New Data on Multinationals

Posted by: Michael Mandel on April 19

The Bureau of Economic Analysis just published the latest figures on multinational employment at home and abroad, through 2005. It shows, as one might expect, that U.S.-based companies have been shifting both their employment and capital spending abroad.

change in capital expenditures, 2000-2005 change in employment, 2000-2005
billions millions
U.S. operations of U.S-based MNCs -55.6 -2.4
Majority-owned foreign affiliates of U.S.-based MNCs 26.7 0.9
percent percent
U.S. operations of U.S-based MNCs -14% -10%
Majority-owned foreign affiliates of U.S.-based MNCs 24% 11%
Data: Bureau of Economic Analysis. Nonbanks only


In some sense, the shift through 2005 has not been as big as one might expect. A 10% decline in workers in the U.S. seems fairly minimal, given the amount of restructuring. And only about one-third of that can be attributed to jobs shifted to majority-owned affiliates.

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Reader Comments

Ken

April 23, 2007 12:28 AM

The data seems to get cut off a bit on the right...is there a way to get it to fit in the layout? Yes, I really want to see it!

Mike Mandel

April 23, 2007 11:36 AM

will fix that right now

Forest

April 23, 2007 06:56 PM

Mike,

Your data covering the period from 2000 to 2005 are heavily influenced by our recession.

Calculations for the period from 2003-2005 show that domestic employment for US MNCs grew 1.8% with domestic capital expenditures growing 8.0%.

During that same period our employment overseas increased 9.9% and our capital expenditures overseas grew 25.3%

Of course, our largest companies are going to enhance productivity domestically by investing in capital goods instead of hiring more workers. Similarly, genuinely labor intense tasks must be offshored.

Due to the lower base headcount at our foreign affiliates the percentage difference is misleading. We actually hired 374,000 more workers here in America during that period and only 816,000 overseas.

Further, in spite of the dramatic percentage differences we actually spent nearly the same amount $25.3 billion domestically versus $27.7 billion offshore.

I don't want to say that we are not outsourcing our labor intense tasks and investing substantially in such operations. We are. But it is not helpful to overstate the case by manipulating the data.

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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