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U.S. Multinational Companies:
U.S. Merchandise Trade, Worldwide Sales,
and Technology-Related Activities in 1977
U.S. DEPARTMENT OF COMMERCE
Malcolm Baldrige, Secretary
Robert G. Dederick, Under Secretary
for Economic Affairs
BUREAU OF ECONOMIC ANALYSIS
George Jaszi, Director
Allan H. Young, Deputy Director
August 1983
Introduction
The three articles in this publication analyze U.S. merchandise
trade associated with, worldwide sales by, and technology-related
activities of, U.S. multinational companies (MNC's) in 1977. The
articles are based on data obtained in BEA's 1977 benchmark survey of
U.S. direct investment abroad.!/ They complete a series of articles,
published by BEA over the past 2 years, that present the major results
of the benchmark survey. Together, the articles in the series provide a
broad view of the operations, both domestic and foreign, of U.S. MNC's
in 1977. They should promote a better understanding among Government,
business, labor, academic researchers, and the general public of the
role MNC's play in U.S. and foreign economies.
U.S. direct investment abroad exists when one U.S. person (U.S.
parent) has a direct or indirect ownership interest of 10 percent or
more in a foreign business enterprise (foreign affiliate). A U.S. MNC
is a U.S. company that has direct investment abroad; each MNC consists
of a U.S. parent and all of its foreign affiliates combined.
The 1977 benchmark survey was a census, and, in terms of value, its
coverage of the direct investment universe was virtually complete.2/ It
was the first benchmark survey of U.S. direct investment abroad
conducted under authority of the International Investment Survey Act of
1976. The act requires that such surveys be conducted at least once
every 5 years.
Each article in this publication is limited in coverage to nonbank
MNC's, i.e., to nonbank U.S. parents of nonbank foreign affiliates, and
their nonbank foreign affiliates. In the benchmark survey, little
financial and operating data were collected for bank parents and
affiliates, because they already had to report most of the information
needed for policymaking purposes to other U.S. Government agencies.
r. Detailed data and the methodology of the benchmark survey were
published in U.S. Department of Commerce, Bureau of Economic Analysis,
U.S. Direct Investment Abroad, 1977 (Washington, D.C.: U.S. GPO, April
l9»i). A limited numoer or copies are available from the Office of the
Chief, International Investment Division (BE-50), Bureau of Economic
Analysis, U.S. Department of Commerce, Washington, D.C. 20230. The
postpaid price is $10.00 within the United States; postage extra outside
the United States.
2. To ease the reporting burden on companies, very small
affiliates—those whose total assets, sales, and net income were each
less than $500,000—were exempted from the survey. Reports covering
3,540 U.S. parents and their 24,666 foreign affiliates were received;
11,123 foreign affiliates were exempted. Although the exempt affiliates
accounted for 31 percent of the number of all affiliates, they accounted
for only 1 percent of the total assets, and less than 1 percent of the
sales and net income, of all affiliates.
ili
Nonbank parents of nonbank affiliates accounted for 97 percent of
both the number and employment, but for only 73 percent of the total
assets, of all U.S. parents. Their nonbank affiliates accounted for 96
percent of the number and 98 percent of the employment, but for only 59
percent of the total assets, of all foreign affiliates. The total
assets of nonbanks, on average, tend to be lower than those of banks,
because the assets of the latter usually reflect substantial financial
claims arising from the banks1 lending activities (their liabilities
also tend 1 to be high because of their sizable borrowing activities and
customers deposits).
For simplicity, in the articles and accompanying tables in this
publication, the term "U.S. MNC's" refers only to nonbank MNC's, "U.S.
parents" refers to nonbank parents of nonbank affiliates, and "foreign
affiliates" refers to nonbank affiliates of nonbank parents.
Portions of each article are further limited in coverage to the
larger majority-owned foreign affiliates (MOFA's) and their U.S.
parents. This limitation is necessary because, in the benchmark survey,
the most detailed financial and operating data were collected only for
the larger MOFA's, i.e., for affiliates that were owned more than 50
percent, directly or indirectly, by all U.S. parents combined and that
had assets, sales, or net income over $3 million in 1977. MOFA's, so
defined, accounted for 50 percent of the number, 72 percent of the total
assets, and 75 percent of the employment of all nonbank affiliates of
nonbank parents.
The other articles in the series on the 1977 benchmark survey data
have appeared in various issues of the Survey of Current Business, BEA's
monthly journal. The other articles are! International Investment
Division, "1977 Benchmark Survey of U.S. Direct Investment Abroad,"
Survey 61 (April 1981): 29-37, which gave a brief description of the
survey and highlights of the data; Betty L. Barker, "A Profile of U.S.
Multinational Companies in 1977," Survey 61 (October 1981): 38-57,
which discussed industry characteristics of MNC's, their size, the
location of their operations, the U.S. parent's percentage of ownership
in their foreign affiliates, and the form of organization of parents and
affiliates; Obie G. Whichard, "Employment and Employee Compensation of
U.S. Multinational Companies in 1977," Survey 62 (February 1982): 3749, 60; and Ned 6. Howenstine. "Growth of U.S. Multinational Companies,
1966-77," Survey 62 (April 19&2): 34-46, and "Gross Product of U.S.
Multinational Companies, 1977," Survey 63 (February 1983): 24-29.
The three articles in this publication examine several additional
aspects of U.S. MNC's. The first article analyzes U.S. merchandise
trade—exports and imports—associated with the MNC's. It covers trade
between U.S. parents and their foreign affiliates, between these
affiliates and other U.S. persons, and between U.S. parents and
unaffiliated foreigners. To the extent data are available, the article
disaggregates MNC trade by industry of U.S. parent or affiliate, by
product, by country of destination or origin, and by intended use. The
second article analyzes worldwide MNC sales—of both merchandise and
services—disaggregated by area of origin (the location of the MNC
seller), by area of destination (the location of the purchaser), by
industry of U.S. parent, and by affiliation between seller and customer.
iv
The third article discusses research and development (R&D) activities of
U.S. MNC's, as measured by their R&D expenditures and the number of R&D
scientists and engineers they employed. It also discusses royalty and
license fee transactions between U.S. parents and their foreign
affiliates and between these members of the MNC and other U.S. or
foreign persons.
By BETTY L. BARKER
U.S. Merchandise Trade Associated With U.S.
Multinational Companies
U.S. multinational companies (MNC's) accounted for very large shares of
total U.S. merchandise exports and imports—84 percent and 58 percent,
respectively—in 1977. These and other data from the 1977 benchmark survey
indicate the nature and magnitude of MNC-associated trade. They also should
shed light on the question of the impact of U.S. direct investment abroad on
U.S. trade.
As noted in the Introduction to this publication, the article covers
only nonbank MNC's. However, trade of bank MNC's was probably insignificant.
MNC-associated U.S. trade consists of (1) trade between U.S. parents and
their foreign affiliates, (2) trade between these same foreign affiliates and
other (unaffiliated) U.S. persons, and (3) trade between U.S. parents and
unaffiliated foreigners. Total U.S. trade of foreign affiliates is equal to
(1) plus (2); total U.S. trade of parents is equal to (1) plus (3). Note
that total U.S. trade of affiliates and total U.S. trade of parents are not
mutually exclusive, because both contain (1), trade between parents and their
affiliates.
Following an overview of MNC-associated U.S. trade, MNC-associated
exports and imports are analyzed in two separate sections. In each, the
amount of detail varies, depending upon the availability of data. In the
benchmark survey, significantly more detail was obtained for exports than for
imports. Also, more detail was obtained for U.S. trade with majority-owned
foreign affiliates (MOFA's) than for U.S. trade with other foreign affiliates
or for trade of U.S. parents with unaffiliated foreigners. 1/ Thus, the
section on exports discusses (1) total MNC-associated U.S. exports, by
country of destination and by industry of U.S. parent, (2) U.S. exports
associated with MOFA's and their U.S. parents, by product, (3) U.S. exports
to MOFA's only, by product and intended use crossclassified by country of
destination and by industry 9f affiliate, and (4) growth, from 1966 to 1977,
of U.S. exports associated with MOFA's and U.S. parents for which comparable
data were available from the 1966 and 1977 benchmark surveys. The section on
imports discusses (1) total MNC-associated U.S. imports, by industry of U.S.
parent, and (2) U.S. imports from MOFA's only, by product crossclassified by
country of origin and by industry of affiliate.
Where possible, the article compares MNC-associated U.S. trade with
total U.S. trade. The MNC trade data were defined in the benchmark survey to
be as comparable as possible with all-U.S. trade data compiled by the Census
Bureau. In practice, however, the two data sets are not strictly comparable.
The technical note discusses the differences between the MNC and
all-U.S. data.
1. MOFA's are defined as affiliates that were owned more than 50
percent by all U.S. parents combined and that had assets, sales, or net
income over $3 million.
NOTE.--Arnold Gilbert and Richard Mauery were responsible for computer
generation of tables for this article.
Overview
In 1977, MNC-associated U.S. exports were $101.8 billion, 84 percent of
total U.S. exports; MNC-associated U.S. imports were $86.8 billion, 58
percent of total U.S. imports (table 1). U.S. MNC's accounted for
significantly larger shares of U.S. trade than of domestic business activity.
For example, their share of all-U.S. business employment was only 35
percent. 2/ Their trade shares may have been larger because, compared with
other U.S. firms, MNC's were more heavily concentrated in goods-producing
industries. Thus, on average, they tended to have larger exports and imports
of goods than other U.S. firms. Even within given industries, however, MNC's
probably accounted for larger shares of trade than of domestic business
activity—one indication of their greater international orientation compared
with other firms.
The very large share of U.S. exports accounted for by the MNC's probably
reflected the fact that the MNC's were among the largest and most
technologically advanced U.S. firms. They may have had a competitive edge
over other U.S. firms in exporting because they could take greater advantage
of economies of scale, produce technically superior or more sophisticated
products, or more readily adapt their products to the needs and tastes of
foreign customers.
The extent to which the existence of their foreign affiliates
contributed to the export performance of U.S. MNC's is unclear. On the one
hand, the affiliates may have offered advantages, such as firsthand knowledge
of foreign markets, direct contacts with foreign customers, closer control
over worldwide distribution via their use as sales outlets for the MNC's, and
provision of local after-sales servicing for exported goods. Also,
affiliates' purchases of goods from U.S. parents for use or for further
manufacture abroad may have boosted the parents' exports relative to those of
other U.S. firms. On the other hand, affiliate production may have displaced
U.S. exports, particularly from U.S. parents, by supplying foreign markets
from abroad rather than from the United States. Such displacement would have
occurred only if affiliate production was at the expense of U.S. exports; it
would not have occurred if U.S. exports had been constrained instead by, for
example, foreign tariffs or quotas, erosion of U.S. firms' foreign market
shares because of the emergence of rival firms, or prohibitively high
transport costs.
The data in this article cannot by themselves provide estimates of the
net effect of direct inyestment on the export performance of U.S. MNC's; they
cannot answer the question of whether, in the absence of direct investment,
these companies' exports would have been larger or smaller than they actually
were. They indicate only the magnitude of MNC-associated exports, given
present levels of such investment. 3/
T. See Whichard, "Employment and Employee Compensation," p. 39.
3. For a review of the literature on, and further discussion of, the
impact of U.S. direct investment abroad on U.S. trade, see C. Fred.
Bergsten, Thomas Horst, and Theodore H. Moran, American Multinationals and
American Interests (Washington, D.C.: The Brookings Institution, 1978),
chapter 3.
Table 1.--Total U.S. Trade and U.S. Trade Associated With U.S. MNC's, 1977
__
__
exports
imports
Balance
Millions of dollars
Total U.S. trade 1/
U.S. trade associated with U.S. MNC's
U.S. trade not associated with U.S. MNCfs--
121,293
150,390
-29,097
101,846
86,759
15,087
19,447
65,631
-44,184
Percent of total U.S. trade
Total U.S. trade--
-
U.S. trade associated with U.S. MNC's
*
HXU)
lOO
TOO
-
84.0
57.7
n.m.
U.S. trade not associated with U.S. MNC's--
16.0
42.3
n.m.
MNC Multinational company,
n.m. Not meaningful.
1. Census basis, valued f.a.s. at the port of exportation, after adjustment to include shipments between the Virgin Islands and foreign countries. (In 1977, exports from the Virgin
Islands to foreign countries were $81 million; imports to the Virgin Islands from foreign
countries were $2,705 million.) Exports include reexports and military grant shipments.
Imports include goods for immediate consumption as well as goods entering into Customs
bonded warehouses.
NOTE.--In this table, data for U.S. MNC's are only for nonbank MNC's.
Although large, the MNC share of total U.S. imports was considerably
smaller than their share of total U.S. exports. Their import share would
have been even smaller were it not for the large share—probably over fourfifths--of total U.S. petroleum imports accounted for by the MNC's.
The smaller MNC import share may have partly reflected the significant
portion of total U.S. imports that normally is imported by independent
wholesalers and retailers rather than by U.S. MNC's. In fact, U.S. parents
that require imported goods in their production processes often purchase the
goods domestically from independent wholesalers instead of importing the
goods directly from foreigners.1 Such domestic purchases of imported goods
are excluded from U.S. parents imports, which, by definition, consist only
of goods imported directly by the parents. Thus, U.S. parents1 imports
probably understate their total purchases of imported goods. 4/
A sizable share of U.S. imports is also typically imported by the U.S.
affiliates of foreign MNC's. In 1977, these affiliates accounted for $41.4
billion (28 percent) of U.S. imports. In contrast, they accounted for only
$24.0 billion (20 percent) of U.S. exports. 5/ If trade of foreign MNC's
with unaffiliated U.S. persons (for which data are not available) could have
been included as well, the difference between the U.S. import and export
shares associated with foreign MNC's might have been even larger. Many
foreign MNC's, particularly those in wholesale trade, have actively and
aggressively sought unaffiliated U.S. customers for their countries' goods.
4. Similarly, U.S. parents' exports tend to understate the total value
of the parents' goods that are sold abroad, because goods produced by the
parents may be purchased and exported by other U.S. firms; however, because
U.S. parents usually sell their goods directly to foreign customers, the
understatement for exports was probably much less than that for imports.
5. These data are from BEA's annual sample survey of foreign direct
investment in the United States, and were published in Ned G. Howenstine,
"Selected Data on the Operations of U.S. Affiliates of Foreign Companies,
1978 and 1979," Survey 61 (May 1981): 35-52.
It should be noted that, if U.S. exports and imports of the U.S.
affiliates of foreign MNC's, as reported in the 1977 annual survey, are
added, respectively, to U.S. exports and imports associated with U.S. MNC's,
as reported in the 1977 benchmark survey, the resulting total for exports
would exceed 100 percent of all U.S. exports and that for imports would be 85
percent of all U.S. imports. Both shares are overstated because of
duplication in the data reported in the two surveys. To the extent U.S.
affiliates of foreign MNC's, in turn, had affiliates abroad, they would have
been considered U.S. parents of those foreign affiliates in the 1977
benchmark survey, and their U.S. exports and imports would have been reported
in that survey as well as in the 1977 annual survey. A match between
companies reported in both surveys indicated that the overlap for exports and
imports was roughly $10 billion each. In addition, trade between unrelated
U.S. affiliates of foreign MNC's and foreign affiliates of U.S. MNC's would
have been counted in both surveys; the amount of this type of duplication is
unknown.
MNC-associated U.S. exports exceeded imports by $15.1 billion. This
large MNC trade surplus is in sharp contrast to the $29.1 billion deficit for
all-U.S. trade in 1977. As noted earlier, the question of whether the
better-than-average
trade performance of the MNC's was the result of these
companies1 direct investments abroad or of other factors is beyond the scope
of this article.
MNC-Associated U.S. Exports
Of total MNC-associated U.S. exports of $101.8 billion, $32.4 billion
(32 percent) were shipped to foreign affiliates by U.S. parents, $8.4 billion
(8 percent) were shipped to foreign affiliates by unaffiliated U.S. persons,
and $61.1 billion (60 percent) were shipped to unaffiliated foreigners by
U.S. parents (table 2). Total exports to affiliates, the sum of the first
two components, were $40.8 billion, of which about four-fifths were by U.S.
parents and one-fifth by unaffiliated U.S. persons. Total exports by U.S.
parents, the sum of the first and third components, were $93.5 billion, of
which about two-thirds were to unaffiliated foreigners and one-third to
foreign affiliates.
By country of destination
Of total MNC-associated U.S. exports, at least 65 percent were to
developed countries and at least 31 percent to developing countries. 6/ Most
of the remainder consisted of low-value shipments that did not have to be
allocated by area in the benchmark survey. 7/ Exports to "international11-i.e., to affiliates that had operations spanning more than one country and
that were engaged in petroleum shipping, other water transportation,
petroleum trading, or the operation of oil and gas drilling equipment that
was moved from country to country during the year—were negligible.
6. The country of destination of U.S. exports to an affiliate is
defined to be the same as the affiliate's country of location. Although
some of the goods shipped to an affiliate eventually may be resold and
shipped to other countries, the amount is believed to be small.
For U.S. parents, the country of destination of exports to unaffiliated
foreigners is defined as the country where the parent knew, at the time of
exportation, the goods were to be consumed, further processed, or
manufactured. If the parent did not know the ultimate destination, the
shipment was credited to the last country to which the parent knew the
merchandise would be shipped in the same form as when exported.
7. In disaggregating exports to unaffiliated foreigners, a U.S. parent
was permitted to sum all exports to countries to which its exports were less
than $100,000 and report the sum as a single item; thus, in countries or
areas shown separately in table 2, exports by U.S. parents to unaffiliated
foreigners are understated by the amount of these unallocated exports.
Table
2. — U.S. Trade Associated
*l i1 h U . S . M N C ' s /
1 9 7 7 / by Country
of D e s t i n a t i o n or O r i g i n
[ M i l l i o n s of d o l l a r s ^
MNC-assoclated
Shipped
Shipped t o a f f i l i a t e s
J.S.
rents
By unaffiliated
U.S.
imports
by afi 1 liates
To U . S .
parents
ii a ted
foreigners
by U . S .
nt s
To u n a f filsated
U.S.
S h i p p e d by
Total
Total
unaffiexports
imports
liated
s h i p p e d by s h i p p e d to
foreigners
U.S.
U.S.
to U . S .
parents
parents
+ col. 5)
(1)
(2)
(3)
(4)
(5)
(6)
All
c ount r l e s
101/846
iiO,7&7
32/397
8/390
61,059
Developed
countries
66/392
32/522
26,350
6,472
Candda
23/138
17/303
12/887
Europe
31/145
12/335
10/547
22/590
2/481
431
3/U72
4/685
239
2/269
71
4/434
4/939
10/313
1 /595
89
1/5 56
1 / 9 32
172
789
68
1 /426
2/686
d/556
196
404
432
...........
Belyium
Denmark
France .
6e rma ny
Ireland
Italy ..
Luxembou
N e t h e r la
O t h e r E ur
Austr l a
Greece
Nor
P o r t u g a l ...
Spain
Sweden
Switzerland
Ot her
Japan
86,759
<8>
(9)
(10)
45,234
93/456
41/525
32/639
8/887
33,871
22/089
15/912
6/176
4,415
5/835
15/641
11/212
4/429
18/723
1,788
18,811
5/097
3/649
1/448
29/358
8/974
1/494
87
1/407
1/762
1 55
533
66
1,362
2,358
1,338
100
2
149
170
17
207
2
364
328
12/277
886
342
1/516
2/753
68
4/328
(D)
32
3/294
(D)
33
(D)
831
(D)
130
68
161
1 /441
1/034
(D)
2
39
68
(0)
19
1
34
826
21/252
2/380
428
2/923
4/515
223
2/062
69
4/039
4,611
1/836
774
1/267
402
2/838
2/022
85
57
1 23
(D)
601
238
7 90
( D)
54
1,573
64
56
(D)
(D)
336
(D)
719
(D)
45
449
1
1
(D)
(D)
265
(D)
71
6/533
111
347
309
(0)
1/235
536
477
(D)
2/754
32
308
3
(D)
355
13
1
(D)
(D)
93
(D)
86
3
(D)
414
5
(D)
(D)
(D)
(D)
(D)
222
0
(D)
8/106
194
402
(D)
413
1/571
(D)
1/196
398
2/799
8/647
1/215
1,1 56
7/432
1/162
897
265
8/58S
155
(D)
(D)
(D)
34
(D)
(D)
(D)
3 /252
2 ,019
262
971
(D)
(D)
30 /079
1/479
3
2/978
2/253
(D)
899
125
1 49
68
195
2/267
769
18
(D)
(D)
11
(D)
59,920
1/669
1 /2 04
94
371
1/459
1/040
37
332
210
163
7
39
1/793
979
175
639
189
(D)
2
(D)
31/964
8/142
6/257
1/685
23/822
19/400
13/005
4/730
3/578
1/151
8/276
5/834
4/928
906
7/858
662
2/233
361
671
358
350
2/B91
312
2/732
2 00
797
58
204
58
93
1 /240
82
2/084
176
671
37
162
47
44
9J6
41
648
24
126
21
42
11
48
335
41
5/125
483
1/436
303
467
299
257
1/651
230
1 /011
13
415
1
(D)
(D)
(D)
(D)
(D)
831
10
315
1
(D)
(D)
(D)
(0)
(D)
180
3
101
0
(D)
(*)
(D)
(D)
(D)
7/209
658
2/106
340
629
346
301
2,557
271
Panam
Other
3/345
291
7S0
1 /309
132
188
1/398
88
1 24
211
44
64
1/736
159
593
1/211
807
(D)
(D)
939
612
(D)
(D)
272
194
(D)
(D)
3/798
2/834
247
717
369
82
19
39
53
177
1 84
40
17
25
30
73
185
42
1
15
23
104
662
29
32
80
204
318
3/612
1/191
22
(D)
(D)
514
3/158
Netherlands Antille
T r i n i d a d and Tooajo
Ot her
1/332
1 1 1
50
1 19
257
494
454
(D)
5
82
(D)
(D)
847
69
49
105
234
391
A u s t r a l i a / New Z e a l a n d /
Austrjlia
\ew Z e a l a n d
South Africa
Developing
countri
Lat l n A.ne n ca ..
South America
Aryen 11na ..
3razi I
Chi le
C o l o m b i a ...
Ecuador
P e r u .......
V e n e z u e l a ..
Other
aid Soutn
3/462
2/183
269
1/010
(D)
17
(D)
(D)
(D)
<D)
(D)
(*)
(D)
2/851
1/620
629
(D)
(D)
1/231
(D)
554
(D)
Other Afri
S a h a ran
fcaypt
L i Dya
Ot her
Suo-Saha
Liberl
INIi yer l
Other
3/U28
1/676
649
228
798
1/353
80
606
668
418
124
32
47
45
2 94
(D)
89
(D)
240
68
11
(D)
(D)
173
13
37
123
178
56
20
(D)
(D)
122
(D)
52
(D)
2/610
1/552
617
182
753
1/058
(D)
516
(D)
4/723
1/862
(D)
1/749
(D)
2/861
(D)
2/336
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(0)
(D)
(0)
N i a d l e Ea
Israel
SPEC . .
