Abstract/Details

The internationalization of production and its effects on the domestic behavior of United States manufacturing multinational firms


1998 1998

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Abstract (summary)

While there is a general impression expressed by many in the media and among policy makers that the economy is becoming more globalized and internationally competitive, these claims are not agreed upon among economists. This dissertation attempts to clarify the validity of these crucial claims through empirical research.

This dissertation focusses on one aspect of economic internationalization and integration--the behavior of U.S. multinational manufacturing corporations and their foreign direct investment activities. The research presented here attempts to test two main hypotheses; first, that the extent of internationalization within U.S. manufacturing firms has grown in the recent past and, second, that production abroad by U.S. manufacturers substitutes for production in the domestic U.S. economy by these firms.

Using industry data from the Department of Commerce Surveys of U.S. Direct Investment Abroad, this dissertation supports the view of growing globalization by U.S. manufacturing multinational firms in the period from the late 1970s through the 1980s as measured by a range of measures. In particular, the data show that slow or non-existent domestic production growth combined with steady growth in foreign production to result in increased internationalization for these firms. The Department of Commerce data is also consistent with the claim that U.S. multinational manufacturing firms are increasingly substituting away from their domestic production base towards production in foreign countries in response to lower factor costs abroad.

Next, merging the Compustat Industrial File and the Compustat Geographic Segment File allowed the construction of a unique cross-section, time-series data set of 123 U.S. manufacturing multinational firms. Employing this firm level data, regression analysis is used to test if foreign production growth by U.S. manufacturing firms represents a substitution away from domestic production. Results of the analysis suggest that whether increased internationalization will displace domestic growth for a U.S. manufacturing firm is dependent on the degree of indebtedness of the firm and the concentration of its foreign operations in low wage areas of the world. For the high debt firms in the sample, the substitution effect of foreign growth on domestic growth outweighs the stimulating effect, while the opposite is true for less indebted firms. Regression analysis also shows a tendency for foreign affiliate growth to substitute for domestic growth when the firm's foreign operations are concentrated in developing countries, a result consistent with the analysis of the Department of Commerce data described above.

Indexing (details)


Subject
Economics;
Business costs
Classification
0501: Economics
0505: Business costs
Identifier / keyword
Social sciences; Domestic behavior; Foreign direct investment; Internationalization; Manufacturing; Multinational firms
Title
The internationalization of production and its effects on the domestic behavior of United States manufacturing multinational firms
Author
Burke, James Michael
Number of pages
129
Publication year
1998
Degree date
1998
School code
0118
Source
DAI-A 59/07, Dissertation Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
ISBN
9780591960426, 0591960427
Advisor
Epstein, Gerald
University/institution
University of Massachusetts Amherst
University location
United States -- Massachusetts
Degree
Ph.D.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
9841845
ProQuest document ID
304439326
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/304439326
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