International direct investment : studies by the Bureau of Economic Analysis

296 Pages·1999·19.6 MB·English

by  United States. Bureau of Economic Analysis

C 59.2: IN 8/6
INTERNATIONAL
INVESTMENT
DIRECT
Studies by the Bureau of Economic Analysis
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DEPARTMENT OF COMMERCE
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Economics and Statistics Administration / Bureau of Economic Analysis

INTERNATIONAL
INVESTMENT
DIRECT
Studies by the Bureau of Economic Analysis
APR
1 9 ^399
MARCH 1999
DEPARTMENT OF COMMERCE
U.S.
WilliaMm MM. Daley, Secretary
J£Jjk ECONOMICS AND STATISTICS ADMINISTRATION
^^5^5
Robert J. Shapiro, Under Secretary for Economic Affairs
ANDSTATISTICS
ADMP
ii BUREAU OF ECONOMIC ANALYSIS
J. Steven Landefeld, Director
Rosemary D. Marcuss, DeputyDirector
Citation
U.S. Department ofCommerce. Bureau ofEconomic Analysis. International
DirectInvestment: Studies by theBureau ofEconomicAnalysis. Washington, DC:
U.S. Government Printing Office, March 1999.
—
j
Ill
TABLE CONTENTS
OF
vii Preface
Direct Investment and Its Relation to the U.S. International
Investment Position and to the Balance ofPayments Accounts
The four articles in this section address the valuation of direct inves—tment and how
the standard current-account presentation in the balance of payment—s which records
intrafirm trade indistinguishably from trade with unrelated parties can be supple-
mented with frameworks that take greateraccount ofthe ownership relationships among
transactors.
3 Valuation ofthe U.S. Net International Investment Position
Reviews and evaluates issues surrounding the valuation of the U.S. international
investment position and presents estimates of direct investment that have been
revalued using two alternatives to the standard historical-cost-based estimates
one with direct investment positions at market value and one with direct
investment positions valued at current cost (replacement cost).
17 Rates ofReturn on Direct Investment
Compares rates of return computed from current-cost measures of the direct in-
vestment position and income with those computed from historical-cost measures
and discusses possible explanations for the relatively low rates ofreturn on foreign
direct investment in the United States.
26 Alternative Frameworksfor U.S. International Transactions
Describes and evaluates three frameworks that use information on ownership to
supplement the residency-based information shown in the standard balance of
payments accounts. Two of the frameworks, suggested by outside researchers,
draw the distinction between what is domestic and what is foreign on the basis of
ownership. The third framework, proposed by the Bureau of Economic Anal
(bea), also provides more information on ownership but retains the residency
basis of the standard accounts.
38 An Ownership-Based Disaggregation of the U.S. Current Account,
1982-93
Extends and refines the BEA-proposed framework that was introduced in the
article "Alternative Frameworks" by integrating it into the overall U.S. current
account and by developing a time series for the account that is disaggregated on
an ownership basis.
IV BEA STUDIES OF DIRECT INVESTMENT
49 Multinational Companies: Production, Sourcing, Distribution,
and Trading Patterns
The six articles in this section examine the production patterns of U.S. affiliates of
foreign multinational companies (mnc's) and ofU.S. mnc's (U.S. parent companies and
their foreign affiliates), the sources of inputs to production, and the trade in goods of
U.S. affiliates and U.S. mnc's.
51 Gross Product of U.S. Affiliates ofForeign Companies, 1977-87
Examines the growth and distribution ofU.S.-affiliate production by industry of
affiliate and by country ofowner, compares U.S.-affiliate production with that of
all U.S. businesses, and analyzes the U.S. and foreign content ofaffiliates' output.
64 Gross Product of U.S. Multinational Companies, 1977-91
Examines trends in U.S.- mnc production, including changes in the distribution
ofproduction between U.S. and foreign locations and the extent to which foreign
affiliates' output results from their own production, from purchases from U.S.
parent companies, or from purchases from other sources.
86 Real Gross Product of U.S. Companies' Majority-Owned Foreign
Affiliates in Manufacturing
Introduces estimates ofthe real gross product ofU.S. companies' majority-owned
foreign affiliates that were created using purchasing-power-parity exchange rates
and host-country inflation rates to remove the effects of changes in prices and
exchange rates on affiliate gross product, examines trends in the production of
manufacturing affiliates, and compares the trends based on the real gross product
measures with those based on current-dollar measures.
97 The Domestic Orientation of Production and Sales by U.S.
Manufacturing Affiliates ofForeign Companies
Compares the domestic content ofoutput ofU.S. manufacturing affiliates offor-
eign mnc's with that of other U.S. manufacturing companies and examines the
extent to which U.S. manufacturing affiliates rely on foreign sources for their
inputs and the extent to which they produce for foreign markets.
120 Merchandise Trade of U.S. Affiliates ofForeign Companies
Examines in detail the patterns oftrade in goods by U.S. affiliates, including how
these patterns vary by country ofowner in 1977-91.
135 U.S. Intrafirm Trade in Goods
Analyzes trade in goods between U.S. parent companies and their foreign affiliates
and between U.S. affiliates and their foreign parents and examines the share of
total U.S. trade that such trade accounts for in 1977-94.
TABLE OF CONTENTS
151 Establishment-Level Data
The two articles in this section use highly detailed establishment-, or plant-, level data
to examine the characteristics of foreign-owned U.S. establishments. (These data were
obtained by linking bea company data on U.S. affiliates of foreign companies and
Census Bureau establishment data on all U.S. businesses.)
152 Characteristics ofForeign-Owned U.S. Manufacturing
Establishments
Compares the operations of foreign-owned manufacturing establishments with
those of U.S.-owned establishments by examining such characteristics as wage
rates, plant size, capital intensity, and productivity.
179 Differences in Foreign-Owned U.S. Manufacturing Establishments
by Country ofOwner
Examines differences by country ofowner in foreign-owned establishments' oper-
ating characteristics, such as wage rates and productivity, and how the differences
appear to be influenced by variations in industry distribution, plant size, capital
intensity, and other factors.
197 Guides to the Statistics
The two articles in this section provide an introduction to the direct investment data
series produced by the Bureau of Economic Analysis (bea).
198 A Guide to bea Statistics on U.S. Multinational Companies
Describes each bea data series on U.S. direct investment abroad and discusses the
uses of each series.
217 A Guide to bea Statistics on Foreign Direct Investment in the United
States
Describes each bea data series on foreign direct investment in the United States
and discusses differences among the series.
229 Methodologies
This section contains reprints ofbeas detailed methodologies ofU.S. direct investment
abroad and foreign direct investment in the United States. These methodo—logies are
from bea's most recent benchmark survey publications on direct investment covering
1994 f°r U.S.—direct investment abroad and 1992 for foreign direct investment in the
United States and they explain, amongother things, the basic concepts and definitions,
the industry and country classification procedures, and the coverage and scope of the
bea direct investment data series.
231 For U.S. Direct Investment Abroad
259 For Foreign Direct Investment in the United States