8/398
1/146
6/775
2/659
4/116
473
1 /1 13
(D)
990
1 41
849
(D)
862
(D)
789
90
699
(D)
250
(D)
201
51
150
(D)
7/285
(D)
5/785
2/518
3/267
(D)
2/915
(D)
2/848
2/369
478
( D)
2,843
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
8/148
1/108
6/574
2/608
3/966
466
7/532
619
561
71 9
465
663
771
1/539
1/396
367
434
1/882
3 60
25
137
242
177
3 86
160
181
82
35
1/576
338
21
40
217
237
355
1 18
1 55
72
24
306
21
97
25
40
32
42
27
10
11
5/650
259
538
582
223
386
385
1/379
1/214
285
399
5/928
1/917
(D)
1/865
(D)
1 91
735
(D)
535
(D)
10
5/515
1/710
(D)
(D)
(D)
180
733
(D)
477
(D)
S
41 4
207
1
(D)
1
11
2
(D)
56
(D)
2
7,227
598
559
622
440
623
739
1,497
1/369
357
423
123
3/366
123
0
33
0
0
3/366
36
0
(D)
(D)
90
3/366
Other
Other .
Other
Asia
and P a c i f i c
India
I ndonesla
Ma lay si a ...
Ph i 11 pp l nes
Singapore
South K o r e a
Taiwan
Thailand . . .
Other
Internatlonal
Unallocated ..
90
0
2
9/221
4
0
0
7/978
1/244
MNC Multinational company.
D Suppressed to avoid disclosure of data of individual companies.
* Less than $500,000 ( + ).
1. U.S. imports shipped by unaffiliated foreiqners to U.S. parents were not disaaqreqated by country in the 1977 benchmark survey; thus, data in
column 10, and hence, in columns 6 and 12, are available only for all countries combined.
2. Consists of U.S. parents' exports to unaffiliated foreiqners in all countries to which the parents' exports were less than $100,000.
NOTE.--In this table, data for U.S. MNC's are only for nonbank fiNC's; data for U.S. parents are only for nonbank parents of nonbank affiliates; and
data for affiliates are only for nonbank affiliates of nonbank parents.
6
74
+ c o l , 10) U
ill)
(11)
77,672
MNC-associated U.S. exports to Canada accounted for 23 percent of the
MNC global total; at $23.1 billion, they were larger than those to any other
single country. Over two-fifths of these exports were shipped, largely by
U.S. parents, to affiliates in the transportation equipment industry.
Exports to these affiliates have been boosted since 1965 by the U.S.-Canadian
automotive agreement, which, by reducing tariffs, stimulated automotive trade
in both directions across the U.S.-Canadian border. Also boosting U.S.
exports to Canada were Canada's physical proximity, which resulted in
relatively low transportation costs, and similarity of consumer tastes, which
lessened the need for U.S. companies to produce special products for the
Canadian market.
Among the remaining developed countries, Europe accounted for 31
percent, Japan for 8 percent, and Australia, New Zealand, and South Africa
for 3 percent, of total MNC-associated U.S. exports. Within Europe, exports
to the United Kingdom, Germany, and the Netherlands were particularly large.
Among developing countries, Latin America accounted
for 13 percent, the
11
Middle East for 8 percent, "other Asia and Pacific for 7 percent, and "other
Africa" for 3 percent, of total MNC-associated U.S. exports. Within Latin
America, exports to Mexico, Venezuela, and Brazil were largest.
MNC's accounted for a large share of total U.S. exports to most
countries (table 3). Their share of U.S. exports to developed countries was
86 percent. Among developed countries, their share of exports to Canada was
90 percent; to Europe, 83 percent; to Japan, 82 percent; and to Australia,
New Zealand, and South Africa, 91 percent.
The MNC share of U.S. exports to developing countries--74 percent—was
somewhat smaller than that to developed countries. 8/ Among the developing
countries, the MNC share of exports to Latin America was 72 percent; to the
Middle East, 84 percent; and to "other Africa" and "other Asia and Pacific,"
69 percent each.
The shares of total MNC-associated exports that were shipped to foreign
affiliates and, thus, the shares that were shipped to unaffiliated foreigners
varied considerably among destinations. Nearly one-half of the MNCassociated exports destined for developed countries were to affiliates,
compared with only one-fourth of those destined for developing countries.
Among developed countries, the share of exports going to affiliates was
particularly large--75 percent--for Canada.
8. It probably would have been closer to the developed-country share if
the unallocated exports by U.S. parents to unaffiliated foreigners could have
been distributed by country. However, even under the unrealistic assumption
that all unallocated exports were to developing countries, the MNC share of
total U.S. exports to those countries would still have been below that for
exports to developed countries--81 percent compared with 86 percent.
Table 3.—Total U.S. Exports and U.S. Exports Associated With U.S. MNC's,
1977, by Country of Destination
T o t a l M N C U.S.
associated
exports 1/
exports
Millions of dollars
(2T
All
Developed
countries
countries
Canada
Europe
Net
Um
e r lands
. .
e d Kingdon
Other
Europ
Austria
.
Creec e
Norway
Portugal
Spain
Sweden
..
Swit
Turk
Othe
Australia,
New
Australia
i la
Ne
South
Africa
Developing
Latin
Zealand,
countries
A m e r i ca
South
America
and
South
Africa
101,846
84.0
77,562
66,392
85.6
25,773
23,138
90.0
37,437
31,145
22,590
3/ 2 552
534
431
3,502
5,984
3,072
4,685
378
239
2,801
3/
4,828
5,949
2,269
4,404
4,939
10,323
8,556
245
538
544
558
196
404
432
438
1,960
1,093
1,749
1,836
421
402
2,808
8,647
82.1
3,815
2,355
3,462
2,183
403
269
1,057
1,010
90.8
92.7
66.8
95.6
43,405
31,964
73.6
17,978
13,005
72.3
9,284
7,858
84.6
93.3
89.6
69.4
85.8
63.5
70.0
91.2
59.4
682
Brazil
Chi le
C o l o m b i a ...
E c u a d o r ....
Peru
Venez uela
Other
525
312
2 snt r al A-ne n c a
Mexico
Panama
Other
6,687
4,832
4,116
3,045
346
1,509
291
780
2,006
1,032
224
87
306
306
O t h e r A s i 3 and
Hong K o n j
India
Indonesia
Malaysia
PhlIippin»s
Singapore
Taiwan
Thai land
Other
. .
I n t e r n a t i o n a l 2/ .
Unallocated . . . . .
520
782
564
500
361
671
358
350
3,171
2,891
1,083
111
50
119
257
494
4,406
2,305
3,028
1,676
982
314
649
228
798
1,009
2,101
1,353
1,052
80
606
668
10,039
1,447
7,695
2,731
4,964
8,398
1,146
6,775
2,659
4,116
91
958
Kiddle
East
Israel
. . .
OPEC
Iran
. . .
Other
..
Dt h e r
Pacific
83.0
3 217
2,233
Other
. ..
Sub-Saharan
Liberia
.
Nigeria
.
Other
«3
10,538
774
1,267
731
Other Africa
S a h a r a n ...
E g y p t ...
L i bya
83.2
83.3
3/ 81.4
~ 80.7
87.7
78.3
63.2
81.0
82.9
80.0
75.1
79.4
78.5
93.7
70.8
72.4
95.5
87.3
2,491
Bahamas
Bermuda
N e t h e rlands Anti lies
T r i n i d a d and T o b a g o
Ot h e r
(3)
121,293
27,113
3,137
Belgium
Denmark
France
MN(>
associated
exports
as a
percentage
of total
U.S. exports
897
478
10,982
1,292
7,532
619
561
719
465
663
771
779
762
561
876
61.6
63.0
84.1
51.7
51.5
49.6
57.5
38.9
84.0
45.6
68.7
72.7
66.1
72.6
79.1
64.4
87.9
63.3
63 5
83.7
79.2
88.0
97.4
82.9
53.3
68.6
47.9
72.0
94.4
82.9
75.7
65.8
64.9
77.6
72.1
50.3
1,172
2,370
1,798
1,539
1,396
509
863
367
434
329
6/ 3,366
...
7/
14,020
12,018
85.7
123
MNC Multinational company.
1. See footnote 1, table 1.
2. Includes U.S. exports to a f f i l i a t e s that had operations spanning more than one country and
that were engaged in petroleum shipping, other water transportation, petroleum trading or o i l
and gas d r i l l i n g .
The precise destination of these exports was not obtained in the 1977
benchmark survey.
3. In the all-U.S. export data, Belgium and Luxembourg are shown together; thus, to be
comparable, exports to Luxembourg are included with those to Belgium in the MNC data in this
table as well.
4. Includes Lichtenstein, which is in "other" "other Europe" in the MNC data.
5. Includes exports of commodities to countries to which total shipments of the commodities
averaged less than $5,000 per month.
6. See footnote 2, table 2.
7. Not calculated because of differences in definition of "unallocated" between the MNC and
all-U.S. data.
NOTE.—In this table, data for U.S. MNC's are only for nonbank MNC's.
One reason for the larger affiliate share in developed countries was the
much greater use of affiliates in those countries as distribution channels
for finished products exported by U.S. parents. In particular, manufacturing
affiliates served to a greater extent in developed than in developing
countries as sales outlets for their U.S. parents1 exports, in addition to
engaging in their own manufacturing activities. Also, fewer affiliates in
developed than in developing countries were subject to performance
requirements, imposed by host1 governments, that limited imports as a
condition for the affiliates operating in those countries. 9/
Exports by U.S. parents were very large shares, and exports by
unaffiliated U.S. persons very small shares, of total MNC-associated
exports
to nearly every destination. For most countries, the parents1 1 share exceeded
90 percent. A major exception was Canada, where the parents share was 81
percent. A large portion of the exports to Canada by unaffiliated U.S.
persons was automotive parts and supplies for further processing and assembly
by Canadian affiliates in motor vehicle manufacturing.
By industry of U.S. parent
In this section, MNC-associated U.S. exports are disaggregated by
industry of U.S. parent. The parent's industry, rather than the industry of
the MNC as a whole, is used because an industry code based on the worldwide
consolidated activities of the MNC was not available from the 1977 benchmark
survey. In a majority of cases, however, the industries of the parent and
MNC were probably the same. 10/
A U.S. parent's industry is not always indicative of the type of
products being exported. Parents that are highly diversified may produce and
export products outside the single, major industry in which they are
classified. In addition, MNC-associated U.S. exports include goods produced
by others, but purchased and exported by U.S. parents, as well as goods
shipped by unaffiliated U.S. persons directly to affiliates. In either case,
the goods may not be products of the U.S. parent's industry of
classification. In examining the composition of the exports themselves, a
breakdown by product is preferable to one by industry of U.S. parent;
however, such a breakdown is not available for total MNC-associated U.S.
exports. That portion of the total for which a product breakdown is
available will be discussed in the next section.
By industry of U.S. parent, manufacturing accounted for a very large
share—72 percent—of total MNC-associated exports (table 4 ) . Most of the
remainder was accounted for by trade (19 percent)—mainly wholesale—and
petroleum (5 percent). Finance (except banking), insurance, and real estate
9.
In the 1977 benchmark survey, 582 a f f i l i a t e s indicated that they
were subject to such import limitations; of these, about two-thirds were in
developing countries.
10.
See Barker, "A P r o f i l e , " p. 4 1 .
Table
4 . — U.S.
Trade
Associated
With
U.S.
MNC's*
[Millions
1977*
of
by
Industry
of
U.S.
Parent
dollars]
Total
iaports
parents
filiated
U.S.
foreigners
by U . S .
col.
(2)
CD
All
industr
Minng . . .
MetaI m i n i n g
Iron
. .
(3)
101*346
40*787
784
55
32
3
CD)
Refining
Petroleum
Other
without
extraction
wholesale
trade
. . .
Chemicals
C5)
61*059
86*759
752
52
0
700
310
CD)
CD)
CO)
0
CD)
3*076
38*372
(0)
CD)
5*227
2*151
CD)
CD)
CO)
4*042
(0)
(0)
CD)
CO)
CD)
(D)
(0)
(0)
CO)
CD)
CD)
CD)
CD)
399
CD)
CD)
CD)
(0)
(0)
cleaners*
and t o i l e t
goods
32*639
0
0
0
0
0
0
0
0
CD)
CD)
CD)
CD)
col. 8
c o l . 10)
C11)
C10)
8*887
CO)
CD)
CD)
CD)
CD)
45*234
CD)
CD)
CO)
CO)
0
CD)
CD)
CO)
CO)
CO)
C*)
CD)
191
CO)
CD)
CO)
0
CD)
20*770
4*829
34*442
CD)
CD)
CD)
CO)
3
CO)
12*568
CD)
1
CD)
3
0
2*315
2*315
0
0
CD)
0
466
CO)
CD)
CO)
CO)
0
CO)
CO)
CO)
CO)
30*508
CO)
1
2*837
CO)
3*841
17*602
13*672
2
1
1
CD)
CD)
1
CD)
14*884
CO)
39*194
34*428
20*988
17*148
603
(0)
(D)
(D)
503
(0)
(D)
2*155
989
120
1*046
2*254
257
257
1*740
599
CD)
145
CD)
CD)
CO)
125
335
9*934
4*841
1*462
751
562
610
1*104
4 98
135
226
4*148
2*467
1*063
309
(D)
(0)
692
411
41
189
(D)
(C)
5*063
3*641
358
253
427
384
3*094
1*311
377
CD)
CD)
120
1*248
640
160
1*011
452
154
CD)
CO)
47
1*823
products
CD)
CD)
CD)
CD)
CD)
CD)
32*823
CD)
1
4*442
(0)
C9)
C8)
41*525
1*106
2 82
3*261
1*271
168
and a l l i e d
38
6
322
298
(D)
(D)
C7)
C6)
CD)
CO)
73*228
Srain
mill
Beverages .
Other
Soap/
29
40
Manufacturing
(0)
(D)
(*)
(4)
8*390
CD)
<*)
C*)
729
O i l and gas f i e l d
services
P e t r o l e u m and c o a l p r o d u c t s
.
32*397
5)
CO)
3*930
CO)
CO)
237
188
CO)
CO)
CO)
17*939
CD)
CO
CD)
CD)
CD)
CO)
30*587
1*656
CD)
112
CD)
2*758
CD)
CO)
CD)
CD)
237
CD)
1*846
671
217
CO)
CO)
73
9*212
6*108
1*421
562
CO)
CD)
2*857
1*123
370
CD)
CO)
119
48
rtonferrous
Fabricated
Office
Other
metal
products
and c o m p u t i n g
machines
E l s c t r i c and e l e c t r o n i c
Household appliances
4*634
3*056
1*313
1*743
1*577
1*433
913
226
686
520
1*014
569
116
451
445
418
344
109
235
75
3*201
2*144
1*087
1*057
1*058
3*744
2*688
1*321
1*368
1*056
12*809
919
5*631
(0)
5*226
(0)
405
7
7*178
CD)
3*315
628
CO)
2*428
592
557
772
507
1*769
1*137
406
731
631
1*509
CO)
297
CD)
365
Glass
products
Othe
Trade
Wholesale
trade
Holding
Individu
Other
Industrie
Agriculture*
Construct ion
1*975
1*551
914
4*215
2*712
1*205
637
424
1*508
1*503
3*213
2*425
1 *174
1*251
787
1*299
CD)
190
CD)
280
210
CD)
107
CD)
85
918
CD)
260
CD)
141
12*434
912
4*328
3*309
3*855
2*218
CO)
4 50
CD)
422
167
1*357
7*748
635
1*798
1*444
3*870
3*420
CO)
CD)
925
1*309
21*019
13*280
7*739
CO)
CD)
1*138
155
CD)
CD)
CD)
86
392
415
10*100
CO)
657
1*064
1*445
294
958
153
348
398
3*124
CO)
4*165
CD)
CD)
381
507
350
556
10*016
8*311
6*197
2*114
1*704
18*020
17*773
3*050
14*722
248
11*265
8*989
6*570
2*420
2*276
CO)
341
CO)
CO)
16
7
220
78
125
CO)
CO)
2
1 *414
56
676
499
CO)
CO)
184
1*167
CO)
143
688
441
246
CO)
3*518
3*959
2*891
CD)
2*681
(0)
8*159
675
3*084
2 39
787
940
1*117
2*672
199
738
921
814
412
40
49
19
303
5*076
436
1*060
523
3*056
3*587
111
1*130
950
1*396
2*229
CD)
CD)
892
CD)
2*062
CO)
569
867
CO)
CO)
13*091
10*544
9*967
577
2*547
2*306
241
10*474
3*313
7*161
13*436
11*959
1*477
10*161
9*423
738
CO)
CD)
399
CD)
CD)
339
3*275
2*536
4*054
(0)
198
85
575
136
339
6*046
888
459
979
870
158
569
97
250
296
2*041
1*084
397
3*473
53
180
430
CD)
337
CD)
CD)
CO)
266
333
143
2*412
294
415
236
2*111
211
5*885
347
595
666
1*318
492
733
49
52
352
725
558
1*721
CD)
3*195
607
794
(0)
140
27
265
18
81
11
21
65
70
1*752
463
4*348
260
338
112
839
154
4 70
67
119
168
18*932
18*535
3*166
15*370
397
2*534
2*221
275
1*9 46
313
1*622
1*458
160
1*298
164
912
762
115
647
153
16*398
16*315
2*891
13,424
84
11 *691
9*402
6*711
2*691
2*288
1*675
1*091
514
578
584
1*249
678
372
306
571
1*856
(0)
(0)
CD)
90
706
1*139
(0)
(D)
4
87
706
(0)
(0)
(0)
(*)
(D)
716
CO)
CD)
CO)
625
78
CD)
CD)
164
94
CO)
CD)
CO)
CO)
CO)
CO)
1*!J19
56
950
613
(0)
(0)
230
897
7
516
279
(D)
492
6
242
165
(D)
(0)
79
405
1
274
114
(D)
(0)
16
922
49
434
334
CD)
CO)
104
1*334
CD)
621
CD)
37
CD)
CD)
CD)
CD)
10*394
1*148
797
1*092
1*710
312
1*038
163
369
818
(0)
95
!><>
98
102
(D)
3
12
775
504
271
237
MNC Multinational company.
D Suppressed to avoid disclosure of data of individual companies.
* Less than $500,000 (+).
NOTE.--In this table, data for U.S. MNC's are only for nonbank MNC's; data for U.S. parents are only for nonbank parents of nonbank a f f i l i a t e s ; and
data for a f f i l i a t e s are only for nonbank a f f i l i a t e s of nonbank parents.
531
263
147
116
268
84
209
104
7*979
Other m a n u f a c t u r i n g
. . . . . . . . . . .
Tobacco m a n u f a c t u r e s
T e x t i l e p r o d u c t s and a p p a r e l
1*238
874
260
615
363
10
CD)
144
CD)
195
CD)
12
12
201
250
122
285
CO)
142
CD)
CO)
CO)
65
83
21
426
413
272
13
739
CD)
CO)
CO)
CO)
CO)
94
454
CD)
CD)
CD)
CD)
CO)
40
167
1
CO)
CO)
712
0
CO)
CD)
CD)
CO)
CD)
CO)
287
642
537
and "other industries11 each accounted for only 2 percent of the MNC total,
largely because MNC's in these industries were engaged primarily in
performing services, rather than in producing goods. The share in mining was
less than 1 percent. This small share mainly reflected the small size of
U.S. mineral exports generally. With the major exception of coal, minerals
in crude form are not usually exported because their high waste content makes
transport uneconomical. Y\J
Of total MNC-associated exports in manufacturing, nearly one-third were
in transportation equipment—21 percent in motor vehicles and equipment and
11 percent in "other11 transportation equipment; 17 percent were in
nonelectrical machinery, 14 percent in chemicals, and 11 percent in electric
and electronic equipment.
Among industries, as among areas, the shares of total MNC-associated
exports that were shipped to affiliates, rather than to unaffiliated
foreigners, varied considerably. In manufacturing and petroleum, exports to
affiliates were 46 and 41 percent, respectively, of total MNC-associated
exports. In trade, they were 13 percent; this relatively low share may have
reflected the practice by wholesale trade parents of distributing goods—
largely bulk shipments of agricultural products and raw materials—
directly to unaffiliated foreign customers rather than through their
foreign affiliates.
Within manufacturing, affiliates1 shares were particularly large—
roughly two-thirds or more—in drugs; soap, cleaners, and toilet goods;
office and computing machines; electronic components and accessories; motor
vehicles and equipment;1 and instruments and related products. In these
industries, affiliates operations may have been more highly integrated with
those of their U.S. parents, so that above-average shares of their parents1
exports were channeled to or through them, either for resale or for further
manufacture abroad. Also, in several industries—such as electronic
components and instruments—exports to affiliates may have been stimulated by
U.S. tariff provisions that permitted import duties on items sent abroad for
processing, and then returned to the United States, to be paid only on the
value added abroad rather than on the full value of the imported goods. As
noted earlier, exports to Canadian affiliates of MNC's manufacturing motor
vehicles and parts were stimulated by the U.S.-Canadian automotive agreement.
In most industries, as in most areas, exports by U.S. parents were very
large shares (and exports by unaffiliated U.S.
persons very small shares) of
total MNC-associated exports. The parents1 shares generally exceeded
90 percent.
I T . A l s o , in the 1977 benchmark survey, parents engaged in smelting or
refining, in addition to mineral exploration and extraction, were classified
in manufacturing, if—as was often the case—their sales of smelted or
refined 1 products exceeded their sales of crude minerals. In such cases, the
parents exports of crude, as well as smelted or refined, minerals would have
been shown in manufacturing instead of in mining.
11
By product
A product breakdown is available for $93.2 billion, or 92 percent, of
total MNC-associated exports (table 5), These data cover U.S. exports
associated with MOFA's and their parents only. \2J Such exports accounted
for very large shares of total MNC-associated exports to nearly all major
areas of destination and in most major industries of U.S. parent. By area,
the lowest share was in Japan (86 percent), where majority-ownership by
foreigners was often restricted. By industry of U.S. parent, the lowest
shares were in finance (except banking), insurance, and real estate (roughly
two-thirds) and in primary and fabricated metal manufacturing (over
four-fifths).
Based on the Standard International Trade Classification (SITC) system,
more than one-fourth of U.S. exports associated with MOFA's and their parents
consisted of machinery, both electrical and nonelectrical (table 6).13/ Road
motor vehicles and food,H beverages, and tobacco each accounted for 14 percent
and "other manufactures ~which includes leather, rubber, wood, and paper
products; textiles; nonmetallic mineral manufactures; and miscellaneous
manufactured articles—accounted for 12 percent. Chemicals and inedible
crude materials, except fuels, accounted for 9 percent each, "other
transportation equipment" for 7 percent, metal manufactures for 5 percent,
and mineral fuels for 3 percent.
