that the U.S. is a nation of spendthrifts, unwilling to pro- vide for the future, rests on observations of particular narrow definitions of capital formation, on the use of nominal values that ignore inter- national differences in the relative prices of capital goods, and on concentration on the ratio of capital formation to total output rather than on the amount of capita1 formation per capita. By a broad definition of capital formation, the U.S. has been investing a proportion of its gross output in the last decade and a half that is not far below that of other developed countries, even in nominal terms. In world prices, or real terms, U.S. capital formation was a higher proportion of output than in nominal terms. Real gross capital formation per capita in the U.S., even by a narrow definition of capital formation, was above the average for developed countries. By a broad measure of capital formation, few countries surpassed the U.S. in per capita real capital formation.