PREFACE
17/
Preface
this publication brings together a number of nies are needed in analyzing the performance and
key studies by the Bureau of Economic Analy- operating characteristics of multinational com-
sis (bea) on U.S. direct investment abroad and panies, bea updates these data regularly and
foreign direct investment in the United States. publishes them in the Survey, usually as part of
Publishing this information in one volume pro- articles discussing current developments in direct
vides a basic resource that can be used by investment. In addition to these regular articles,
Government officials and by researchers in assess- from time to time bea publishes articles, such as
ing trends in direct investment and in analyzing those reprinted here, that focus on specific issues
the impact of direct investment on the U.S. and pertaining to direct investment.
world economies. The studies cover such topics In addition to the data presented in the stud-
as the characteristics of multinational compa- ies in this volume, additional data collected in
nies, including their profitability, productivity, bea's surveys of direct investment are available
and sourcing patterns; measures of direct invest- in the Survey, in separate publications, on bea's
ment that are valued in current-period prices; Web site, and on diskettes. For a comprehensive,
and supplemental balance of payments frame- up-to-date listing of bea information on direct
works that incorporate information on owner- investment, see the Product Guide of the Inter-
ship from bea's direct investment surveys. These national Investment Division, which is available
studies were originally published in the Survey on bea's Web site at <www.bea.doc.gov> or by
of Current Business, bea's monthly journal. writingto International Investment Division, be-
This publication also includes users' guides to 50, Bureau of Economic Analysis, Washington,
bea's statistics on direct investment and detailed dc 20230.
methodologies from bea's benchmark survey
publications on foreign direct investment in the
United States and U.S. direct investment abroad.
Acknowledgments
bea's official statistics on direct investment
are essential to the compilation of U.S. eco-
Gerald A. Pollack, Associate Director for Interna-
nomic accounts statistics and for the analysis tional Economics, provided general guidance for the
of multinational companies. For example, data preparation of this volume. R. David Belli, Chief of
on positions and transactions between affiliates the International Investment Division (nn), provided
and their parents are needed for compiling the overall supervision. Ned G. Howenstine, Chiefof the
Research Branch of iid, wrote the introductory text.
U.S. international transactions accounts, the in-
M. Gretchen Gibson of Publications Services in the
ternational investment position of the United Current Business Analysis Division coordinated the
States, and the U.S. national income and product preparation of the publication for printing. Eric B.
accounts. Data on the overall financing and op- Manning edited the introductory text and typeset the
erations of U.S. parent companies, their foreign text. Laura A. Oppel typeset the tables, and \V. Ronnie
affiliates, and U.S. affiliates of foreign compa- Foster designed the cover and prepared the charts.