Exports of road motor vehicles and other transportation equipment are
probably significantly overstated (and exports of other products,
particularly machinery, understated) because survey reporters had difficulty
classifying parts and accessories for such equipment. The SITC requires that
parts—such as tires and tubes, engines, and electrical parts for
engines—that are shipped separately, and certain accessories not attached to
the vehicle chassis, be excluded from road motor vehicles and parts and
"other transportation equipment," and included in other SITC categories
(e.g., tires and tubes in "other manufactures," engines and engine parts in
machinery, etc.). Reporters, however, often erroneously included all such
parts and accessories in road motor vehicles and parts or "other
transportation equipment."
In table 6, U.S. exports associated with MOFA's and their parents, by
product, are crossclassified by industry of U.S. parent. In most goodsproducing industries, the exports tended to be products either of the
industries in which the U.S. parents were classified or of closely related
12. Total U.S. exports associated with MOFA's and their parents, as
previously published in U.S. Direct Investment Abroad, 1977, were $96.9
billion. However, one part of the total—exports by the parents of MOFA's to
their minority-owned foreign affiliates—is not available by product. Such
exports were relatively small—$3.7 billion, or 4 percent of the total;
therefore, their omission here probably has little effect on the analysis.
13. See United Nations, Statistical Office, Standard International
Trade Classification, Revised (United Nations Statistical Papers, Series M,
NO. J 4 ) , lybl
12
Table 5.—U.S. Exports Associated With MOFA's and Their U.S. Parents for Which a Product Breakdown
Is Available Compared With Total MNC-Associated U.S. Exports, 1977, by Area of
Destination and Industry of U.S. Parent
(Millions of dollars or percent)
Total MNCassociated
exports
Exports associated
with MOFA's and
their U.S. parents
for which a
product breakdown
is available 1/
Column (2)
as a percentage
of column (1)
(1)
(2)
(3)
101,846
93,232
91.5
Developed countries
Canada
Europe
European Communities (9)
Other Europe
Japan
Australia, New Zealand, and
South Africa
66,392
23,138
31,145
22,590
8,556
8,647
61,035
21,709
28,719
20,860
7,858
7,441
91.9
93.8
92.2
92.3
91.8
86.1
3,462
3,166
91.4
Developing countries
Latin America
Other Afr ica
Middle East
Other Asia and Pacific
31,964
13,005
3,028
8,398
7,532
28,996
11,665
2,854
7,656
6,822
90.7
89.7
94.2
91.2
90.6
123
115
3,366
3,086
93.5
91.7
All areas, all industries
By area of destination:
International
Unallocated
By industry of U.S. parent;
Mining
Petroleum
Manufacturing
Food and kindred products
Chemicals and allied products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipmentTransportation equipment
Other manufactur ing
Trade
Finance (except banking), insurance,
and real estate
Other industries
784
(D)
5,227
73,228
3,261
9,904
4,634
12,809
8,159
23,566
10,894
18,932
4,802
67,807
2,908
9,237
3,889
11,866
7,458
22,593
9,856
17,083
1,856
1,819
1,619
(0)
(0)
91.9
92.6
89.2
93.3
83.9
92.6
91.4
95.9
90.5
90.2
(D)
89.0
MOFA Majority-owned foreign affiliate.
MNC Multinational company.
D Suppressed to avoid disclosure of data of individual companies.
1. Excludes $3.7 billion of U.S. exports to minority-owned foreign affiliates of the U.S. parents of
MOFA's. See footnote 12 in text for further discussion.
NOTE.—In this table, data for U.S. MNC's are only for nonbank MNC's; data for U.S. parents are only for
nonbank parents of nonbank affiliates; and data for affiliates are only for nonbank affiliates of nonbank
parents. MOFA's are defined as affiliates that were owned more than 50 percent by all U.S. parents
combined and that had assets, sales, or net income over $3 million in 1977.
13
CMi U i o n s
elated
rials
fuels
(3)
13/114
Mining
........
Metal mining
(0)
(D)
(0)
78
0
0
41
0
699
Petroleum
........
O i l and gas e x t r
Crude p e t r o l e u
O i I and gas f i
(no r e f i n i n g )
Int
Petroleui
Other ..
wholesale trade
Manufacturi
Food and kindred products ...
Srain mill and bakery produ
and gas
8/233
(•)
(0)
(D)
(D)
4/ 802
(0)
322
(D)
3/671
(0)
(0)
166
(D)
35
3
0
0
0
3
3
0
0
0
0
67,307
3/703
2/521
2/908
(D)
161
(D)
2/222
(0)
113
(D)
163
(D)
9/237
313
806
(D)
3/889
2/639
(D)
(0)
1/250
(6)
(7)
24/086
13/433
68
0
0
0
(0)
(D)
0
(D)
(D)
0
0
(D)
0
(D)
(D)
1/925
1
1
0
(D)
1/453
CD)
(0)
(D)
1
1/360
1
1
(*)
(D)
(0)
0
0
(D)
1
CD)
0)
D)
D)
D)
435
0
0)
(D)
O
6/889
21/657
154
(D)
4
(0)
70
10
(D)
(D)
5/859
3/967
1/103
(0)
(D)
331
666
534
CD)
17
0
(0)
231
208
(D)
(0)
23
627
388
168
220
239
39
1
(0)
CO
0
(0)
(0)
(D)
(0)
217
142
(D)
13
(D)
179
(D)
(0)
(D)
(0)
(D)
Transportation equipment
Other manufacturing ...
Tobacco manufactures
Rubber p
liscella
Trade
Wholesale
22/593
15/139
7/454
9/856
(0)
670
1/027
1/543
2 54
990
136
336
418
2/861
(D
(D)
10
4
6
D)
/076
/054
1
0
0
0
2
0
0
(•)
Nondurable goods
21
0
(0)
(*)
Insurance ........
Real estate ......
Holding companies
5/280
5/279
372
4/908
1
Ser
1/619
50
857
540
250
290
171
56
0
(D)
(D)
(D)
(*)
(D)
CO
(*)
<*)
0
(D)
(*)
(0)
CD)
CO
O/504
3/316
9/032
CD)
146
(D)
CD)
88
CD)
CO
1/206
750
192
CD)
0
CD)
CD)
CD)
CO
C D)
0
4
4
0
0
0
CO
0
13/303
(0)
0
0
3
0
0
0
1
1
CD)
CO
(0)
3
17
(0)
9
5
2
3
3
3
0
0
1
0
360
CD)
1
CD)
CD)
(0)
0
CO
CO)
CD)
20
127
74
CD)
CO
300
0
CD)
470
CO)
271
CO)
181
677
CD)
217
CD)
166
12
3
1
(0)
(D)
(0)
5/684
478
1/570
940
2/696
62
5
5
(0)
(0)
136
CD)
1
13
(D)
822
CD)
72
279
CD)
10
0
2
4
4
106
(D)
(D)
3/610
1/867
1/743
(0)
12/297
(D)
5/489
709
4/780
303
76
227
366
112
254
(0)
CD)
415
3
10
(D)
(D)
3
128
(0)
2
(0)
(D)
5
857
6
54
5
47
7
83
7
(D)
(D)
560
60
(D)
140
0
CO
CO
CO
CD)
CO
CO
CO
417
417
189
228
0
(0)
1
1
39
0
5
(D)
4
(D)
(0)
0
(*)
0
CD)
0
0
(0)
1
CD)
CD)
4
CD)
&
CD)
(D)
2
19
78
5/522
CD)
500
346
1/186
230
405
CD)
264
171
1 /991
335
501
468
415
53
33
(0)
(D)
(D)
(*)
25
25
24
1
0
427
409
408
1
13
979
873
355
518
107
442
(D)
CD)
(*)
26
3
(0)
0
CD)
CO
(*)
0
(0)
(D)
(D)
2
394
(D)
42
(0)
(D)
CD)
5
2
0
(D)
(*)
0
3
62
0
3
CO
CD)
CD)
CD)
69
CD)
CO)
CD)
CO
(0)
(D)
(0)
11
5
1
18
CD)
1
(*)
CD)
CD)
CD)
u
0
0
2
1
(D)
M0FA Majority-owned foreign a f f i l i a t e .
0 Suppressed to avoid disclosure of data of individual companies.
* Less than $500,000 (+).
1. Excludes $3.7 billion of U.S. exports to minority-owned foreign affiliates of the U.S. parents of MOFA's. See footnote 12 in text for further
discussion.
NOTE. — In this table, data for U.S. parents are only for nonbank parents of nonbank affiliates and data for affiliates are only for nonbank affiliates
of nonbank parents. MOFA's are defined as affiliates that were owned more than 50 percent by all U.S. parents combined and that had assets, sales,
or net income over $3 million in 1977.
14
(D)
CD)
CD)
CD)
CD)
CD)
103
0
(*)
(D)
(0)
(0)
(0)
CO
CO
0
0
CD)
(0)
17
CD)
0
CO
412
0
371
1
39
0
5
0
19
5
19
1
0
1
18
18
0
0
CO
352
CO
CO
10/143
(D)
3/321
2/932
(D)
(0)
(0)
(D)
(0)
(0)
(D)
(0)
(D)
(0)
(D)
(0)
(D)
(D)
Other it dus tr
Agri ci
Consti
(D)
(D)
(0)
9/343
(0)
(0)
8/928
(D)
trade
1/214
1
(D)
(D)
(D)
(0)
92
1
5
43
(D)
0
CO
5
0
5
0
0
0
0
0
0
(*)
2
U
0
0
0
2
291
190
118
72
101
85
3
(*)
(D)
CD)
1/903
1*332
71 7
614
571
5
0
0
CO
120
CD)
21
CD)
CD)
(D)
1/271
(D)
(O
(*)
155
34
27
7
121
CD)
(*)
Electr
Other
11/010
CO
(D)
CD)
3/525
C10)
4/337
(D)
CO)
CO
CD)
11/866
(0)
Office and computing mac hi
Other
6
2
0
2
0
4
(0)
(0)
(0)
(D)
(D)
(0)
C1 1 )
C9)
6/693
(8)
5)
8/745
0
1/384
712
(0)
(D)
Agricult
Other ..
of dol l a r s
0
1
1
CO
CD)
t,
4
7
1
CD)
CD)
CO
CO
CD)
3
CO
26
26
CD)
CD)
1
2
1
0
0
1
CD)
CD)
CD)
CO
6
18
19
277
0
167
CD)
CD)
CD)
CD)
CD)
CD)
226
CD)
6
CD)
79
CD)
62
0
CD)
(D)
CD)
CO
(D)
CD)
CD)
CO
7
CO
CO
14
CJ
1
CD)
CO)
CO
(D)
industries. This tendency mainly reflected the large shares of exports in
these industries
that were shipped by U.S. parents and the large shares of
the parents1 exports that were their own products.
In mining, over four-fifths of the U.S. exports associated with MOFA's
and their parents were mineral fuels, mainly coal; the remaining exports were
largely inedible crude materials, except fuels. In petroleum, 40 percent of
the exports were mineral fuels and 28 percent were chemicals; a large share
of the latter was probably petrochemicals.
Among manufacturing industries, 85 percent of the exports in
nonelectrical machinery, 81 percent of those in motor vehicles, and 76
percent of those in both1 foods and electric and electronic equipment were
products of the parents industries of classification. In "other
transportation equipment" and chemicals, the shares of exports that were
products of these same industries were 64 and 63 percent, respectively; in
the former, most of the remaining exports were machinery, and, in the latter,
most were "other manufactures" and inedible crude materials, except fuels.
In "other manufacturing," 56 percent of the exports were "other manufactures"
and, in primary and fabricated metals, 49 percent were metal products. The
former share may have been somewhat understated because "other manufacturing"
includes several industries whose major products are not classified in "other
manufactures"—for example, in the SITC, tobacco products are in food,
beverages, and tobacco, lumber is in inedible crude materials, except fuels,
and plastic materials are in chemicals.
In non-goods-producing industries--trade; finance (except banking),
insurance, and real estate; transportation, communication, and public
utilities; and services—the products shipped were, by definition, from
industries other than those of the U.S. parents. In trade, most of the
exports were food, beverages, and tobacco or inedible crude materials, except
fuels. These products tended to be marketed abroad by trade MNC's, rather
than by the producers of the goods themselves. (Trade MNC's handled large
shares of total exports associated with MOFA's and their parents in both
product categories--71 and 64 percent, respectively.) In finance (except
banking), insurance, and real estate, exports were scattered among several
product categories; however, nearly 40 percent were machinery. A few highly
diversified companies classified in this industry, but with significant
operations in machinery, accounted for most of the machinery exports.
Machinery exports were also a large share—over 40 percent—of exports in
transportation, communication, and public utilities.
In construction, which is generally considered a goods-producing
industry, but which has a significant services component, the final products
normally do not cross national borders. The exports in this industry were,
therefore, mainly products of industries that supply goods used in
construction activities. They consisted largely of machinery, "other
manufactures," and metal products.
U.S. exports associated with MOFA's and their parents for which a
product breakdown is available accounted for 77 percent of all U.S. exports
(table 7). (As noted earlier, total MNC-associated exports accounted for 84
15
Table 7.--Total U.S. Exports and U.S. Exports Associated With MDFA's and
Their U.S. Parents for M u c h a Product Breakdown Is Available, 1977, by Product
Total U.S.
exports y
Exports associated
with MDFA's and
their parents for
which a product
breakdown is
available 2/
Exports associated with
MDFA's and their parents
for which a product
breakdown is available
as a percentage of
total U.S. exports
Millions oidollars
(I)
(2)
(3)
Total
121,293
93,232
76.9
79.3
13,114
Food, beverages, and tobacco
16,536
63.7
8,233
Inedible crude materials, except fuels
12,926
76.9
3,230
Mineral fuels, lubricants, and related materials..
4,200
79.6
8,745
73.0
Chemicals
10,992
24,086
112.8
3/
3/
Machinery
32,975
3/
99.2
Road motor vehicles and parts
11,908
II 13,433
6,693
82.1
Other transportation equipnnent
6,747
4,337
78.4
Metal manufactures
5,285
11,010
6.2
Other manufactures
14,042
352
Other
5,682
MDFA Majority-owned foreign affiliate.
1. See footnote 1, table 1.
2. Excludes $3.7 billion of U.S. exports to minority-owned foreign affiliates of the U.S. parents of MZFA's.
See footnote 12 in text for further discussion.
3. For MZFA's, and their U.S. parents, exports of road motor vehicles and parts and of "other transportation
equipment" are probably significantly overstated because of inclusion by reporters of certain parts and
accessories for transportation equipment in these categories rather than in the appropriate other SITC
category. See text for further discussion.
NJTE.--In this table, data for U.S. parents are only for nonbank parents of nonbank affiliates and data for
affiliates are only for nonbank affiliates of nonbank parents. MDFA's are defined as affiliates that were
owned more than 50 percent by all U.S. parents combined and that had assets, sales, or net income over $3
million in 1977.
16
percent of all U.S. exports; thus, about 7 percent of all U.S. exports were
associated with MNC's, but cannot be compared with all U.S. exports by
product.)
In most product categories, the MNC's accounted for between 64 and 82
percent of the U.S. totals. There were, however, a few major exceptions.
MNC shares of U.S. exports of road motor vehicles and of other transportation
equipment were extraordinarily high—over 100 percent and 99 percent,
respectively. These high shares partly reflected the previously mentioned
misclassification of parts and accessories by reporters. They also may have
reflected underreporting in the all-U.S. trade data, particularly with regard
to overland shipments
to Canada. The very low MNC share of total U.S.
exports of "other11 products (6 percent) probably reflected the large portion
of these products that were of a type not normally produced, handled, or sold
by U.S. MNC's—such as nonmonetary gold, which is shipped mainly by
independent gold dealers; arms or other military equipment, a large share of
which is shipped by U.S. Government military agencies; live animals; and
commodities donated for relief or charity by individuals or private agencies.
U.S. exports shipped to MOFA's
As previously mentioned, more detail was obtained in
survey for U.S. exports to MOFA's than for those to other
or to unaffiliated foreigners. In particular, exports to
available by product and intended use, crossclassified by
destination and by industry of affiliate.
the 1977 benchmark
foreign affiliates
MOFA's are
country of
U.S. exports shipped to M0FA!s were $35.8 billion—35 percent of total
MNC-associated exports (table 8). Compared with the total, they were more
heavily concentrated, by product, in road motor vehicles and parts and
machinery; by area, they were more heavily concentrated in developed
countries, particularly Canada.
In all product categories except one—mineral fuels—over 70 percent of
the exports to MOFA's were to developed countries. For mineral fuels, only
49 percent were to developed countries. In every product category, including
mineral fuels, exports to Canada far exceeded those to any other single
country. Canadian MOFA's accounted for a particularly large share—85
percent—of total exports of road motor vehicles and parts.
By industry of affiliate, 70 percent of exports to MOFA's were to MOFA's
in manufacturing and 23 percent were to MOFA's in trade. Within
manufacturing, transportation equipment accounted for a particularly large
share of the total. "Other manufacturing," electric and electronic
equipment, nonelectrical machinery, and chemicals accounted for most of
the remainder.
In most manufacturing industries, exports to MOFA's were generally
products of the affiliates' own industries. Ninety percent of the exports to
MOFA's in transportation equipment were road motor vehicles and parts or
other transportation equipment; 86 percent of those to MOFA's in
nonelectrical machinery and 82 percent of those to MOFA's in electric and
electronic equipment were machinery exports. In chemicals and food, the
17
Table
8.--U.S.
Exports
Shipped
toM O F A ' s / 1 9 7 7 , Area of Destination
CMillions
Total
-
(1)
All
areas,
all
industries
<3>
U>
of Affiliate
by Product
Df d o l l a r s ]
Food,
Inedible
Mineral
Chemicals
oeverages, crude
fuels/
and
materials/ lubricants/
tobacco
except
and related
fueIs
materials
(?)
and Industry
(5)
Macninery
Road motor
vehicles
and oarts
Other
Metal
transpor- manutation
factures
equipment
(6)
(7)
3b,313
?,324
1/299
574
3/798
10/497
10/794
(8)
(9)
£9,210
2/085
1/13'*
281
2/844
8/004
9/754
220
16,201
10/866
468
1/541
314
7 82
130
120
7 92
1/591
3/110
3,927
9/184
381
119
80
9,250
1/408
645
93
1/334
3/375
325
80
134
11
133
16
27
(D)
257
222
0
264
1/215
Other
manufactures
(10)
Other
(11™
4/957
92
877
3/935
76
433
393
1/615
2/024
37
27
266
1/699
26
127
9
325
72
By area of d e s t i n a t i o n :
Developed c o u n t r i e s
Cnada
Europe
-
European Communities
Other
Japan
(9)
F.urooe
Australia/
1/615
7
09
New Z e a l a n d / a n d S o u t h A f r i c a . • • • • • • . . . . • • • •
Developing countries
L a t i n America
Other A f r i c a
M i d d l e EdSt
other Asia ind P a c i f i c
International
••••
••
--
1,434
6,489
3,700
3
?4
937
1,52b
115
551
319
(*)
1
(*)
65
21
(0)
2 39
(o)
21
43
225
12
238
146
36
6
50
(O
165
114
12
3
35
(*)
(D)
(0)
(D)
9 54
6 70
14
32
2 38
(•>
2,460
1,098
87
455
823
33
1/041
994
10
23
13
<•>
42
15
2
9
15
2
338
116
50
105
67
1
(D)
439
58
292
(0)
(0)
16
9
3
1
2
(*)
(D)
3
834
621
17
( *)
0
0
0
185
1,463
1
23
14
881
231
210
166
3
7
3
260
370
0
(0)
(0)
428
92
(*)
32
39
3
1
1
16
27
(*)
(0)
29
176
2/739
35
2,375
38
17
75
20
179
832
(0)
(0)
66
565
6/068
37
75
139
2/606
1,897
966
348
3/508
5
286
6
22
10/607
1
(*)
55
14
(D)
10/530
(D)
131
0
28
93
52
12
648
56
(o)
( • )
By industry of affiliate:
Mining
Petroleum
Manufacturing
Food and k i n d r e d p r o d u c t s
••••••••
C h e u i c a l s and a l l i e d p r o d u c t s
•
Primary and f a b r i c a t e d metals
••••
M a c h i n e r y / except e l e c t r i c a l
E l e c t r i c and e l e c t r o n i c e q u i a m e n t • • . . • • • • • • . • • • • • • • • • • •
T r a n s p o r t a t i o n equipment
Other manufacturing
•
Trade
F i n a n c e ( e x c e p t b a n k i n g ) , i n s u r a n c e / and r e a l e s t a t e . . . . .
Other i n d u s t r i e s
*
194
1#639
25,145
974
3/007
845
3/036
2,316
11/305
3,161
8,133
20
682
MOFA Majority-owned foreign a f f i l i a t e .
* Less than $500,000 ( + ) .
D Suppressed to avoid disclosure of data of individual companies.
NOTE.--In this table, data for a f f i l i a t e s are only for nonbank a f f i l i a t e s of nonbank parents. MOFA's are defined as a f f i l i a t e s that were owned
more than 50 percent by a l l U.S. parents combined and that had assets, sales, or net income over $3 million in 1977.
9
5
155
(*)
(*)
(0)
28
(D)
107
(D)
66
<*)
28
18
137
738
11
28
318
168
41
104
67
199
(*)
122
20
284
2/961
29
244
81
197
272
(0)
(0)
1,525
(D)
(D)
(0)
6
69
9
15
(0)
2
5
(0)
19
12
0
(0)
corresponding percentages were 79 and 64 percent, respectively. In metals,
in contrast, only 38 percent of the exports were metal manufactures; a large
portion of the remainder was inedible crude materials, except fuels,
and machinery.
Over 40 percent of all exports to MOFA's in trade were machinery, 19
percent were "other manufactures,11 and 18 percent were food, beverages and
tobacco. Less than 15 percent of exports to MOFA's in mining and about onefourth of those to MOFA's in petroleum were products of their own industries.
Large shares of the remaining exports in both industries were machinery.
By intended use, 57 percent of total exports to MOFA's were for resale
without further manufacture, 4 percent were capital equipment or other goods
charged to fixed assets, and 38 percent were for "other" uses—mainly for
further processing or assembly by affiliates (table 9). The small share for
capital equipment reflected the fact that MOFA's obtained most of their
capital equipment from local and other non-U.S. sources; U.S. exports of such
equipment were less than 7 percent of total plant and equipment expenditures
by MOFA's in 1977.
Exports for resale without further manufacture, most of which were from
U.S. parents, were probably nearly all distributed by the MOFA's to
unaffiliated foreign customers. In addition, the U.S. parents of MOFA's
exported $57.4 billion of goods directly to unaffiliated foreigners. Thus,
U.S. exports that reached unaffiliated foreigners without further manufacture
by MOFA's could have been as much as $77.9 billion, more than four-fifths of
total U.S. exports associated with MOFA's and their parents. Over one-fourth
of these exports were channeled through MOFA's.
Exports for resale were a significantly larger share of total exports to
MOFA's in developed countries than in developing countries. As noted
earlier, MOFA's in developed countries served to a greater extent than those
in developing countries as distributors of their U.S. parents' exports. By
industry of affiliate, exports for resale accounted for almost one-half of
total U.S. exports to MOFA's in manufacturing. Within manufacturing, they
were a particularly large share (64 percent) of exports to MOFA's in
transportation equipment. These exports were primarily shipments of road
motor vehicles and parts from U.S. parents to MOFA's in Canada. In trade,
nearly all--92 percent—of the exports to MOFA's were for resale.
Capital equipment and goods for "other" uses were both larger shares of
total U.S. exports to MOFA's in developing than in developed countries.
MOFA's in developing countries may have had more difficulty obtaining such
goods locally or from other non-U.S. sources. Capital equipment exports were
particularly large shares of total exports to MOFA's in the Middle East and
"other Africa." By industry of affiliate, capital equipment was 39 percent
of total exports to MOFA's in mining, 30 percent to MOFA's in petroleum, and
less than 3 percent to MOFA's in manufacturing. The much larger shares in
mining and petroleum partly reflected the greater capital intensiveness of
these industries; also, a larger proportion of the MOFA's in these industries
were located in developing countries, where the required capital equipment
may not have been available locally. Within manufacturing, the share of
19
Table
9 . - - U . S . E x p o r t s Shipped to MOFA's, 1 9 7 7 / Area
oy Whom S h i p p e d and I n t e n d e d Use
[Millions
Shipped
Total
by all U.S. persons
Capital
e q u i pment
1/
Other
(3)
(4)
Affiliate
Ot her
Total
dollars]
Total
by U . S .
Capital
equ ipment
1/
Shi pped by
parents
without
further
manufac ture
(7)
(8)
(9)
1,201
18*496
9/577
6,539
17/827
10/021
6/567
5/381
1/186
503
7 37
(D)
1/595
73
418
(D)
(D)
10/556
5/817
3/979
3/603
376
(D)
(D)
(D)
1/810
181
211
(D)
(D)
23/975
12/566
9/468
8/056
1,412
688
1/254
5,212
2/908
213
801
1/289
87
625
257
249
207
42
(D)
(D)
573
199
56
282
35
3
16/240
9/190
5,897
4,825
1,071
483
670
(D)
1,307
48
395
(D)
(D)
7,110
3,119
3,322
3,023
299
(D)
(D)
(D)
1/402
109
124
(D)
5,235
3,636
1,398
1 ,194
11
709
12/103
161
1/132
213
1/168
697
7/593
1/137
7/513
13
115
108
432
12/365
783
1/834
599
1,590
1,566
4,115
1,879
378
6
484
38
1/358
20/510
454
2,655
632
2/813
1,986
9,483
2,490
7,023
13
333
8
397
527
9
26
17
263
39
65
109
227
(*>
42
(D)
640
1 1,232
118
1,134
178
1/106
622
7,131
1,054
6,438
9
(D)
(D)
321
8,701
327
1,526
437
1 /442
1/325
2,318
1,327
308
4
156
282
4,634
520
351
213
227
330
2,322
671
1,110
8
349
29/210
16/201
10/866
9/250
1/615
709
1/434
6/489
3/700
324
937
1/528
115
827
364
320
266
54
<D>
(D)
74 0
294
73
309
64
10
194
Mining
Petroleum
1/639
^ a n u f a c t u r i ng • ..,......•.....••....••.•••.•...•.•.•...•.••••
25/145
FoDd a n d k i n d r e d p r o d u c t s .................................
974
C h e n i c a l s and a l l i e d p r o d u c t s ............................
3/007
Primary
and fabricated metals ••«...•...••...•«..«•.*.*•.«
845
M a c h i n e r y / e x c e p t e l e c t r i c a l .............................
3/036
E l e c t r i c a n d e l e c t r o n i c e q u i p m e n t ................^ ....... 2 / 3 1 6
T r a n s p o r t a t i o n e q u i p m e n t •.....•......•.•..••••.....•••••.
11/805
Other
3/161
Trade
8,133
F i n a n c e ( e x c e p t b a n k i n g ) / i n s u r a n c e / a n d r e a l e s t a t e .......
20
O t h e r i n d u s t r i e s ...........................................
682
75
498
676
30
41
33
279
53
93
144
242
for resale
without
f urther
manufac ture
376
Other
(12)
{in
(10)
29/275
20^464
unaffi liated U . S . persons
Capital
equipment
1/
13/773
1/577
industries
of
(6)
35/813
all
and I n d u s t r y
(5)
(2)
areas/
Destination
Shipped
For resale
wi thout
further
manufacture
(1)
All
of
of
1,967
4,196
1,588
3,446
2,698
By area of destination:
Developed c o u n t r i e s . . . . . . . . . • . . . . . . . . . . . . . . • . . • . . . * . . • . • • . •
Canada
.................................
Europe . . . . « • • • • • • • • . • • . . . • • . . . . . • . • . • • • • • • . • • • • . • • • • • • • • •
E u r o p e a n C o m m u n i t i e s <9> . . . • • . • . . . . . • • • . . . « . • • • • . . . • • • •
Other Europe . . • . . . • • • • • • • . • . • • . . • • • • • • . . • • . • • • • • • . . . • • •
Japan
A u s t r a l i a / New Zealand/ and South Africa .................
Developing countries
•
Latin Ame
Other Afr
Middle Ea
Other Asi
and Pacific
I
Internation
203
22
180
1,277
791
11 1
136
238
28
201
107
71
59
^2
<*>
22
167
95
^7
27
29
7
831
6 70
556
114
20
67
379
289
22
22
47
0
656
580
76
2
90
730
408
72
87
163
20
By industry of affiliate:
2
83
MOFA Majority-owned foreiqn affiliate.
* Less than $500,000 (+).
D Suppressed to avoid disclosure of data of individual companies.
1. Capital equipment and other goods charged to fixed assets.
NOTE.--In this table, data for affiliates are only for nonbank affiliates of nonbank parents. MOFA's are defined as affiliates that were owned more
than 50 percent by all U.S. parents combined and that had assets, sales, or net income over $3 million in 1977.
67
102
149
21
15
16
16
14
33
35
15
1
41
(D)
69
821
44
28
35
63
75
4 92
84
1/025
4
(0)
(D)
111
3,665
456
308
162
148
241
1,797
553
70
2
(D)
total exports accounted for by capital equipment was largest—9 percent—for
MOFA's in nonelectrical machinery. The equipment, which was shipped mainly
to MOFA's manufacturing computers, consisted
largely of computers for lease
or rental to others. Exports for "other11 uses accounted for 56 percent of
total exports to MOFA's in mining, 49 percent to MOFA's in manufacturing, and
26 percent to MOFA's in petroleum.
Growth from 1966 to 1977
This section discusses growth of exports associated with MOFA's and
their parents from 1966 to 1977. The 1966 data are from the 1966 benchmark
survey of U.S. direct investment abroad. 14/ They differ somewhat in
concept, coverage, and methodology from the 1977 data; therefore, data for
both years have been adjusted to improve comparability. The net effect of
the adjustments was quite small—1966 exports were adjusted downward about 2
percent and 1977 exports were revised upward about 1 percent. 15/ Growth
rates were calculated by country of destination and by industry of U.S.
parent; they could not be calculated by product because a product breakdown
of the 1966 data is not available.
U.S. exports associated with MOFA's and their parents grew at a compound
annual rate of 16.2 percent, from $18.8 billion in 1966 to $97.9 billion in
1977 (table 10). During the same period, total U.S. exports grew at a
significantly slower rate—13.4 percent—from $30.4 billion to $121.3
billion. Ij)/ Consequently, the share of total U.S. exports that were
associated with MOFA's and their parents rose from 62 percent to 81 percent.
14. See U.S. Department of Commerce, Bureau of Economic Analysis, U.S.
Direct Investment Abroad, 1966, Final Data (Washington, D.C.: U.S. GPO,
n.d.), tables E-l through E-16.
15. The adjustment for 1977 was applied to $96.9 billion of total
exports associated with MOFA's and their U.S. parents, as published in U.S.
Direct Investment Abroad, 1977. This total differs from the one that appears
in tables 5-7, which disaggregate U.S. exports associated with MOFA's and
their parents by product. The difference occurs because this total includes,
but the one in tables 5-7 excludes, $3.7 billion of U.S. exports to minorityowned foreign affiliates of the U.S. parents of MOFA's for which no product
breakdown is available.
In the adjusted data for both years, MOFA's are defined as affiliates
owned more than 50 percent by a single U.S. parent, regardless of the size of
each affiliate's assets, sales, or net income. (In previously published data
for 1977 and in the rest of this article, they are defined as affiliates that
were owned more than 50 percent by all U.S. parents combined and that had
assets, sales, or net income over $3 million.) The adjusted data exclude
data for parents and affiliates in finance, except banking, and in insurance,
because 1966 export data were not collected for them.
16. Growth rates for a period that are calculated from i n i t i a l - and
terminal-year data may differ from an average calculated from data for each
year in the period i f the i n i t i a l - or terminal-year values have been affected
by circumstances atypical of the period as a whole. For the 11-year period
covered here, however, the i n i t i a l - or terminal-year values of U.S. exports
associated with MOFA's and their parents, or of total U.S. exports, would
have had to differ by about 10 percent from those cited in order to change
the growth rates by 1 percentage point.
21
Table 1 0 . — G r o w t h in U.S. Exports Associated With HOFA's and Their U.S. Parents, After Adjustments to
Improve Comparability, 1966-77, Area of Destination and Industry of U.S. Parent by Transactor 1/
Compound annual rate of growth
Total exports
associated
with MOFA's
and their
U.S. parents,
as adjusted
Shipped
to MOFA's
"
By
U.S.
parents
By
unaffiliated
U.S. persons
Shipped
to other
foreigners
by U.S.
parents 2/
Shipped
Total exports
associated with MOFA's
and their
U.S. parents,
as adjusted
to MOFA's
By
U.S.
parents
By
unaffiliated
U.S. persons
Shipped
to other
foreigners
by U.S.
parents 2/
Total exports
associated
with MOFA's
and their
U.S. parents,
as adjusted
Shipped
Total
to MOFA's
By
U.S.
parents
By
unaffiliated
U.S. persons
Shipped
to other
foreigners
by U.S.
parents 2/
Millions of dollars
All areas, all industries
18,814
7,459
6,144
1,315
11,355
97,907
37,008
30,434
6,575
60,899
11,867
4,334
5,609
4,398
1,211
1,169
5,846
3,250
2,038
1,797
4,923
2,590
1,819
1,601
6,021
1,084
3,571
2,602
217
180
334
24,815
12,836
9,908
8,429
1,479
5,286
3,655
1,429
1,217
241
191
367
5,257
2,801
1,586
1,097
150
89
251
27
33,799
5,733
18,961
12,500
6,461
7,227
1,879
23,801
8,371
2,563
7,158
5,709
16.6
16.0
16.6
15.8
18.9
19.1
14.7
17.4
14.4
17.2
29.3
15.8
16.1
15.9
16.9
16.5
19.4
13.3
13.8
14.1
12.2
507
482
63,900
22,223
30,298
22,146
8,152
7,980
3,398
30,593
12,275
2,896
8,093
7,328
30,100
16,490
11,337
9,646
1,691
754
923
660
219
196
24
11
33
390
180
81
42
88
2
118
1
...
...
-15.2
11.2
16.1
By area of destination;
Developed countries
Canada
Europe
European Communities (9)
Other Europe
Japan
Australia, New Zealand, and South Africa
Developing countries
Latin America
Other Africa
Middle East
Other Asia and Pacific
International 3/
1,467
1,690
1,196
917
69
47
163
25
970
978
387
3,670
1,704
358
393
1,216
1,663
753
731
1,520
6,791
3,904
1,341
5,530
3,117
332
935
221
803
1,619
1,388
117
89
212
23
179
1,261
787
111
132
231
28
7.5
23.9
18.5
15.9
15.7
16.7
16.3
19.1
13.6
13.5
15.0
11.8
11.2
29.5
21.5
—
17.2
16.9
18.6
18.1
22.0
6.9
16.7
11.3
14.4
2.9
11.0
9.2
—
17.0
16.4
16.4
15.4
18.8
20.0
15.5
18.5
15.6
19.6
30.2
15.1
By industry of U.S. parent:
Mining
Petroleum
Manufacturing
Food and kindred products
Chemicals and allied products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipment
Transportation equipment
Other manufacturing
Trade
Finance (except banking), insurance,
and real estate 4/
Other industries
324
996
116
549
84
364
14,420
6,158
5,210
777
327
893
384
195
789
274
1,235
1,132
460
417
1,974
1,601
887
384
45
207
2,045
1,278
2,796
1,473
3,907
2,144
2,699
51
324
801
334
32
185
948
131
104
110
102
42
372
86
50
15
138
31
69
208
447
757
19
(D)
1,759
31,779
1,457
26,802
1,561
1,013
1,933
1,258
2,315
5,130
71,825
3,050
9,692
4,294
12,666
8,135
23,357
10,631
17,999
5
117
1,719
8,262
450
1,152
894
477
738
8.0
16.1
15.7
13.3
15.2
11.7
14.7
16.8
17.7
15.7
18.8
22.7
16.4
922
544
4,427
1,122
5,223
2,909
12,715
4,460
2,215
3,931
4,873
2,517
10,223
3,797
1,499
2,492
663
716
3,371
40,046
2,128
5,265
3,173
7,442
5,226
10,642
6,171
15,783
467
769
(D)
429
(D)
339
10
950
MOFA Majority-owned foreign affiliate.
D Suppressed to avoid disclosure of data of individual companies.
1. See text for discussion of adjustments made to the 1966 and 1977 data to improve comparability.
In the adjusted data for both years,
MOFA's are defined as affiliates owned more than 50 percent by a single U.S. parent, regardless of the size of each affiliate's assets,
sales, or net income.
2. Consists of U.S. exports shipped to minority-owned affiliates and to unaffiliated foreigners by the U.S. parents of MOFA's.
3. Growth rates are not shown because the 1977 definition of "International" differed from that for 1966.
(See footnote 17 in text for
discussion.)
4. In order to improve its comparability with 1966, the 1977 data were adjusted to exclude U.S. parents and affiliates in insurance and in
finance, except banking. This adjustment significantly affected the finance (except banking) , insurance, and real estate industry because,
when classified by industry of U.S. parent, all parents and most affiliates in insurance or in finance, except banking, were in this major
industry group.
(D)
302
917
4,976
378
497
204
351
392
(D)
13.5
16.1
(D)
4.6
16.3
10.1
15.3
12.2
20.2
15.4
15.2
14.8
12.2
15.3
16.1
16.8
15.6
19.1
9.9
9.8
15.7
10.2
14.0
18.3
18.5
15.8
17.3
15.7
11.6
14.2
17.8
18.4
15.2
14.6
23.7
12.7
(D)
(D)
6.0
10.9
15.6
21.0
5.8
11.9
22.4
18.9
20.4
27.5
Exports shipped to unaffiliated foreigners by the U.S. parents of MOFA's
grew at a 16.5 percent rate. Exports shipped to MOFA's, both by U.S.
parents and by other U.S. persons, grew at a 15.7 percent rate.
Exports associated with MOFA's and their parents that were destined for
developing countries grew at a slightly faster rate than those destined for
developed countries—17.4 percent compared with 16.6 percent. Y7J In the
developing countries the growth rate was highest—29.3 percent—for the
Middle East, where members of the Organization of Petroleum Exporting
Countries (OPEC) used sizable portions of their growing oil revenues to
purchase U.S. goods. The growth rate was lowest—at 14.4 percent—in Latin
America. The low rate partly reflected policies in several countries that
limited the import content of production by foreign-owned firms or encouraged
foreign 11investment in import-competing industries. In "other Asia and
Pacific, where the growth rate was 15.8 percent, very rapid growth of U.S.
exports to some countries—particularly Singapore, Indonesia, South Korea,
Taiwan, and Malaysia, whose economies were expanding rapidly—was partly
offset by slower growth in exports to other countries.
Among the developed countries, growth rates ranged from 14.7 percent for
Australia, New Zealand, and South Africa to 19.1 percent for Japan. The
relatively high rate for Japan probably reflected the rapid growth of the
Japanese economy, which is highly dependent on imported raw materials, and
the gradual relaxation of Japanese import restrictions and foreign investment
controls. Growth rates for Canada and Europe were 16.0 and 16.6 percent,
respectively. The growth in exports to Canada was probably concentrated in
transportation equipment. Within Europe, the growth rate for the European
Communities (9) was significantly slower than that for "other Europe"—15.8
percent compared with 18.9 percent. The gradual elimination of internal
tariffs and imposition of common external tariffs by the EC(9) encouraged
U.S. companies to produce in, rather than export to, member countries. Also,
relatively slow economic growth in the United Kingdom may have dampened U.S.
exports to that country and, thus, to the EC(9) as a whole. W
By industry of U.S. parent, the growth rate of U.S. exports associated
with MOFA's and their parents was 18.8 percent in trade, 16.1 percent in
petroleum, and 15.7 percent in manufacturing. In trade, growth was
concentrated in wholesale trade of farm product raw materials and electrical
IT. Growth rates tor "international" were not calculated because the
definition of the "international" category differed in the 1966 and 1977
benchmark surveys. As noted earlier, in the 1977 survey, "international"
consisted of affiliates that had operations spanning more than one country
and that were engaged in petroleum shipping, other water transportation,
petroleum trading, or the operation of oil and gas drilling equipment that
was moved from country to country during the year. In the 1966 survey,
"international" was defined more broadly to include, in addition, affiliates
in finance, nonpetroleum trading, insurance, and construction that were
engaged in activities in more than one country. No adjustments could be made
for these definitional differences.
18. For these comparisons, 1966 as well as 1977 data are for the EC(9),
even though the United Kingdom, Denmark, and Ireland did not become members
of the Communities until 1973.
23
goods. Within manufacturing, growth was highest in transportation
equipment—probably in response to the U.S.-Canadian automotive agreement—
and in electrical machinery.
MNC-Associated U.S. Imports
Of total MNC-associated U.S. imports of $86.8 billion, imports shipped
by foreign affiliates to U.S. parents were $32.6 billion (38 percent),
imports shipped by foreign affiliates to unaffiliated U.S. persons were $8.9
billion (10 percent), and imports shipped by unaffiliated foreigners to U.S.
parents were $45.2 billion (52 percent) (table 2 ) . Total imports shipped by
affiliates, the sum of the first two components, were $41.5 billion, of which
nearly four-fifths were to U.S. parents and just over one-fifth were to
unaffiliated U.S. persons. Total imports shipped to U.S. parents, the sum of
the first and third components, were $77.9 billion, of which 58 percent were
from unaffiliated foreigners and 42 percent from foreign affiliates.
As noted earlier, significantly less detail was obtained in the 1977
benchmark survey for imports than for exports. Specifically, imports shipped
to U.S. parents by unaffiliated foreigners were not obtained by country of
origin or by product. Because such imports accounted for more than one-half
of total MNC-associated U.S. imports, generalizations about total MNCassociated imports, and comparisons of such imports with all U.S. imports by
country of origin or by product are not appropriate. Also, the growth of
MNC-associated U.S. imports from 1966 to 1977 cannot be calculated because no
import data were obtained in the 1966 benchmark survey. 19/ As a result of
these limitations, this section will cover only total MNU^associated imports
disaggregated by industry of U.S. parent and U.S. imports shipped by MOFA's
disaggregated by product and crossclassified by country of origin and
industry of affiliate.
19. A very rough estimate of U.S. imports associated with MOFA's and
their parents in 1966 was given in a previous article on MNC trade. (See
table 21 in Betty L. Barker, "U.S. Foreign Trade Associated with U.S.
Multinational Companies," Survey 52 (December 1972): 20-28.) The estimate
was made using preliminary data on MOFA sales to the United States, as
reported in the 1966 benchmark survey, together with a universe estimate of
1966 U.S. parent imports from unaffiliated foreigners, based on data for a
very small sample of MNC's from a special 1970 survey conducted by BEA.
(Note that MOFA sales to the United States differ from U.S. imports from
MOFA's. The sales data include both goods and services that were charged to
U.S. customers by MOFA's; the import data include only goods and only to the
extent they were physically shipped to U.S. customers by the MOFA's,
regardless of to or by whom they were charged.) Using the same procedure as
in the previous article, but with revised data on 1966 MOFA sales to the
United States, a rough estimate of 1966 U.S. imports associated with MOFA's
and their parents of $12,489 million is obtained. In 1977, U.S. imports
associated with MOFA's and their parents were $82,363 million, 95 percent of
total MNC-associated U.S. imports. Ignoring comparability problems, the
approximate compound annual growth rate of these imports from 1966 to 1977
was 18.7 percent. During the same period, total U.S. imports grew from
$25,618 million to $150,390 million, or at a 17.5 percent annual rate.
24
By industry of U.S. parent
By industry of U.S. parent, petroleum accounted for 44 percent and
manufacturing for 40 percent of total MNC-associated
U.S. imports (table 4 ) .
Trade accounted for 13 percent, "other industries11 for 2 percent, and mining
and finance (except banking), insurance, and real estate for less than 1
percent each.
In general, a U.S. parent's industry is probably not a good indicator of
the types of products being imported. Manufacturing parents, for example,
may import raw materials and supplies that are products of nonmanufacturing
industries, or parts and capital equipment that are products of manufacturing
industries other than the one in which they are classified.
In petroleum, however, most of the MNC-associated imports were probably
crude petroleum, petroleum products, or natural gas. The large share of
total MNC-associated imports accounted for by MNC's with petroleum parents
primarily reflected the heavy U.S. dependence on foreign petroleum. In 1977,
this dependence was exacerbated by strong U.S. economic expansion, an
exceptionally cold winter, a drought in the West that led to a significant
loss of hydroelectric power, and substantial private stockpiling of oil in
anticipation of OPEC price increases.
Of total MNC-associated imports in manufacturing, the transportation
equipment industry accounted for the largest share--39 percent. This large
share probably reflected the stimulus that the U.S.-Canadian automotive
agreement provided to U.S. imports, as well as exports, of road motor
vehicles and parts. Primary and fabricated metals accounted for 11 percent,
electric and electronic equipment for 10 percent, and chemicals and allied
products for 9 percent, of the imports in manufacturing.
The shares of total MNC-associated imports that were shipped by foreign
affiliates varied significantly by industry. They ranged from 14 percent in
trade to roughly 80 percent in finance (except banking), insurance, and real
estate. The shares in manufacturing and petroleum were 61 and 46 percent,
respectively. Within manufacturing, imports shipped by affiliates were a
particularly large share (76 percent) of MNC-associated imports in
transportation equipment.
In most industries, imports shipped to U.S. parents were wery large
shares, and imports shipped to other U.S. persons very small shares, of total
MNC-associated U.S. imports. The major exceptions were in industries—such
as coal mining, paper, lumber, and glass—in which affiliates were engaged
primarily in production of raw materials or other inputs that were often
shipped directly to unaffiliated U.S. customers.
U.S. imports shipped by MOFA's
U.S. imports shipped by MOFA's were $38.0 billion in 1977 (table 11).
They accounted for 44 percent of total MNC-associated U.S. imports.
25
Table
11.—U.S.
Imports
Shipped
by MOFA's*
1977*
[Millions
Total
(1)
All
areas*
all
industries
. .
-
38/000
Foods
Inedible
beverages/
crude
and
materials*
tobacco
except
fueIs
(2)
(3)
998
Area
of
of O r i g i n
and I n d u s t r y
of
Chemicals
Machinery
Road m o t o r
vehicles
and p a r t s
(4)
(5)
(6)
C7)
16*734
by P r o d u c t
dollars!
Mineral
fuels*
lubricants*
and r e l a t e d
mater i a I s
1*877
Affiliate
854
Other
transportation
equipment
(8)
5*122
8*376
8*224
7*689
(D)
510
<D)
0
<0)
152
152
0
0
0
0
Metal
manufactures
(9)
272
949
<D>
241
lt»
<0>
0
0
(*)
(D)
5
0
0
(0)
0
625
374
235
205
30
<0>
(0)
324
<D>
(0)
0
(D)
0
0
0
268
0
0
(D)
3
(D)
250
(*)
4
0
<*)
(D)
(D)
656
(+)
(D)
428
70
14
( D)
122
(D)
0
(*>
Other
lanufactures
Other
(10)
(11)
<D>
(0)
By area of o r i g i n :
Developed c o u n t r i e s
Canada
Europe
.
E u r o p e a n Communities ( 9 )
Other Europe
Jaoan
A u s t r a l i a * New Z e a l a n d * and S o u t h A f r i c a
Developing countries
.
L a t i n America
*
Otner A f r i c a
Middle East
, .
Other Asia and P a c i f i c
.
International
. . . . . . . . . . . . . . . . . .
By i n d u s t r y o f
.
19*557
14*305
4*736
4*063
673
362
153
18*409
5*240
4*618
2*872
5*680
34
553
189
362
176
187
(*)
2
44 5
356
2
2
85
0
1*337
1*170
97
(0)
(0)
(0)
(D>
(D)
209
CD)
<0)
183
(0)
(0)
1*244
1*802
(0)
(0)
<0>
(0)
13*671
3*410
4*407
2*848
3*006
(D)
602
322
268
259
9
9
3
253
(D)
0
0
(D)
0
2*952
1*597
998
963
35
(0)
<D>
2*170
486
(D)
<D)
1*677
0
1*145
16*795
17*656
513
637
998
1*200
2*548
9*172
2*588
1*706
(D)
(D)
0
0
484
448
(D)
(*)
0
2
0
(D)
284
0
231
810
19
556
<D)
(D)
47
<*)
(*)
0
(D)
402
0
90
(D)
16*663
27
0
(D)
<D>
2
1
(*)
1
(D)
<*)
0
(D)
2
(D)
4*521
(*)
2
48
1*087
2*346
1*004
33
522
0
(D)
6
2
(D)
2
(0)
(D)
(*)
(D)
( O
0
0
<D>
0
affiliate:
Mining
Petroleum
Manufacturing
Food a n d k i n d r e d p r o d u c t s • • • • • • • • • • • • • . • • • • • • • • • • • • • • • •
Chemicals and a l l i e d p r o d j c t s . . . . . . . . . . . . . . . . . . . . . . . . . .
Primary and fabricated metals . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery* except e l e c t r i c a l • . . • . • • • . . . . . • • « « « • • • • . « . . •
E l e c t r i c and e l e c t r o n i c equipment . . . . . . . . . . . . . . . . . . . . . . . .
T r a n s p o r t a t i o n equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other manufacturing
•. • . . . . . . • . • • * . . • • •
Trade
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - , . . . .
Finance (except banking)* insurance* and real estate • • • • «
Other i n d u s t r i e s
73
568
1
463
(0)
1
(D)
1
89
(D)
0
<*)
MOFA Majority-owned foreign a f f i l i a t e .
D Suppressed to avoid disclosure of data of individual companies.
*
Less than $500,000 ( + ) .
NOTE.--In this table, data for a f f i l i a t e s are only for nonbank a f f i l i a t e s of nonbank parents. MOFA's are defined as a f f i l i a t e s that were owned more
than 50 percent by a l l U.S. parents combined and that had assets, sales, or net income over $3 million in 1977.
1*953
1*477
430
343
87
42
3
792
155
ID)
<0>
623
<D)
0
0
(D>
0
(D)
431
5
<*)
7*869
(D)
(D)
0
0
3
(D)
<D)
1
10
(0)
32
174
<D)
1*940
211
(0)
(D)
0
(*)
(D)
(0)
<*)
(*)
<*)
1
1
1
2
(*)
1
By product, 44 percent of the imports shipped by MOFA's were mineral
fuels, 22 percent were road motor vehicles and parts, 13 percent were
machinery, and 5 percent were inedible crude materials, except fuels.
Imports of other products were relatively small. As with exports, imports of
road motor vehicles and parts were probably
overstated, and imports of other
goods understated, because of reporters1 incorrect classification of
transportation equipment parts and accessories.
Imports from developed countries accounted for 51 percent, and those
from developing countries for 49 percent, of total U.S. imports shipped by
MOFA's. 20/ Among developed countries, Canada accounted for 38 percent and
Europe for 12 percent of the global MOFA total. Among developing countries,
"other Asia and Pacific" accounted for 15 percent, Latin America for 14
percent, "other Africa" for 12 percent, and the Middle East for 8 percent of
the total.
Imports from MOFA's in developed countries exceeded those from MOFA's in
developing countries in all product categories except mineral fuels and
"other." For mineral fuels, more than four-fifths of the imports, probably
mainly crude petroleum, were from developing countries--54 percent from
members of OPEC alone. Imports of "other" products, which were very small in
value, were mainly from "other Asia and Pacific."
Also, for all products except mineral fuels and "other," U.S. imports
from MOFA's in Canada were larger than those from MOFA's in any other single
country. Imports from Canadian MOFA's were particularly large shares of
imports of road motor vehicles and parts (92 percent), "other transportation
equipment" (89 percent), and inedible crude materials, except fuels
(62 percent).
By industry of affiliate, 46 percent of total imports shipped by MOFA's
were from MOFA's in manufacturing and 44 percent were from MOFA's in
petroleum. More than one-half of the imports in manufacturing were from
MOFA's in transportation equipment.
In goods-producing industries, large shares of the U.S. imports shipped
by MOFA's were products of the affiliates1 own industries of classification.
Virtually all of the imports shipped by petroleum MQFA's were of mineral
fuels, and 71 percent of those shipped by mining MOFA's were of inedible
crude materials, except fuels (probably mostly minerals). Within
manufacturing, the shares of imports that were products of the MOFA's own
industries were highest in electric and electronic equipment and in
nonelectrical machinery—over 90 percent in each. Corresponding shares were
87 percent in food and kindred products, 86 percent in transportation
equipment, 75 percent in "other manufacturing," and 73 percent in chemicals.
In primary and fabricated metals, in contrast, only 43 percent of the imports
shipped by MOFA's were of metal manufactures; the remainder was mostly road
motor vehicles and parts. Some of the latter may actually have been metal
parts and accessories for road motor vehicles, which should have been
classified as metal manufactures instead.
20. In all cases, the country of location of a MOFA was considered to
be the country of origin of the U.S. imports shipped by it.
27
In non-goods-producing industries, imports shipped by MOFA's in trade
were mainly machinery; inedible crude materials, except fuels; food,
beverages, and tobacco; and "other manufactures." In services—which is part
of "other industries" and which was the only other non-goods-producing
industry with imports of any size—nearly all imports were of
"other manufactures."
Technical Note
U.S. trade is defined by the Census Bureau as the physical movement of
goods between the customs area of the United States and the customs area of a
foreign country. The all-U.S. trade data in this article are as compiled by
Census, except that they have been adjusted to include shipments between the
Virgin Islands and foreign countries. (The 1977 Census data excluded these
shipments, but the MNC data included them.)
All-U.S. exports and imports are valued f.a.s. at the U.S. or foreign
port of exportation; thus, they include all costs incurred up to the point of
loading the goods aboard the export carrier at the port of exportation,
including the selling price at the interior point of shipment (or cost if not
sold), packaging costs, and inland freight and insurance. All-U.S. exports
include reexports and military grant shipments; all-U.S. imports include
goods for immediate consumption as well as goods entering into U.S. Customs
bonded warehouses.
The MNC data were defined to be as comparable as possible with the allU.S. trade data. In practice, however, the MNC and all-U.S. trade data are
not strictly comparable because they came from two different sources. The
MNC data were based on company records, whereas
the all-U.S. trade data were
1
compiled by the Census Bureau from shippers declarations filed with U.S.
Customs on each transaction.
Although the MNC data, like the all-U.S. data, were required to be
reported on a "shipped basis"—i.e., on the basis of when, where, and to (or
by) whom the goods were physically shipped—most reporters maintained their
books, and probably, in many cases, reported to BEA, on a "charged basis"—
i.e., on the basis of when, where, and to (or by) whom the goods were billed
or charged. Data on the two bases can differ significantly. For example, if
a U.S. parent buys goods from an affiliate in country A and sells them to an
affiliate in country B, but the goods are shipped directly from country A to
country B, a U.S. import or export would not be recorded on the shipped
basis, because the goods never physically entered or left the United States;
however, on the charged basis, both a U.S. import (to show the purchase
charged to the U.S. parent from country A) and a U.S. export (to show the
sale charged by the U.S. parent to country B) would be recorded.
The MNC data may also contain duplication. For example, if one U.S.
parent exported goods to an affiliate of another U.S. parent, the goods would
be counted twice in total MNC-associated U.S. exports—once as goods shipped
by U.S. parents to unaffiliated foreigners and once as goods shipped to
28
affiliates by U.S. persons other than their U.S. parents. This duplication
would cause the MNC data to be overstated relative to the all-U.S. data. The
amount of any such overstatement is unknown, but believed to be small.
The MNC and all-U.S. trade data may also differ because the timing,
valuation, origin or destination, shipper, or product involved in a given
transaction may have been recorded differently on company records than on the
Customs export and import documents. Other comparability problems are noted
in the text, including the misclassification of certain parts and accessories
for transportation equipment
in the MNC data disaggregated by product, and
the use of the "unallocated11 category in the data on MNC-associated U.S.
exports disaggregated by country of destination.
29
By L.A. LUPO
Worldwide Sales by U.S. Multinational Companies
This article analyzes sales by U.S. nonbank multinational companies
(MNC's) in 1977, by area of origin and destination, by industry of U.S.
parent, and by affiliation between seller and customer.
As noted in the Introduction to this
by nonbank U.S. MNC's are covered; thus,
nonbank MNC's, and MNC sales—defined as
their foreign affiliates—refers only to
collection of articles,
only sales
the term "MNC's11 refers only to
the sum of sales by U.S. parents and
sales by nonbank MNC's.
Total MNC sales could be disaggregated by area of origin (the location of
the seller) because the location of each seller, that"is, of each parent and
foreign affiliate, was reported in the 1977 benchmark survey. In contrast,
as explained below, only sales by U.S. nonpetroleum parents and by majorityowned foreign affiliates (MOFA's) could be disaggregated by area of
destination (the location of the customer). For sales disaggregated by
industry, unless noted otherwise, the industry used for MNC's, parents, and
affiliates was that of the parent. 1/
The first section of the article discusses total MNC sales by industry
and by area of origin. The second section discusses the destination of sales
by U.S. nonpetroleum parents of MOFA's, and by all MOFA's. Sales are
distributed into local sales (those where the customer is located in the same
country as the seller) and nonlocal sales (those where the customer is
located in a different country from the seller). In the third section, sales
by U.S. nonpetroleum parents of MOFA's and by all MOFA's are distributed
according to whether or not these sellers and their customers were
affiliated—that is, were members of the same MNC. The technical notes
discuss (1) the use of U.S. parents' export shipments as an estimate of their
nonlocal sales, which were not reported in the 1977 benchmark survey, (2) the
effect on the sales data of the consolidation rules applied in the 1977
benchmark survey, (3) the relationship between sales data in this article and
BEA's earlier published data on sales by MNC's, and (4) the extent to which
the distribution of affiliate sales by industry of affiliate differs from
that by industry of U.S. parent.
1. In the 1977 benchmark survey, each parent and each affiliate was
classified in the one industry in which its sales were largest; the U.S. MNC
as a whole was not classified by industry because the data needed to assign
an industry code based on the worldwide activities of the MNC's were not
secured. In most cases, however, the MNC-wide industry code would have been
the same as the parent's because each U.S. parent normally accounted for a
much larger share of total sales by an MNC than did its foreign affiliates,
and most affiliates were classified in the same industry as their U.S.
parent (see the technical notes).
30
Highlights
In 1977, U.S. MNC's had worldwide sales of $2,060 billion; $1,412 billion
were by U.S. parents and $648 billion were by foreign affiliates.
Of the $1,412 billion of sales by parents, more than two-thirds were by
parents in goods-producing industries—mainly manufacturing and
petroleum; the remainder were mainly in trade, insurance, and
communication and public utilities.
Although fewer than 1 in 2,000 U.S. businesses were parents, the parents
accounted for more than 35 percent of sales by all U.S. businesses, and
nearly 62 percent of sales by U.S. businesses in goods-producing
industries.
Sales by affiliates were concentrated more heavily in goods-producing
industries than were sales by their U.S. parents, mainly because
petroleum accounted
for a much larger share of the affiliates1 than of
1
the parents total sales.
Of the $648 billion of sales by affiliates, 15 percent originated in
Canada, 35 percent in the European Communities (9), 8 percent each in
"other Europe" and Japan, 11 percent in Latin America, and 17 percent in
developing areas other than Latin America.
Worldwide sales by U.S. nonpetroleum parents of MOFA's, and by all
MOFA's, can be distributed both by destination and origin. Worldwide
sales by the parents were $1,106 billion. By destination, only 8 percent
were to foreigners; the remaining 92 percent were local.
In contrast, of worldwide sales of $507 billion by all MOFA's, 62 percent
were local, 19 percent were to the United States, and nearly 20 percent
were to third countries (that is, to countries other than the United
States or the country of the MOFA).
Both for U.S. nonpetroleum parents and MOFA's, the bulk of worldwide
sales were to unaffiliated customers.
Sales by U.S. nonpetroleum parents to unaffiliated customers were 97
percent of their worldwide sales; the share was high because most of
their sales were local (i.e., were sold in the United States), and all of
their local sales were, by definition, to unaffiliated customers (see
footnote 8). In contrast, the share of their nonlocal sales that were to
unaffiliated customers was only 67 percent.
31
Sales by all MOFA's to unaffiliated customers were about two-thirds of
their worldwide sales. In most areas and industries, over 90 percent of
their local sales, but markedly lower shares of their nonlocal sales,
were to unaffiliated customers.
Sales by Industry and by Origin
By MNC's as a whole
In 1977, worldwide sales by U.S. MNC's totaled $2,060 billion. Of this
amount, $1,412 billion (69 percent) were by U.S. parents and $648 billion (31
percent) were by their foreign affiliates.
When each MNC was classified by industry of U.S. parent, nearly threefourths of sales were in goods-producing industries—mainly manufacturing and
petroleum. Most of the remainder was in trade, insurance, and communication
and public utilities (table 1 ) . 2/
MNC's in manufacturing had sales of $1,037 billion, about one-half of
worldwide sales by all U.S. MNC's. Within manufacturing, sales were largest,
at $241 billion, in transportation equipment; although most of these sales
were by automobile manufacturers, sales by U.S. aircraft companies also were
substantial.
MNC's in petroleum had sales of $475 billion. Most of these sales were
by a few large integrated companies engaged in all stages of the petroleum
industry—extraction, refining, and marketing. MNC's that specialized in
only one aspect of the industry, such as petroleum trade, tanker or pipeline
operations, or refining without extraction, together had sales of only $66
billion.
MNC's in trade had sales of $229 billion; these sales were split about
equally between retail and wholesale trade. In finance (except banking),
insurance, and real estate, sales were $145 billion; they mainly consisted of
gross operating revenues of MNC's in insurance. In "other" industries—
mainly transportation, communication, and public utilities—sales were $168
billion; in mining, they were less than $7 billion.
T.In this article, goods-producing industries cover mining (table 1,
line 2), petroleum (line 8), manufacturing (line 18), agriculture, forestry,
and fishing (line 71), and construction (line 72). Oil and gas field
services and petroleum trade are considered part of the petroleum industry as
shown on line 8, even though they are not "goods-producing" industries;
because they constituted less than 3 percent of the petroleum total, however,
their inclusion has little effect on the analysis. Non-goods-producingindustries cover trade (line 59), finance (except banking), insurance, and
real estate (line 64), transportation, communication, and public utilities
(line 73), and services (line 76).
32
Table 1.—Sales by U.S. MNC's, 1977, by Industry of U.S. Parent
Percent distribution
by industry
Millions of dollars
Total
Line
1
2
3
4
5
6
7
All industries
Mining
Metal mining
Iron —
Copper, lead, zinc, gold, and silver
Bauxite, other ores, and services
Coal and other nonmetallic minerals
By
U.S.
parents
By
foreign
affiliates
Total
By
U.S.
parents
2,060,262
1,412,293
647,969
100.0
100.0
6,866
2,672
(D)
1,850
(D)
4,194
4,986
1,467
(D)
(D)
4
3,519
1,880
1,205
(D)
(D)
(D)
675
.3
.1
.4
.1
(D)
(D)
(D)
(D)
(D)
.2
.2
474,635
8,547
6,140
2,407
411,457
409,123
(D)
(D)
42,252
12,379
221,757
6,131
4,144
1,987
181,568
179,389
252,878
2,416
1,996
420
229,889
229,734
23.0
.4
.3
.1
20.0
19.9
15.7
.4
.3
.1
12.9
12.7
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
22,321
11,736
19,930
642
2.1
.6
1.6
.8
1,037,157
110,762
19,132
12,958
78,672
145,821
80,203
27,464
23,729
4,066
10,360
119,639
82,575
52,897
29,678
37,064
126,403
9,178
27,025
47,859
42,342
87,103
11,928
20,442
9,176
45,557
240,716
181,105
59,611
206,713
14,559
30,054
20,493
31,496
16,071
25,256
4,122
8,868
13,912
28,832
13,049
739,460
83,422
14,497
9,679
59,245
96,474
53,985
16,423
14,790
3,303
7,974
94,563
66,152
46,902
19,250
28,411
80,174
6,559
18,211
23,950
31,455
62,631
8,436
16,723
6,247
31,225
165,681
115,877
49,804
156,516
10,845
25,342
18,218
22,570
13,734
16,401
3,251
6,053
10,409
19,087
10,607
297,697
27,340
4,635
3,279
19,426
49,347
26,218
11,042
8,939
762
2,386
25,076
16,423
5,996
10,428
8,652
46,228
2,619
8,814
23,909
10,887
24,472
3,493
3,719
2,929
14,332
75,035
65,228
9,807
50,198
3,715
4,712
2,276
8,927
2,337
8,854
872
2,815
3,503
9,745
2,442
50.3
5.4
.9
.6
3.8
7.1
3.9
1.3
1.2
.2
.5
5.8
4.0
2.6
1.4
1.8
6.1
.5
1.3
2.3
2.1
4.2
.6
1.0
.5
2.2
11.7
8.8
2.9
10.0
.7
1.5
1.0
1.5
.8
1.2
.2
.4
.7
1.4
.6
52.4
5.9
1.0
.7
4.2
6.8
3.8
1.2
1.1
.2
.6
6.7
4.7
3.3
.7
2.0
5.6
.5
1.3
1.7
2.2
4.4
.6
1.2
.4
2.2
11.7
8.2
3.5
.8
1.8
1.3
1.6
1.0
1.2
.2
.4
.7
1.4
.8
45.9
4.2
.7
.5
3.0
7.6
4.1
1.7
1.4
.1
.4
3.9
2.5
.9
1.6
1.3
7.1
.4
1.4
3.7
1.7
3.8
.5
.6
.5
2.2
11.6
10.1
1.5
7.8
.6
.7
.4
1.4
.4
1.4
.1
.4
.5
1.5
.4
228,750
108,215
37,516
70,699
120,536
183,706
77,683
29,252
48,431
106,023
45,044
30,532
8,264
22,268
14,513
11.1
5.3
1.8
3.4
5.9
13.0
5.5
2.1
3.4
7.5
7.0
4.7
1.3
3.4
2.2
8.5
.6
7.7
(*)
3.9
.3
2.4
(*)
.5
.7
—
.1
8
9
10
11
12
13
14
15
16
17
Petroleum
—
—
Oil and gas extraction
Crude petroleum (no refining) and gas
Oil and gas field services
Petroleum and coal products —
Integrated refining and extraction
Refining without extraction —
Petroleum and coal products, nee
Petroleum wholesale trade
Other
—
-
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
Manufacturing
Food and kindred products —
—
—
Grain mill and bakery products
Beverages
—
Other —
—
Chemicals and allied products —
Industrial chemicals and synthetics -Drugs —
Soap, cleaners, and toilet goods
Agricultural chemicals
Other
—
Primary and fabricated metals --—
Primary metal industries -Ferrous
Nonferrous
—
Fabricated metal products
Machinery, except electric
—
Farm and garden machinery and equipment
Construction and related machinery
Office and computing machines
Other —
Electric and electronic equipment
Household appliances -Radio, television, and communication equipment
Electronic components and accessories —
Other
Transportation equipment
Motor vehicles and equipment
Other
Other manufacturing
Tobacco manufactures --Textile products and apparel
Lumber, wood, furniture, and fixtures
Paper and allied products
Printing and publishing
Rubber products -M'-c*llaneous plastics products
a.uss products
S.one, clay, cement, and concrete
Instruments and related products
Other —
—
59
60
61
62
63
Trade
—
Wholesale trade
Durable goods
Nondurable goods
Retail trade
-
64
65
66
67
68
69
Finance (except banking), insurance and real estate
Finance, except banking
Insurance
Real estate —
Holding companies
Individuals, estates, and trusts 1/
144,650
11,178
123,446
587
5,118
4,321
119,596
9,051
108,088
517
1,940
0
25,054
2,127
15,358
70
3,178
4,321
7.0
.5
6.0
(*)
.2
.2
0
70
71
72
73
74
75
76
Other
—
—
Agriculture, forestry, and fishing
Construction
—
Transportation, communication, and public utilities
Transportation
--Communication and public utilities
Services
—
-
168,204
(D)
(D)
108,710
39,217
69,493
29,752
142,789
1,533
17,165
100,314
35,202
65,112
23,777
25,416
8.2
10.1
(D)
(D)
(D)
(D)
8,396
4,015
4,381
5,974
5.3
1.9
3.4
1.4
—
-
--
—
-
—
-
—
-
-
By
foreign
affiliates
-
11.1
.1
.1
1.2
7.1
2.5
4.6
1.7
MNC Multinational company.
D Suppressed to avoid disclosure of data of individual companies.
* Less than 0.05 percent.
1. Consists of U.S. parents that are individuals, estates, and trusts. Data for such U.S. parents appear as zero
because those parents were not required to report financial and operating data in the 1977 benchmark survey. Foreign
affiliates were not classified in this category; however, when data for affiliates are classified by industry of U.S. parent,
the data for the affiliates of such parents are shown against this category.
NOTE.—In this table, data for U.S. MNC's are only for nonbank MNC's; data for U.S. parents are only for nonbank parents of
nonbank affiliates; and data for affiliates are only for nonbank affiliates of nonbank parents.
33
39.0
.4
.3
(*)
35.5
35.5
(D
(D.
3.1
.1
3.9
(D)
(D)
1.3
.6
.7
.9
By U.S. parents
Of the $1,412 billion of sales by U.S. parents, more than two-thirds were
by parents classified in goods-producing industries—mainly manufacturing (52
percent of the total) and petroleum (16 percent). Sales by parents
classified in the other goods-producing industries (mining, agriculture,
forestry and fishing and construction) together were less than 2 percent of
the total.
The main non-goods-producing industry was trade, which accounted for 13
percent of total sales by the parents. The finance (except banking),
insurance, and real estate and the transportation, communication, and public
utilities industries each accounted for less than 8 percent, and services for
less than 2 percent, of the total.
Table 2 compares sales by U.S. parents with sales by all U.S. businesses,
by industry and by size of sales
per company. The all-U.S.-business data are
from the Bureau of the Census1 1977 Enterprise Statistics, and differ in
industry scope (coverage) from the U.S. parent data. 3/ After adjustment for
these differences, $1,180 billion (84 percent) of sales by parents were in
industries that were also within the scope of the 1977 Enterprise Statistics
(lines 11 and 12). Although fewer than 1 in 2,000 of U.S. businesses were
parents of foreign affiliates, the parents accounted for more than one-third
of the sales by all in-scope U.S. businesses.
The industry distribution of the U.S. parents1 sales differed markedly
from that for all U.S. businesses. 4/ For parents, manufacturing,
petroleum, and mining together accounted for over 80 percent of sales, with
3 . F o r the all-U.S.-business data, see U.S. Department of Commerce,
Bureau of the Census, 1977 Enterprise Statistics (Washington, D.C.: U.S.
GPO, 1981). The industry scope of the U.S. parent data as reported to BEA
was greater than that of all U.S. businesses as shown in the 1977 Enterprise
Statistics. Differences in scope were resolved essentially by eliminating
from the comparisons in table 2 the parents that were within the scope of
BEA, but were out-of-scope of the 1-977 Enterprise Statistics. Lines 11-13 of
table 2 give a reconciliation of the parent data in table 2 to the BEA total
for parents given in table 1, and the footnotes to table 2 describe the main
items in the reconciliation.
4. Some of the differences between the BEA and the Census industry
distributions reflected differences in statistical practices. In the 1977
Enterprise Statistics, each U.S. business was a consolidation of domestic
enterprises under "common ownership or control." In contrast, in the BEA
data, each U.S. parent was essentially a consolidation of the owning U.S.
business and all of its majority-owned domestic (U.S.) subsidiaries (see the
technical notes). Control of a company could be conferred by less than
majority ownership positions; therefore, the Census consolidation rule may
have been more inclusive than the BEA rule. Another source of difference
between BEA and Census industry distributions arose because BEA assigned an
industry code based on sales, but Census assigned one based mainly on payroll
data. The impact of these differences in statistical practices upon the
industry distribution of the data is not known.
34
Table 2.—Sales by U.S. Parents Compared With Sales by All U.S. Businesses, 1977
Number of companies
U.S.
All inparents scope
U.S.
businesses 1/
Millions of dollars
Sales by
U.S.
parents
Sales by
all inscope
U.S.
businesses V
Percent distribution
Millions of dollars per company
Sales by Sales by
all inU.S.
parents scope
U.S.
businesses ]_/
Sales by Sales by
U.S.
all inparents scope
U.S.
businesses
Line
1
All industries covered in the 1977
benchmark survey and in 1977
Enterprise Statistics 1/
2,700 5,589,802
1,179,625
3,324,550
100.0
100.0
436.9
29
8,875
148 198,595
1,841 295,060
375 1,885,749
307 3,201,523
4,986
210,530
739,460
183,706
40,942
37,565
263,805
1,275,174
1,332,093
415,914
.4
17.9
62.7
15.6
3.5
1.1
7.9
38.4
40.1
12.5
172.0
1,422.5
401.7
489.9
133.3
4.3
1.4
4.4
.7
.1
665
1,060
393
1,293
371
2,186
1,271 5,585,263
1,065,763
63,402
26,580
23,879
1,293,663
199,864
150,132
1,680,891
90.3
5.4
2.2
2.0
38.9
6.0
4.5
50.5
1,602.7
161.4
71.7
18.8
1,220.7
154.6
68.7
.3
3,425
n.a.
1,412,293
n.a.
n.a.
n.a.
412.4
n.a.
2,700
n.a.
1,179,625
n.a.
436.9
n.a.
n.a.
232,669
n.a.
321.0
n.a.
By industry:
2
3
4
5
6
Mining
Petroleum 2/
Manufacturing
Trade
Other 3/
-
—
By sales size class, millions of dollars:
7
8
9
10
$250 and over
$100-249.9
$50-99.9
Less than $50
—-
-
Addenda: Reconciliation of U.S.
parent data:
11 U.S. parent total from 1977
benchmark survey
12 U.S. parents in industries covered
in 1977 Enterprise Statistics
13 U.S. parents not in industries
covered in 1977 Enterprise
Statistics 4/
-
725
n.a.
n.a.
n.a. Not applicable.
1. The "scope11—coverage by industry--of U.S. parents, as reported in the 1977 benchmark survey, was broader than that for all U.S. businesses, as shown
in the 1977 Enterprise Statistics. The industry groups given in lines 2-6 include only those industries that are in scope of both BEA's 1977 benchmark
survey and the 1977 Enterprise Statistics. Data for direct investment industries that are out of scope of the 1977 Enterprise Statistics are shown in line
13 (see footnotiTT
2. Petroleum excludes petroleum tanker operations; pipeline transmission, including natural gas; petroleum storage for hire; and lessors of gasoline
service stations and sites. These categories, which are part of the direct investment petroleum industry, are out of scope of the 1977 Enterprise
Statistics. Several parents, accounting for $11,227 million in sales in 1977, were excluded.
3. "Other" consists of construction and services that are in-scope of the 1977 Enterprise Statistics.
4. Parents not within the scope of the 1977 Enterprise Statistics consist of the U.S. petroleum parents cited in footnote 2 plus those classified in
agriculture, forestry, and fishing; finance (except banking), insurance, and real estate; and transportation, communication, and public utilities. See
text for further discussion of comparability of sales between the benchmark survey and 1977 Enterprise Statistics.
NOTE.— In this table, data for U.S. parents are only for nonbank parents of nonbank affiliates.
35
manufacturing the major industry; trade and "other" industries together
accounted for less than 20 percent of the total. In contrast, for all U.S.
businesses (which include the parents), trade accounted for the largest
share~40 percent; manufacturing, petroleum, and mining together accounted
for less than one-half of the total.
Sales per company were far higher for parents than for all U.S.
businesses, both in total and in each industry shown. In terms of number,
parents accounted for nearly two-thirds of the U.S. businesses with sales of
$250 million or more (the largest size class in table 2), but a negligible
proportion of those with sales of less than $50 million (the smallest size
class). In terms of sales, parents accounted for most of the sales in the
largest, but a negligible proportion of sales in the smallest, size class.
In the largest size class, most U.S. businesses in goods-producing
industries, but relatively few of those in other industries, were also U.S.
parents.
U.S. parents were predominant in the largest size classes for several
reasons. First, investments abroad often involved significant commitments of
capital and management, both of which could be mobilized more readily by
large than by small businesses. Second, a U.S. business that already had a
major share of the U.S. market may have needed access to foreign markets in
order to obtain further sales growth or economies of scale in production. In
contrast, many medium- and small-scale U.S. businesses may have needed to use
most of their resources domestically, in order to remain competitive in U.S.
markets. Moreover, many small businesses were in trade or services and
therefore mainly served local markets.
By foreign affiliates
When sales by foreign affiliates were classified by industry of U.S.
parent, the sales were chiefly in goods-producing industries. Of the $648
billion of sales, manufacturing accounted for 46 percent, petroleum
(including petroleum trade) for 39 percent, and other goods-producing
industries for only 2 percent of the total (table 1, column 6 ) .
The main non-goods-producing industry, trade, accounted for 7 percent of
total sales by affiliates. The finance (except banking), insurance, and real
estate industry accounted for less than 4 percent, and the transportation,
communication, and public utilities and the services industries each
accounted for roughly 1 percent, of the total.
The share of petroleum was markedly higher, and the shares of non-goodsproducing industries markedly lower, in sales by foreign affiliates than in
sales by U.S. parents (table 1, columns 5 and 6). The share of petroleum was
higher for affiliates, partly because they supply a large portion of the
petroleum needed by both the U.S. and foreign customers of the petroleum
MNC's. Also, the affiliate sales data are more likely to contain duplication
than are the parent sales data: crude petroleum may be sold by an extractive
affiliate to a refining affiliate, which may resell refined petroleum
products to an unaffiliated customer; each of the sellers is a foreign
affiliate of a U.S. petroleum parent and, therefore, sales by each are
36
correctly included in affiliate sales. In contrast, as explained in the
technical notes, domestic sales by U.S. parents were reported on a
consolidated basis; thus, only a petroleum parent's sales to unaffiliated
customers would be counted in the parent's domestic sales. Further, for
petroleum that was both produced and consumed locally, the U.S. Government
held prices below world market levels. This policy, since dropped, tended to
reduce the dollar volume
of sales by U.S. petroleum parents, and, thus, the
U.S. petroleum parents1 share of total sales by U.S. parents.
The relatively low shares of sales by foreign affiliates in non-goodsproducing industries—in particular, retail trade, insurance, and
transportation, communication, and public utilities--reflected a tendency for
the markets served by these industries to be fragmented by country-to-country
differences in commercial practices, regulatory framework, and language.
Overcoming these differences can be expensive and can inhibit investment; in
some countries, formal and informal restrictions on foreign investment
particularly affected these industries.
In table 3, affiliate sales by major industry of U.S. parent are
classified by area of origin (the seller's country of location). Affiliates
in developed countries accounted for 69 percent of total sales by the
affiliates, those in developing countries for 28 percent, and those in
"international", which mainly were engaged in international petroleum
transportation, for 2 percent. Among developed countries, Canada and the
European Communities (EC (9)), accounted for 15 and 35 percent, respectively,
"other Europe" and Japan for about 8 percent each, and Australia, New
Zealand, and South Africa for 4 percent, of worldwide sales by affiliates.
Among developing countries, Latin America accounted for 11 percent, and
other developing areas ("other Africa," the Middle East, and "other Asia and
Pacific") for 1/ percent, of the worldwide affiliate total.
In both developed and developing countries, most of the sales originated
in a few countries. Ranked according to size of affiliate sales originating
in each, the top five developed countries were Canada, the United Kingdom,
Germany, Japan, and France (table 3, line 81). Together, they accounted for
sales of $307 billion, more than two-thirds of the developed country total.
More than one-half of the sales were by affiliates of U.S. manufacturing
parents. Except in Japan, transportation equipment was the largest
manufacturing industry. In Japan, the largest manufacturing industry was
electric and electronic equipment; this mainly reflected sales by a very
large Japanese affiliate in which a U.S. parent held a minority ownership
position.
Affiliates of U.S. petroleum parents accounted for roughly one-fourth of
affiliate sales originating in the five countries. In Japan, these
affiliates accounted for nearly one-half of sales by all affiliates, a much
higher proportion than in any of the other four countries; sales were
especially large because these affiliates were the major importers of
petroleum into Japan. In oil and gas extraction, affiliate sales originating
in Canada and in the United Kingdom (mainly the North Sea area) were
particularly large; in refining and distribution, affiliate sales originating
in each of the five countries were a significant part of the total.
37
Table 3.—MNC Sales, 1977, Area of Origin by Industry of U.S. Parent
Percent distribution by industry
Millions of dollars
I1§
Total
Petroleum
All areas
2,060,262
474,635
2 Sales by U.S. parents
3 Sales by foreign a f f i l i a t e s
1,412,293
647,969
221,757
252,878
449,015
126,108
I
Manufacturing
Trade
Other
Petroleum
Manufacturing
228,750
319,721
~23T0~
~50A~
739,460
297,697
183,706
45,044
267,371
52,350
15.7
39.0
52.4
45.9
246,715
39,474
36,717
28.1
55.0
54,661
9,895
13,859
17.4
1,037,157
TFide"—Dti
TEl
I57T
13.0
7.0
19.0
8.1
57.6
10.4
14.6
Located in:
4
Developed areas
5
Canada
94,876
16,462
6
Europe
276,275
80,403
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
European Communities (9)
Belgium
Denmark
France
Germany
Ireland
Italy
Luxembourg
Netherlands
United Kingdom
Other Europe
Austria
Greece
Norway
Portugal
Spain
Sweden
Switzerland
Turkey
Other
225,909
16,998
3,452
34,747
60,435
2,009
15,899
696
27,008
64,666
50,366
3,180
1,498
3,945
803
12,202
4,921
21,373
1,079
1,364
67,968
4,147
1,926
(D)
19,971
(D)
4,374
105
12,718
17,157
12,436
(D)
898
1,852
(D)
3,586
1,493
2,491
(D)
(D)
8.2
148,516
27,446
19,910
29.1
53.8
9.9
7.2
125,935
10,159
1,323
23,846
33,373
1,458
9,488
569
10,554
35,165
15,987
1,256
27
1,710
2,487
28
794
17
2,652
7,017
16,020
1,436
177
(D)
4,604
(D)
1,243
5
1,084
5,327
30.1
24.4
55.8
(D)
33.1
(D)
27.5
15.0
47.1
26.5
55.8
59.8
38.3
68.6
55.2
72.6
59.7
81.8
39.1
54.4
7.1
7.4
.8
4.9
7.1
8.5
5.1
4.1
1.4
7.6
5.0
2.4
9.8
10.9
7.8
.8
4.0
8.2
22,581
1,599
475
1,298
524
7,100
2,891
7,690
342
662
11,459
(D)
(D)
16
(D)
801
53
10,265
(D)
210
3,891
(D)
(D)
780
48
716
484
926
(D)
(D)
24.7
(D)
60.0
46.9
(D)
29.4
30.3
11.7
(D)
(D)
44.8
50.3
31.7
32.9
65.2
58.2
58.8
36.0
31.7
48.5
22.8
7.7
(D)
(D)
(D)
(D)
(D)
(D)
.4
19.8
(D)
5.9
5.9
9.8
4.3
6.6
1.1
48.0
(D)
15.4
(D)
(D)
27
Japan
51,895
24,176
26,080
848
790
46.6
50.3
1.6
1.5
28
29
30
31
Australia, New Zealand, and South Africa
Australia
New Zealand
South Africa
25,970
18,125
1,393
6,453
5,067
(D)
(D)
1,748
17,459
12,893
845
1,286
1,157
16
2,158
(D)
(D)
871
19.5
(D)
(D)
27.1
67.2
71.1
60.7
57.7
5.0
6.4
1.1
1.8
8.3
183,219
113,033
14,363
61.7
27.5
20.9
12.4
22.6
67.1
67.4
67.3
51.7
54.8
40.5
75.8
75.2
53.3
32
33
Developing areas
Latin America
73,287
25,377
3,721
113
50,431
5,393
6,689
36,978
23,702
2,748
13,019
4,243
2,032
2,201
597
892
1,053
34
35
36
37
38
39
40
41
42
South America
Argentina
Brazil
Chile
Colombia
Ecuador
Peru
Venezuela
Other
35,331
4,075
19,340
610
2,410
629
1,021
6,436
810
7,397
505
4,376
(D)
643
(D)
148
1,041
198
43
44
45
46
Central America
Mexico
Panama
Other
15,083
10,833
1,681
2,569
1,969
510
736
724
10,641
8,772
47
48
49
50
51
52
Other Western Hemisphere
Bahamas
Bermuda
Netherlands Antilles
Trinidad and Tobago
Other
22,873
2,425
14,414
2,160
1,395
2,478
16,010
1,953
10,384
1,775
1,229
670
2,636
225
315
(D)
71
1,322
174
(D)
271
(D)
26.7
255
774
45
14.5
16.2
24.4
4,839
431
728
1,141
244
582
275
92
1,442
55
200
(D)
357
(D)
(D)
(D)
1,067
1,407
13.1
840
41
186
711
177
519
43.8
28.2
1,145
78
950
27
14
76
3,081
149
2,499
83
60
290
4.7
70.0
80.5
72.0
82.2
88.1
27.0
53
54
55
56
57
58
59
60
61
Other Africa
Saharan
Egypt
Libya
Other
Sub-Saharan
Liberia
Nigeria
Other
16,662
6,758
839
5,068
850
9,904
268
4,808
4,828
13,010
5,897
665
4,931
301
7,114
25
4,227
2,861
2,124
87
372
31
113
228
(D)
1
(D)
(D)
(D)
62
63
64
65
66
67
Middle East
Israel
OPEC
Iran
Other
Other
66,607
995
63,660
11,675
51,984
1,952
60,238
(D)
58,614
(D)
(D)
(D)
2,131
774
745
350
(D)
(D)
68
69
70
71
72
73
74
75
76
77
78
Other Asia and Pacific
Hong Kong
India
Indonesia
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Other
26,664
5,301
2,287
5,605
1.245
3,080
2,554
3,511
1,304
1,070
707
14,408
2,784
821
4,240
521
9,197
1,816
1,385
455
931
283
612
(D)
877
2,807
(D)
(D)
425
1,300
1,492
52
210
24
76
169
87
15,734
13,737
551
177
75,204
63,614
6,808
269
306,617
(D)
173,125
21,956
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
79
International
Addenda:
80
OPEC
(D)
(D)
13.5
1,752
192
269
1,291
263
1,519
590
890
459
197
1,441
(D)
143
(D)
(D)
(D)
78.1
87.3
79.2
97.3
35.4
71.8
12.7
6.6
58.2
1
(D
J
(D)
2,128
(D)
(D)
(D)
8.7
17.0
(D)
5.6
(D)
(D)
(D
(D
.2
6.0
.1
6.2
(D)
(D)
(*)
(D)
(D)
(D)
3.5
5.3
8.0
7.9
3.2
26.4
2.4
6.6
1.4
18.0
(D)
(D)
(D)
60.2
1,270
87.3
3.5
4,514
84.6
9.1
(D)
(D)
3.9
4.3
11.7
.5
160
39
(D)
6.2
(D)
.1
(D)
49.2
42.2
58.4
16.8
68.3
42.9
27.8
905
60
13.5
17.3
5.5
3.7
2.2
54.0
52.5
35.9
75.7
41.9
(D)
34.3
79.9
419
10.5
20.2
12.8
26.7
(D)
(D)
(D)
(D)
5.0
3.2
6.6
1.3
1.0
3.1
4.0
9.4
(D)
4.4
5.6
11.5
10.1
87.9
59.3
92.1
5.4
3.1
(D)
51
90.4
11.6
11.2
9.3
6.6
(D)
(D)
(D)
(D)
7.2
(D)
(D)
0
3,456
6.2
5.5
5.5
7.1
7.8
2.4
7.2
(D)
(D)
4,105
4.6
70.6
81.0
43.3
44.4
26.8
17.7
71.5
132
59
72
5.8
14.7
34.5
34.3
60.6
8.1
(D)
0
(D)
.1
4.1
6.8
1.0
2.2
(D)
(D)
(D
(D
19.1
(D)
5.4
(D)
16.2
4.8
(D)
6.3
(D)
1.1
(D
(D
(D
1.1
8.1
12.9
8.2
6.0
Sum of top 5 countries, ranked by amount of sales
by affiliates located in each country:
81
Developed countries—Canada, United Kingdom,
Germany, Japan, and France
82
Developing countries—Saudi Arabia, Brazil,
Bermuda, Iran, and Mexico
MNC Multinational company.
OPEC Organization of Petroleum Exporting Countries: consists of Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya,
Nigeria, Qatar, Saudi Arabia, Venezuela, and the United Arab Emirates.
D Suppressed to avoid disclosure of data of individual companies.
* Less than 0.05 percent.
NOTE.—In this table, data for U.S. MNC's are only for nonbank MNC's; data for U.S. parents are only for nonbank parents of
nonbank affiliates and data for affiliates are only for nonbank affiliates of nonbank parents.
38
56.5
(D)
7.2
(D)
(D)
(D)
Affiliates of U.S. parents in trade and in "other" industries together
accounted for less than one-fifth of affiliate sales originating in the five
countries. Sales were particularly large in Canada and the United Kingdom,
and particularly small in Japan, where commercial practices and policies may
have inhibited foreign investment, especially in these industries.
The top five developing countries were Saudi Arabia, Brazil, Bermuda,
Iran, and Mexico. Together, they accounted for well over one-half of total
affiliate sales originating in developing countries. Sales originating in
each country except Saudi Arabia are shown separately in table 3. Sales for
Saudi Arabia separately, and, hence, the sum of sales for the five countries
combined, are not shown in order to avoid disclosure of data for individual
companies (one affiliate accounted for most of the sales originating in Saudi
Arabia). Sales originating in Saudi Arabia, however, accounted for a very
large share of the $52 billion of sales in "other" Middle East OPEC (line
66); these sales, of course, were almost entirely by affiliates of U.S.
petroleum parents.
Affiliates of petroleum parents accounted for well over 60 percent of
affiliate sales originating in the five developing countries. (In contrast,
in the top five developed countries, petroleum accounted for about one-fourth
of the total.) In both Saudi Arabia and Iran, which are members of OPEC, the
share of petroleum exceeded 90 percent. In Bermuda, petroleum accounted for
72 percent of the total; this large share reflected sizable sales by
affiliates of petroleum parents that were engaged in financial activities on
behalf of their U.S. parents. (In Bermuda, the largest industries after
petroleum were trade, and finance and insurance (included in "other");
Bermuda is one of the several countries that, for various business reasons,
including tax minimization, were favored by U.S. parents as locations for
their captive trade, finance, and insurance affiliates.) In Brazil, the
share of petroleum was 23 percent, and, in Mexico, it was less than 5
percent, respectively, of affiliate sales originating in each country. The
share of affiliate sales in Mexico was particularly low because most
petroleum activity there is reserved to a government-owned company.
Affiliates of U.S. manufacturing parents accounted for roughly 20 percent
of total affiliate sales originating in the five countries. In Brazil and
Mexico, the shares of manufacturing were 67 and 81 percent, respectively, and
in each of the other three countries, less than 7 percent. In both Brazil
and Mexico, the largest manufacturing industry was chemicals, with
transportation equipment almost as large. Except in Bermuda, the share of
affiliate sales in the remaining industries (trade and "other") was less than
10 percent of the total. In Bermuda, affiliates of parents in the finance
(except banking), insurance, and real estate industry (part of "other")
accounted for 17 percent of affiliate sales originating there.
Sales by Destination
As noted previously, all MNC sales could not be distributed by
destination, because the benchmark survey obtained sales by destination only
39
for MOFA's, but not for minority-owned foreign affiliates or for U.S.
parents. For U.S. nonpetroleum parents, however, sales by destination could
be derived. This section first discusses the effect on the data of excluding
minority-owned affiliates, and explains the derivation of sales by
destination for U.S. nonpetroleum parents of MOFA's. For those parents and
for all MOFA's, it then analyzes sales to the United States and to major
foreign destinations.
The data
Exclusion of minority-owned foreign affiliates.--Table 4 shows that,
after excluding minority-owned affiliates, and, for consistency, parents that
had only minority-owned affiliates, from the MNC's, the remaining affiliates
(the MOFA's) and their parents accounted for well over three-fourths of total
MNC sales in each major industry group, and in each major area of origin
except Japan. In Japan, coverage was only 26 percent, reflecting barriers
there to majority foreign ownership of Japanese businesses.
Derivation of sales by destination for U.S. nonpetroleum parents.-Because data on nonlocal sales by U.S.1 parents were not available from the
benchmark survey, data on the parents merchandise export shipments (which
were available) were
used as a rough approximation of their nonlocal sales.
The U.S. parents1 local sales then were estimated by subtracting their export
shipments from their total sales.
The resulting estimates
by destination of U.S. parents1 nonlocal sales
1
are rough. Parents exports cover physical shipments of goods across the
U.S. customs
frontier, irrespective of to whom the goods were charged.
Parents1 nonlocal sales, in contrast, cover all sales of goods and services
charged to foreign countries, irrespective of whether the goods were actually
shipped from the United States to, or the services were actually performed
in, those countries.
This method of estimating the destination of U.S. parents1 sales was used
in each industry except petroleum. The destination of sales by U.S.
petroleum parents could not 1be estimated by this method, because the evidence
indicated that these parents nonlocal sales generally were much larger than
their export shipments. Their nonlocal sales were often resales of petroleum
previously purchased from foreign sources. In many cases, the petroleum was
shipped directly from a foreign supplier to a foreign purchaser, but was
charged (sold) by the foreign supplier to the U.S. parent rather than to the
foreign purchaser directly; the parent, in turn, billed the foreign
purchaser. (This was particularly likely if the foreign supplier or the
foreign purchaser, or both, were affiliated with the parent.) The sale by the
parent to a foreigner would have been recorded in the benchmark survey as
40
Table 4.—Comparison of Sales by U.S. MNC's With Sales by U.S. Parents of MOFA's
and Their MOFA's, 1977, by Industry of U.S. Parent
and by Area of Origin
U.S.
MNC's
Line
(1)
1 Total sales
2
By U.S. parents--3
By foreign affiliates
4
5
6
7
8
9
10
11
12
13
14
By industry of U.S. parent:
Petroleum
Manufacturing
Trade
Other
By area of origin:
United States
Canada
Europe
Japan
Australia, New Zealand, and
South Africa
Latin America
Other
-
Millions of dollars
Other U.S.
U.S. parents parents, and all
Column 2
of MOFA's and minority-owned
as a percentage
their MOFA's foreiqn affiliates
of column 1
(2)
(3)
(4)
2,060,262
1,412,293
647,969
1 ,832,565
1 ,325,546
507,019
227,700
86,747
140,950
88.9
93.9
78.2
474,635
1,037,157
228,750
319,721
421,754
930,209
190,795
289,805
52,881
106,948
37,955
29,916
88.9
89.7
83.4
90.6
1,412,293
94,876
276,275
51,895
1,325,546
84,659
220,213
13,232
86,747
10,217
56,062
38,663
93.9
89.2
79.7
25.5
25,970
73,287
125,667
20,233
58,208
110,475
5,737
15,079
15,192
77.9
79.4
87.9
MNC Multinational company.
MOFA Majority-owned foreign affiliate.
NOTE.--In this table, data for U.S. MNC's are only for nonbank MNC's; data for U.S. parents are only
for nonbank parents of nonbank affiliates; and data for affiliates are only for nonbank affiliates of
nonbank parents. MOFA's are defined as affiliates that were owned more than 50 percent by all U.S.
parents combined and that had assets, sales, or net income over $3 million in 1977.
41
part of total sales by the parent; however, no export to or from the United
States would have been recorded, because the petroleum did not cross the U.S.
customs frontier—it was not actually shipped to or from the United States. 5/
Sales by U.S. petroleum parents were $220 billion. When these sales were
excluded from total parent sales, sales by the remaining (nonpetroleum) U.S.
parents were $1,106 billion. Sales by all MOFA's (whether of petroleum or of
nonpetroleum parents) were $507 billion. Thus, sales by those two subsets—
which are analyzed in this and subsequent sections of the article—together
covered $1,613 billion, or 88 percent, of sales by all U.S. parents of MOFA's
and their MOFA's.
Industry and destination of sales by U.S. nonpetroleum parents
Local sales (sales to U.S. customers) accounted for 92 percent of
nonpetroleum parents1 total sales of $1,106 billion (table 6 ) . In each major
nonpetroleum industry, the bulk of sales—about
90 percent in manufacturing
and in trade, and nearly 99 percent in "other11 industries—were local. The
larger share in "other" reflected the inclusion of large service-type
subindustries—mainly insurance, communication, public utilities, and
services. Most sales in these subindustries probably were local because they
often depended on proximity to customers 1and familiarity with local customs
and opportunities. Also, because parents local sales were calculated as the
difference between the parents1 total sales and their exports of merchandise,
all parent sales of services were forced into local sales.
Nonlocal sales by U.S. nonpetroleum parents were $84 billion. Of the
total, sales to Canada were $18 billion, nearly all in manufacturing (tables
7A and 7B). Within manufacturing, sales in transportation equipment—mainly
automotive—were by far the largest (table 7B, line 62, column 4 ) . (These
sales—mostly to Canadian MOFA's of U.S. automotive parents—were
approximately offset by sales by the Canadian MOFA's to the United States.
The fact that these automotive sales to Canada were approximately equal to
those from Canada is attributed to the operation of the 1965 U.S.-Canadian
automotive agreement, which encouraged expansion of automotive trade in both
directions.)
Sales to Europe were $27 billion, larger than those to any of the other
major foreign areas (table 7A, line 17, column 5 ) . Within Europe, sales to
5. The dollar amounts involved in transactions in which U.S. parents
sold petroleum to foreigners, but did not ship the petroleum from the United
States, apparently were large. Partial data by area of destination provided
informally by some large petroleum parents during a prepublication review of
the benchmark survey results showed that they charged $57 billion of sales to
foreigners; in contrast, export shipments reported by all petroleum parents
were less than $5 billion. Thus, at a minimum, there were $53 billion of
parent sales to foreigners that did not result in parent export shipments of
petroleum (table 5 ) . Because of their partial coverage, the data on
petroleum parents1 sales probably seriously understated actual nonlocal sales
by all petroleum parents.
42
Table 5.—Partial Estimates of Nonlocal Sales and U.S. Export Shipments by U.S. Petroleum
Parents, 1977
(Millions of dollars)
Total
Line
1
2
3
4
5
All areas
Canada
Europe
Other
Not distributed by area —
Known nonlocal sales
by U.S. petroleum
parents that were
not shipped from
the United States
Reported U.S. export
shipments of U.S.
petroleum parents
(1)
(2)
(3)
57,506
1,466
21,920
26,625
7,495
52,710
1,040
20,659
23,516
7,495
4,796
426
1,261
3,109
— None.
NOTE.—Data in column 3 are from the benchmark survey. They were known not to overlap with the
data on nonlocal sales by U.S. petroleum parents shown in column 2. The latter were obtained
informally from some, but not all, U.S. petroleum parents during the prepublication review of the
benchmark survey data. Because of their partial coverage, these data underestimate U.S. parent
sales abroad to some unknown extent.
43
Table 6.—Total, Local, and Nonlocal Sales by U.S. Parents of MOFA's and Their MOFA's, 1977
Millions of dollars
U.S. and
foreign destinations
Line
A
1
2
3
4
Sales by U.S. parents 1 /
Nonpetroleum, total
Manufacturing
Trade
Other
5
Petroleum 1 /
B
Sales by MOFA's
6
7
8
9
10
11
12
13
14
15
16
-
-
By industry of parent:
Nonpatroleum, total
Manufacturing
Trade
Other
Petroleum
By area of location of MOFA:
Canada
Europe
Japan
Australia, New Zealand, and
South Africa
Latin America
Other
Total
Sales
to
United
States
Sales
to
other!
areas
JLU
ilL
JL3L
Percent distributions
Local and nonlocal sales
Local
sales
Nonlocal sales
To
To
United
other
States
areas
Total
Sales
to
United
States
J1L
J5JL
J2L
3,067
n.a.
93,574
100,138
18.5
81.5
22,726
19,680
1,470
1,576
70,848
70,770
52,701
12,006
6,062
29,368
7.5
8.5
4.4
4.1
35.0
14,659
7,791
(D)
3,599
66,820
(D)
11,092
59,230
n.a.
1,021,560
632,993
140,691
n.a.
84,430
64,811
16,552
250,943
247,876
3,067
247,876
3,067
219,556
n.a.
n.a.
n.a.
n.a.
n.a.
507,019
93,574
413,445
313,307 193,496
84,659
220,213
13,231
14,659
70,000
7,791 212,422
(D)
(D)
20,233
58,208
110,475
(D)
11,092
59,230
(D)
47,117
51,244
211,325
160,024
20,076
31,225
101,982
93,496
72,381
13,476
7,638
100,216
66,402 18,258
145,603 74,611
12,274
957
17,780 '2,453
36,786 21,421
34,463 76,012
Q2L
n.a.
92.4
90.7
89.5
98.8
n.a.
n.a.
84,430
64,811
16,552
282,095
212,725
32,083
37,287
131,351
Local
sales
n.a.
7.6
9.3
10.5
1.2
n.a.
.n.a.
1,021,560
632,993
140,691
22,726
19,680
1,470
1,576
70,848
Sales
to
other
areas
Local and nonlocal sales
n.a,
92.4
90.7
89.5
98.8
n.a.
1,325,546
1,105,990
697,804
157,243
304,821
232,405
33,552
38,863
202,198
U.S. and foreign
destinations
n.a.
Nonlocal sales
To
To
United
other
areas
Total States
(11)
61.8
n.a.
7.6
9.3
10.5
1.2
n.a.
38.2
n.a.
18.5
92.5
91.5
95.6
95.9
65.0
69.3
68.9
59.8
80.3
50.4
30.7
31.1
40.2
19.7
49.6
7.4
8.5
4.4
4.1
35.0
17.3
3.5
(D)
82.7
96.5
(D)
78.4
66.1
92.8
21.6
33.9
7.2
17.3
3.5
(D)
(D) (D)
10,329 19.1
16,782 53.6
(D)
80.9
46.4
87.9
63.2
31.2
12.1
36.8
68.8
(D)
19.1
53.6
n.a.
84,430
64,811
16,552
(D)
MOFA Majority-owned foreign affiliate.
n.a. Not available.
iD Suppressed to avoid disclosure of data of individual companies.
—
None, by definition. See text for explanation.
1. A distribution by area of destination of sales by U.S. petroleum parents is not available.
NOTE.--In this table, data for U.S. parents are only for nonbank parents of nonbank affiliates and data for affiliates are only for nonbank affiliates
of nonbank parents. MOFA's are defined as affiliates that were owned more than 50 percent by all U.S. parents combined and that had assets, sales, or
net income over $3 million in 1977.
(12)
n.a.
n.a.
7.6
9.3
10.5
1.2
n.a.
19.8
23.2
22.7
35.8
15.6
14.5
4.3
30.3
(D)
(D)
17.7
15.2
Table 7A.— Sales by U.S. Parents of MOFA's and by their MOFA's, 1977, Selected Industry of U.S. Parent and Area of Origin by Area of Destmatic
•I
Canada
lands
Line
<1>
<2>
<3>
(4)
(5)
<6)
(7)
(8)
Kingdom
(9)
(10)
Europe
(11)
South
Africa
(12)
(13)
area:
(14)
(15)
All industries:
Located
in:
760
United
Japan
and
Kingdom ,
11
56/680
12
13,232
2,178
372
54,503
162
12,860
38
605
161,885
22,073
36,133
9,919
11,696
39,687
47,794
1,801
79
67
131
747
54
120
235
44
(0)
347
(0)
2,097
139
(D)
(D)
(0)
28
D)
87
71
763
65
1,616
0)
28,095
60 1 2 , 2 7 4
117
1,514
1,271
989
395
3,663
17,994
145
237
(0)
(D)
144,114
332
270
7,866
730
1,501
456
(0)
1,258
(0)
3,549
. . . .
Soutl
38,217
36,094
Italy .
Netherl
United
157,243
Located
1 4 0 ,
in:
Canada
. . . .
Europe
. . . .
7,395
1,389
Japan
and
6,762
(D)
356
3
1,305
'803
493
South
Afr
1,183
989
(D)
3,938
Italy
(0)
858
3,833
(D)
(D>
(0)
(0)
(D)
52
(0 )
(D)
(0)
(0)
3
(D)
<D)
<D)
12,743
12,597
3,727
(0)
616
3,271
1 37
20
(D)
2,996
16
(D )
(D)
(0)
(D)
(D>
(D)
(0>
3,000
6,436
11,843
4,148
5,374
Japan
and
South i
MOFA Majority-owned foreign a f f i l i a t e .
n.a. Not available. See text for explanation.
* Less than $500,000 ( + ) .
" Suppressed to avoid disclosure of data of Individual companies.
NOTE.—In this table, data for U.S. parents are only for nonbank parents of nonbank a f f i l i a t e s and data for a f f i l i a t e s are only
for nonbank a f f i l i a t e s of nonbank parents. MOFA's are defined as a f f i l i a t e s that were owned more than 50 percent by a l l U.S.
3
parents combined and that had assets, sales, or net Income over $3 million In 1977.
69
( 0 )
(0)
(D)
(0)
(D)
(*)
(D)
(0)
1
(0)
2
11
(D)
(D>
13
(D)
(D)
(D)
D)
r>)
D)
D)
D)
n>
Table 7B.—Sales by U.S. Parents of HOFA's and by Their MOFA's, 1977, Selected Manufacturing Industry of U.S. Parent and Area of Origir
by Area Of Destination
( M i l l i o n s of dollars)
Foreign
Total
Canada
Europe
New Zeal a n d , and
South
<1>
<2)
1,945
2/159
776
1,223
3,254
2,005
Germany
Italy . .
Netherla
United K
Other Eu
(3)
(4)
(5)
(6)
(8)
<9>
(10)
(11)
(12)
(13)
(14)
developing
areas
(15)
1,827
12
192
2,398
768
1,130
1,218
(7)
America
1,977
64 6
646
1,337
5,691
23
5,523
2,124
27
1,160
1,145
28
1,829
1,823
40
1,766
96
55
3,860
154
103
239
339
2,095
Located in:
5,871
6,867
169
97
5,703
(D)
5,297
411
228
571
6,771
1,663
1,748
73
(*)
2,627
2,477
943
(*)
10
(D)
(*)
(*)
(D)
1,003
1,360
74 5
Other
japan
.
5,137
945
335
335
3,732
3,718
710
630
Italy
Netherlands . .
United Kingdoi
Other Europe
615
5,777
595
1,623
230
715
1,604
1*310
670
1,666
277
1,534
Ja pan . . . . . .
A u s t r a l i a , I lew Zealand,
and South ,
Other
develi ipmg areas ,
179,995
141,747
38,248
Other manufactui
By U.S. paren
By MOFA's . . .
1 35,186
132,181
3,004
9,290
20,245
3,061
4,059
1,262
1,700
5/036
5,128
France
Italy — Z I I I I I I — ZIII
Netherlands
United Kingdo
Other Europe
44,810
9,566
35,244
23,294
3,831
19,463
1,682
4,939
4,976
375
18,787
2,896
3,918
1,193
1,513
4,631
4,636
2,927
2,172
153
4,422
1,500
1,314
4,326
215
3,169
1,456
1,232
535
and South A f r i c a
,
L a t i n America
,
Other d e v e l o p i n g areas
105
1,822
4,361
1,996
(D)
(D)
(D)
(D)
MOFA Majority-owned foreign affiliate.
n.a. Not available. See text for explanation.
* Less than $500,000 (+).
D Suppressed to avoid disclosure of data of individual companies.
NOTE.—In this table, data for U.S. parents are only for nonbank parents of nonbank affiliates and data for affiliates are only
for nonbank affiliates of nonbank parents. MOFA's are defined as affiliates that were owned more than 50 percent by all U.S.
parents combined and that had assets, sales, or net income over $3 million In 1977.
46
(D)
17
(D)
(0)
70
92
162
11
74
Germany, the United Kingdom, and the Netherlands were particularly large. In
most major European countries, the bulk of the sales were by U.S.
manufacturing parents; however, in the Netherlands and Switzerland (part of
"other Europe"), trade parents accounted for a sizable part of the total;
sales by parents in other nonpetroleum industries were small.
Sales to Japan were $7 billion; manufacturing and trade parents each
accounted for nearly one-half. Sales to Australia, New Zealand, and South
Africa were $3 billion, and were mostly by manufacturing parents. Sales to
Latin America were $10 billion, and were mostly by manufacturing parents;
trade parents accounted for most of the remainder. Within Latin America, the
destinations with the largest sales—more than $2 billion each—were Mexico,
Venezuela, and Brazil.
Sales to "other developing" areas were nearly $19 billion: manufacturing
parents accounted for about three-fourths, and trade parents for most of the
remainder. Within the "other developing" areas, roughly one-half of the
sales were to members of OPEC; most of the remainder were unclassified by
area of destination, but were included in this article in "other developing"
areas (these were low-value export shipments for which destination data were
not obtained in the benchmark survey in order to reduce the reporting
burden). 6/
Industry and destination of sales by MOFA's
Of the $507 billion of sales by all MOFA's, $202 billion were by MOFA's
of U.S. petroleum parents and $305 billion were by MOFA's of nonpetroleum—
mainly manufacturing—parents (tables 6 and 7A). In petroleum, the
distribution between local and nonlocal sales differed sharply from that in
nonpetroleum industries. In petroleum, one-half of sales were local, roughly
one-fourth were to the United States, and one-fourth to third countries
(countries other than the United States or that of the seller). In contrast,
in nonpetroleum industries, 69 percent of sales were local, 7 percent were to
the United States, and 23 percent were to third countries.
In each of the nonpetroleum industries, nonlocal sales were a much higher
proportion of total sales by MOFA's than by their U.S. parents. The higher
proportion for MOFA's may have reflected several factors. First, MOFA's may
need to produce for external markets, in order to attain more efficient
scales of operation than would have been possible by producing mainly for
their local markets. In contrast, many parents could attain efficient scales
of operation by producing mainly for the U.S. market. Second, a major part
of MOFA's nonlocal sales were by affiliates located in Europe, particularly
in the EC(9). Preferential trade arrangements among the EC(9) member
countries encouraged sales among the members. This contributed to a
relatively high ratio of nonlocal to total sales by European MOFA's. Third,
6. These low-value shipments are discussed separately in Betty L.
Barker, U.S. Merchandise Trade Associated with U.S. Multinational Companies,
in this collection of articles.
47
to obtain approval to operate in certain countries, some foreign affiliates
agreed to sell part of their output abroad; also, in certain countries, some
affiliates were offered incentives, such as increased availability of foreign
exchange, to purchase imported parts and supplies, if they would meet export
goals.
Sales by Canadian MOFA's were $85 billion. The destinations of about
three-fourths of the sales were local. Most of the remainder were to U.S.
customers; sales to Europe were only 2 percent, and sales to other
destinations were even smaller. By industry of U.S. parent, sales by MOFA's
of U.S. manufacturing parents were more than one-half of the total; within
manufacturing, sales in transportation equipment were particularly large,
chiefly because of the previously noted U.S.-Canadian automotive agreement.
Petroleum accounted for about 16 percent of the sales, which were primarily
local; most of the remainder were to the United States.
Sales by MOFA's located in Europe were $220 billion. The destinations of
nearly two-thirds of their sales were local. More than one-third were
nonlocal, and were mostly to other European countries. 7/ The main
destinations of sales outside Europe were the OPEC members in "other
developing" areas, which accounted for less than 5 percent, and the United
States and Latin America, each of which accounted for roughly 2 percent, of
the total.
By industry of U.S. parent, manufacturing accounted for nearly threefifths of total sales by European MOFA's; these sales were chiefly local.
Petroleum accounted for nearly one-fourth of the sales (table 7A, lines 5 and
80); rpost of these sales were local, partly because major refining and
distribution affiliates were located in Europe specifically to serve European
markets. Also, some of the crude petroleum and natural gas produced in
Europe, especially in the North Sea area, was sold to European customers.
Sales to the United States were relatively small and, for the most part,
consisted of petroleum that was subsequently resold to foreign customers by
U.S. petroleum parents. (In such cases, the European MOFA's usually would
not actually ship the petroleum to the United States, but instead would ship
it directly to foreign customers of the U.S. parents.) Sales in trade and
"other," which were much smaller than the sales in petroleum, were also
chiefly to European destinations.
Sales by MOFA's located in Japan and Australia, New Zealand, and South
Africa were, respectively, $13 and $20 billion; in each area, the bulk of the
sales were local. By industry of U.S. parent, roughly three-fifths of sales
7. Because local sales covered only the sales where seller and customer
were in the same country (as opposed to the same area or region), local sales
in Europe would have included, for example, sales by a French MOFA to a
French customer, but would have excluded sales by a French MOFA to a German
customer.
48
by Japanese MOFA's were in petroleum, and three-fifths of sales by MQFA's in
Australia, New Zealand, and South Africa were in manufacturing.
Sales by Latin American MOFA's were $58 billion, of which nearly twothirds were local and one-fifth to U.S. customers. Sales to European
customers and to nonlocal customers in Latin America each were less than 8
percent of the total. By industry of U.S. parent, nearly one-half of total
sales by Latin American MOFA's were in manufacturing; these sales were
chiefly local. Petroleum accounted for 40 percent of the total; of these
sales, 60 percent were nonlocal. (In contrast, sales by European and
Canadian MOFA's of petroleum parents were chiefly local.) The nonlocal sales
in petroleum were primarily to parents, by MOFA's in Bermuda and the other
Caribbean islands, for resale to foreign customers (most of the petroleum was
shipped directly to the foreign customers rather than to the United States).
The local sales in petroleum were mainly by MOFA's in South America—chiefly
Brazil.
Sales by MOFA's located in "other developing" areas were $110 billion;
more than two-thirds were nonlocal. These nonlocal sales were mainly to the
United States and, to a lesser extent, to third countries in "other
developing" areas. Most of the nonlocal sales originated in the African and
Middle Eastern members of OPEC. By industry of U.S. parent, petroleum
accounted for 85 percent of the sales originating in "other developing"
areas. More than one-half of these sales were to U.S. parents; as was the
case with sales by European MOFA's to their U.S. petroleum parents, most of
the petroleum from "other developing" areas was not actually shipped to
parents, but instead was shipped directly to the parents' foreign customers.
Manufacturing and "other" accounted for 8 and 5 percent, and trade for less
than 1 percent, of the total.
Sales by Affiliation Between Seller and Customer
This section distributes sales by U.S. nonpetroleum parents of MOFA's,
and by all MOFA's, (the same subset just discussed by area of destination)
into sales to affiliated and to unaffiliated customers. Affiliated customers
are those that are members of the same MNC as the seller; all other customers
are unaffiliated.
To affiliated customers
By'U.S. nonpetroleum parents.—Sales by U.S. nonpetroleum parents to
affiliated customers were only $28 billion, or 3 percent, of their sales to
all customers. All of these sales were to their own MOFA's because, by
49
definition, a U.S. parent has no sales to affiliated U.S. (domestic)
customers. 8/ The sales to MOFA's were roughly one-third of the parents1
total sales to foreign customers (table 8 ) . About one-third of the sales to
MOFA's were by U.S. auto manufacturers to their Canadian MOFA's; very few
sales to other foreign areas were to affiliated customers.
By MOFA's.—Sales by MOFA's to affiliated customers—either their U.S.
parents or other foreign affiliates of the parents—were $168 billion, about
one-third of their total sales. 9/ The share of total sales to affiliated
customers varied considerably by industry and area of destination. In
petroleum, more than one-half of sales were to affiliated customers; this
large share reflected the high degree of vertical integration in the
operations of the petroleum MNC's, from crude oil production through
refining, marketing, and distribution. By destination, a relatively small
portion of their local sales, but most of their nonlocal sales, were to
affiliated customers. Most of their sales to the United States were to
parents, and most of their other nonlocal sales were to other affiliates.
The large shares of MOFA sales that were to affiliated customers, both in the
U.S. and third countries, primarily reflected an industrywide practice of
channeling petroleum sales from MOFA's in petroleum-exporting areas through
the parents, or through refining or distribution affiliates, to final
customers in petroleum-importing areas.
In nonpetroleum, about one-fifth of the $305 billion of sales by MOFA's
were to affiliated customers. By destination, nearly all of the U.S. sales
by MOFA's were to their own parents, and more than two-fifths of their sales
to third countries were to other affiliates. (In contrast, most of their
local sales were to unaffiliated customers.) Some of the nonlocal sales to
affiliated customers probably reflected use of the customers' knowledge of
local conditions and established marketing arrangements to penetrate markets
in those areas. Also, they reflected specialization of production among
members of an MNC in different countries. Thus, a German affiliate may
produce some components and a British affiliate other components of a
product; the components may be exported to yet a third country for assembly
into a finished product. Such specialization tends to result in larger
production runs, and more efficient operations, in each affiliate than
otherwise would be possible.
8. In conformance with U.S. generally accepted accounting principles,
each U.S. parent was asked to consolidate fully its domestic (U.S.)
operations in reporting in the benchmark survey; the full consolidation was
to include all domestic subsidiaries in which the parent had, directly or
indirectly, a majority-ownership interest. Such consolidation eliminated
sales among the domestic companies that were part of the consolidated parent.
Domestic enterprises that were minority-owned by a parent were treated in the
benchmark survey as unaffiliated. A parent, therefore, by definition, had no
affiliated U.S. customers.
9. Sales to minority-owned foreign affiliates were included in MOFA
sales to affiliated customers, but, for consistency with the treatment of
sales to affiliated customers by U.S. parents, they should have been
excluded. Unfortunately, sales by MOFA's to minority-owned foreign
affiliates could not be separated in the benchmark data from their sales to
other affiliates. Because these sales were small, their inclusion in sales
to affiliated customers probably had little effect on the distribution of the
data by affiliation.
50
Table 8.--Sales by Affiliation of Customer and by Industry of U.S. Parent, 1977
(Millions of dollars)
U.S. and
foreign destinations
Total
Line
(1)
Local and nonlocal sales
Local
sales
Total
(4)
(5)
Sales to
United
States
(2)
Sales to
other
areas
(3)
n.a.
1,021,560
1
2
3
4
5
Sales by U.S. parents
Nonpetroleum, total
To a f f i l i a t e d customers--To unaffiliated customersPetroleum
1,325,546
1,105,990
27,846
1,078,144
219,556
n.a.
1,021,560
1,021,560
n.a.
n.a.
84,430
27,846
56,584
n.a.
6
7
8
Sales by MOFA's, total
To affiliated customers--To unaffiliated customers-
507,019
168,023
338,995
93,574
84,155
9,419
9
10
11
Nonpetroleum, total
To affiliated customers--To unaffiliated customers-
304,821
58,333
246,487
12
13
14
Petroleum, total
To affiliated customers--To unaffiliated customers-
202,198
109,690
92,508
Nonlocal sales
To other
To United
areas
States
(7)
(6)
n.a.
1,021,560
n.a.
n.a.
84,430
27,846
56,584
n.a.
n.a.
n.a.
84,430
27,846
56,584
n.a.
413,445
83,869
329,576
313,307
34,115
279,192
193,712
133,909
59,803
93,574
84,155
9,419
100,138
49,754
50,384
22,726
18,048
4,678
282,095
40,285
241,809
211,325
9,733
201,592
93,496
48,601
44,895
22,726
18,048
4,678
70,770
30,553
40,217
70,848
66,107
4,741
131,351
43,584
87,767
101,982
24,382
77,600
100,216
85,308
14,908
70,848
66,107
4,741
29,368
19,201
10,167
MOFA Majority-owned foreign affiliate.
n.a. Not available. See text for explanation.
—
None, by definition. See text for explanation.
NOTE.--In this table, data for U.S. parents are only for nonbank parents of nonbank affiliates and data for affiliates are only for
nonbank affiliates of nonbank parents. MOFA's are defined as affiliates that were owned more than 50 percent by all U.S. parents combined
and that had assets, sales, or net income over $3 million in 1977.
To unaffiliated customers
Sales to unaffiliated customers accounted for the bulk of total sales,
both by U.S. nonpetroleum parents of MOFA's, and by all MOFA's. They are,
therefore, only summarized here because most of the points already made about
total sales also apply to sales to unaffiliated customers. In some
individual areas and industries, however, differences between sales to
unaffiliated customers and total sales were substantial. To show these
differences, table 9A gives sales to unaffiliated customers in the same
detail by area and by industry as did table 7A for total sales; table 9B
gives, for each area-industry cell, the sales figure in table 9A as a
percentage of the comparable total sales figure in table 7A.
By U.S. nonpetroleum parents.—Sales by U.S. nonpetroleum parents to all
unaffiliated U.S. and foreign customers were $1,078 billion, 97 percent of
total sales
by the parents. The share was high because almost all of the
parents1 total sales were local and, as noted earlier, all of their local
sales were, by definition, to unaffiliated customers. In contrast, the share
of the parents1 nonlocal sales that was to unaffiliated customers was
considerably smaller—67 percent. 1 Sales to unaffiliated customers were
especially large shares of parents sales to Japan and "other" areas, and
especially small shares of their sales to Canada and the United Kingdom.
By MOFA's.—Sales by MOFA's to all unaffiliated U.S. and foreign
customers were $339 billion, 67 percent of their total sales. For most of
the areas and industries shown in tables 9A and B, well over 90 percent of
total local sales were to unaffiliated customers. 10/ In general, the shares
of their nonlocal sales that were to unaffiliated customers were markedly
smaller. This was particularly true, by area, of sales to the United States
and, by industry, of sales by affiliates of petroleum parents.
Technical Notes
Estimation of U.S. parents' nonlocal sales
In this article, U.S. nonpetroleum parents' export shipments were used as
an estimate of their nonlocal sales; however, export shipments differed in
concept, and could differ in amount, from sales. Exports were physical
shipments of goods to foreign countries, irrespective of to whom the goods
were charged. In contrast, nonlocal sales were all sales of both goods and
services charged on the parent's books to foreign customers, irrespective of
whether the goods were actually shipped from the United States or of where
the services actually were performed.
W. For individual countries, local sales are given in the line and
column intersections in table 9A (the "diagonal" of the table). For example,
for Canada, local sales were $64 billion (table 9A, column 4, line 4 ) .
52
Table 9A.—Sales to UnaffiHated Customers by U.S. Parents of MOFA's and by their MOFA's, 1977, Selected Industry of U.S. Parent and Area of
Origin by Area of Destination
(Millions of dollars)
Total
Canada
Europe
Japan
lands
(7)
All
(8)
Kingdom
land/ and
South
Africa
Europe
loping
areas
(9)
(10)
(11)
(12)
(13)
(U>
(15)
39/482
29/592
industries;
Total . .
9/419
By MOFA's
529,576
64/106
161/870
22/915
38/911
13/600
9/934
36/983
39/528
16/672
17/855
168/317
22/294
356
3
156/550
21/514
22/251
20/074
38/041
13/068
337
181
9/454
36/060
37/677
(0)
12
(0)
25
12/005
10/300
37/768
37/437
124
340
265
1/023
107
848
510
1/580
11/370
261
223
768
7/406
298
1/295
319
34/282
1/102
315
1/126
2/190
31/669
42
118
(0)
57
157
(0)
32
(0)
(0)
(0)
22
11,826
Located i
Othe
Japan
170/205
22/345
38/388
12/505
10/881
76
38
30
44/282
1/008
12/466
10/8S1
41/120
43/274
11/980
20
11/960
18/745
129
18/616
1/005
25/928
By U.S. parents
8y MOFA's
Located
Canada
20
21
22
23
57/354
127/954
16/745
27,824
8/700
8/453
606
(D)
73
293,393
56,584
241/309
57/371
5/378
51/994
137/564
17/693
119/970
(D)
127,348
(D)
27,751
(0)
(0)
(0)
51,579
(D)
3
1/D75
116/326
18/490
(D)
(D>
(0)
406
115
30/564
2/566
27/999
11/007
1/402
9/60S
335
24/266
103
174
254
7/688
10/096
2/732
7/364
30/719
2/104
28/615
36/788
(0)
(D)
13/997
6/755
7/243
15/608
1/841
13/767
(D)
309
21
326
28/006
123
164
63
(0)
(0)
(0)
1/570
251
549
(0)
(0)
(D)
(0)
25
(0)
4/733
(0)
457
(0)
41J
(0)
2/438
(0)
38
(0)
(0)
326
2/025
16 1,324/631 1/026/238
17 1/078/144 1,021,560
18
246/437
4/678
466
,,325
642
37/198
7/601
29/597
36/555
17/311
19,239
(0)
7/827
(0)
(D)
(0)
(0)
(D)
(0)
(0)
(0)
(D)
22
4/583
(D)
662
33
11
10/251
8/289
13/101
30/453
23/735
155
140
100
383
255
27
45
139
134
348
249
335
276
1/722
1/676
706
92
217
10/832
33
29
36
23/245
5
234
169
5/050
(D)
30/019
11/712
(0)
(0)
(0)
(0)
(D)
(D)
853/287
216/888
39/593
101/718
15/267
23/316
3,290
36/100
95/804
14/152
21/962
7/135
34/532
166
825
89/346
13/521
21/358
6/771
5/938
24/108
22/511
12
124
(0)
37
6 / 1 4 422/573
26/129
10/673
35
36
37
38
38/804
96/036
14,178
21,999
7,144
5,944
2/704
2 32
22,582
13/777
12/350
275
101
21/284
272
19/387
89
7/337
156
16?
6/283
4/997
80
225
117
57
105
21/747
20/388
4/124
12,184
24,502
5/593
111
265
85
12,073
24,237
5/508
203
21/400
567
1/185
222
775
1/358
17/293
8 30
19
3
35
261
662
199
(0)
110
233
4/939
510
47
5,985
1/071
94 7
2,173
France
(D)
Italy
1,829
Un
Other Eu
(D)
Japan . . . .
263
(0)
(0)
0
(0)
(D)
(0)
(0)
(0)
0
<D)
(•)
(0)
and South
903
2,150
(0)
1,759
801
(0)
(D)
109
62
250/310
11/462
13/845
1,620
3,651
(D)
681
1/930
(D)
(0)
2
69
4
(0)
(0)
2
39
(0)
(D)
(D)
(D)
(0)
(0)
(0)
(*)
(0)
3
(D)
(D)
(0)
994
(0)
(0)
3th
By U.S. parents
(0)
2,393
(0)
830
(D)
2
(*)
(0)
,836
793
247/876
(D)
(D)
11,043
13,770
(0)
(0)
(D)
(0)
(D)
3/421
10,393
)
12 /227
)
3 ,462
>
1
)
)
)
)
)
)
(0)
590
(D)
59
2
470
6
(0)
336
)
(0)
(0)
1
)
>
0
(D)
(0>
3/085
(0)
(D)
2/949
(0)
574
)
3 ,035
(0)
(0)
70
3,059
(D)
17
3
(0)
19
(D)
(0)
(0)
(0)
(0)
(0)
(D)
(0)
(D)
(0)
(0)
(0)
(D)
(D)
(D)
(0)
(D)
326
(0)
(0)
(0)
(0)
(0)
(0)
(0)
(0)
(0)
2,862
(0)
12
36
(*)
(D)
(0)
11
9
(0)
(•)
(0)
332
(0)
12
15
(0)
(D>
(0)
(0)
1 ,263
(•)
4
(*)
2/399
3
Total . . . .
By U.S. parents
12/504
42/251
5/600
10/564
3/804
2/428
9,131
7,247
4,029
(D)
(D)
(D)
(0)
40 , 9 6 9
(D)
10 , 5 6 1
(0)
(0)
(0)
(*)
2 82
(0)
3
12,018
3
(0)
59
40/224
(D)
10/557
3/765
2/406
8/370
(D)
(D)
(0)
116
25
(D)
65
3/682
3
(0)
5
2/081
(0)
5
129
(0)
(0)
(0)
(0)
7/784
(0)
(0)
(0)
7,247
0
0
0
0
0
4/029
(0)
(D)
1
(*)
(0)
(0)
(D)
(D)
(0)
(D)
(0)
MOFA Majority-owned foreign a f f i l i a t e .
n.a.
Not available. See text f o r explanation.
* Less than $500,000 ( + ) .
0 Suppressed to avoid disclosure of data of individual companies.
NOTE.—In this t a b l e , data for U.S. parents are only for nonbank parents of nonbank a f f i l i a t e s and data for a f f i l i a t e s are only
for nonbank a f f i l i a t e s of nonbank parents. MOFA's are defined as a f f i l i a t e s that were owned more than 50 percent by a l l U.S.
parents combined and that had assets, sales, or net income over $3 m i l l i o n in 1977.
2,523
3,991
15
(0)
Table 9B.-Sales to Unaffiliated Customers as a Percentage of Total Sales by U.S. Parents of MOFA's and by Their MOFA's, 1977, Selected Industry
of U.S. Parent and Area of Origin by Area of Destination
(Millions of dollars)
Total
Line
*U
(1)
<2>
(3)
Canada
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
industries:
Total
..
88.9
63.7
11 .2
2.2
11
78. 1
46.3
88.4
(D)
(D)
(D)
(D)
12
90. 5
5.4
36.9
96.3
11.9
19.5
28.8
13
14
15
92. 6
72. 6
23. 5
30.0
15.9
3.4
94.0
36.0
46.6
59.8
17.3
13.2
83.0
61.9
27.9
93.9
97.5
80.9
98.3
100.0
20.6
81.4
67.0
85.7
79.1
30.1
95.0
77.9
65.6
83.1
81.1
79.0
75.9
76.9
87.7
(D)
16.2
9.6
(0)
80.5
76.9
(0)
88.9
95.9
(0)
7.4
12.8
(0)
80.7
77.0
79.3
(D)
78.9
92.6
26.1
34.6
Italy
. . . . . .
Netherlands
Other
Japan
.
90.8
69.1
51.3
71.7
93.5
87.6
38.8
(0)
76.2
49.8
99.3
43.0
39.1
90.4
53.5
32.2
51 .4
9.8
88.1
66.4
36.0
87.5
82.5
(D)
94.9
35.9
(0)
85.5
91.3
40.1
81.7
49.4
47.2
80.7
61.2
83.1
78.6
72.4
79.6
74.9
73.6
75.4
81.1
52.0
84.6
74.7
(0)
(D)
89.9
91 . 2
88.8
85. 6
60. 4
90. 6
87.4
73.5
91.9
89.3
92.0
87.0
(D)
(D)
27.9
97.7
76.2
24.1
30.7
(0)
85.2
(D)
(0)
(D)
(D)
40.4
(D)
(0)
62.2
(D)
(D)
(0)
39. 9
3 8 . i,
(D )
42.
68.5
75.2
55.6
42.5
87.6
78.4
(D)
94.3
(D)
90.7
(D)
36.9
94.0
12.4
19.5
(D)
56.5
87.4
94.9
97.3
86.4
81.4
Njnpet roleuw:
Total
By U.S. pare
By MOFA's . .
located
Canada
France
Germany
Italy .
82.3
ng,
83.4
21.7
97.1
38.1
(0)
(0)
85.2
31.9
(D)
(D)
13.3
23.1
26.1
(D)
44.7
82.5
93.5
(D)
48.1
54.7
69.6
57.7
(D)
(D)
(D)
(0)
74. 6
21. 9
6 .9
85 . 8
78.1
73.6
74.7
74.3
77.7
76.2
68.8
78.3
70.5
86. 3
83. 9
86 . 7
87 . 2
20.1
96.7
16.2
8.6
38.8
32.9
20.1
41 . 9
35.0
35.0
21.3
56.6
74.8
52.7
88.2
86.2
84.3
total
35.4
36.1
(0)
37.6
By MOFA's
Located
i
4.4
67.0
79.2
75.1
Netherlands
United Kingd
Other Europe
11 .4
10.7
34.3
81.2
66.0
90.2
(D)
79.1
55.3
100.0
(D)
100.0
94.7
4.5
99.3
100.0
92.3
91.3
(D)
94.8
96.1
Other,
By U.S. pi
98.5
99.7
Othe
J apan
99.7
100.0
71
(0)
(D)
72
92.0
(D)
91.7
91.3
(D)
(D)
(0)
(D)
73.2
(D)
37.4
(D)
93.1
44.2
100.0
94 . 4
80.0
(0)
42 . 9
(D)
(0)
5.7
0
(0)
94.3
(D)
(0)
(0)
100.0
(D)
93.5
92.2
54.1
99.6
91.8
(D)
100.0
(0)
83.8
(0)
99.8
(D)
(0)
93.9
70.3
19.8
57.8
(0)
(D)
59.9
87.6
69.2
95.9
96.2
91.5
79.3
(0)
99.8
(D)
6.8
99.6
98.7
(0)
(D)
96.1
89.1
91 . 9
86.4
84.7
0
(0)
.4
66.7
4.7
75.4
99.4
99.1
0
(D)
21.6
97.8
(D)
91.6
56.2
85.6
(D)
91.3
99.2
94.2
52.1
90.1
78.4
91.7
83.4
(0)
30.1
84.?
90.1
90.8
98.0
(0)
92^0
97^
42.2
87.0
94.0
(D)
92.1
97.9
100.0
100.0
100.0
(0)
97.9
100.0
99.2
(D)
(0)
(0)
Petroleum:
By U.S. pa
By MOFA's
Other
Europe
. . . . . . . . . . . . . . . . .
66.8
90.9
<0)
87.0
69.3
66.4
61.7
(0)
89.9
86.2
77.1
31.2
79
89.7
(D)
31 .6
(D)
75.5
95.4
(0)
94.3
78.2
100.0
89.3
100.0
87.5
100.0
(D)
(D)
71.2
88.9
69.7
99. 5
(D
100.0
97.2
(D)
19.9
70.8
50.3
99.7
(D)
82
83
89.2
91.7
(D)
13.0
(0)
95.6
(0)
90.6
(D)
62.4
62.1
92.4
54.0
83.7
98.2
45.1
(D)
(D)
(D)
42.
(D
(D)
(0)
(D)
88.5
97.2
71.0
54.4
68. U
86
74. 7
61 .4
(D)
75.8
99.9
(0)
63.1
(0)
35.0
56.0
21.3
48.1
5.3
44.5
40.7
(D)
75.1
(0)
(D
(D
99.8
93.9
(D)
52.9
11.7
66.3
7.6
93.5
(D)
100.0
97.2
98.6
97.1
100.0
99.8
94.0
99.8
90
15.1
(D)
(D)
4.1
22.6
33.3
18.4
(D)
(D)
8.0
(0)
30.4
80.7
45.0
85.9
41.2
31.3
MOFA Majority-owned foreign affiliate,
n.a. Not available. See text for explanation.
D Suppressed to avoid disclosure of data of individual companies.
NOTE.—In this table, data for U.S. parents are only for nonbank parents of nonbank affiliates and data for affiliates are only
for nonbank affiliates of nonbank parents. MOFA's are defined as affiliates that were owned more than 50 percent by all U.S.
arents combined and that had assets, sales, or net income over $3 million in 1977.
54
Although comparison of data on the two bases is not available for
parents, it is for MOFA's (table 10). The MOFA data show that, for
manufacturing and trade, percent differences
between the two bases were
small, but for petroleum and "other11, they were quite large; whether or not a
similar relationship holds for parent data is not known.
Consolidation rules applied in the benchmark survey
The benchmark survey defined a U.S. parent as a fully consolidated U.S.
domestic business enterprise. If incorporated, it consisted of (1) the U.S.
parent corporation not owned more than 50 percent by another U.S.
corporation, and (2) in each ownership chain under that parent corporation,
any U.S. corporation more than 50 percent owned by the U.S. corporation above
it in the ownership chain. All other U.S. corporations and all foreign
business enterprises were excluded from the consolidation.
In the reported sales of the consolidated U.S. parent, sales among the
U.S. business enterprises included in the consolidation were eliminated, so
that a parent's sales to U.S. persons consisted of its sales to U.S.
business enterprises in which it had a minority ownership interest, plus its
sales to U.S. persons in which it had no ownership interest. Both types of
sales were considered sales to unaffiliated U.S. customers. Sales by a U.S.
parent to foreigners consisted of its sales to foreign affiliates and to all
other foreigners.
Each foreign affiliate had to be reported on an unconsolidated basis,
unless the recordkeeping system of the affiliate made this extremely
difficult. In that case, foreign business enterprises could be reported on a
consolidated basis if they were in the same country and industry, or were
Integral parts of the same business enterprise.
Relationship of sales data in this article to BEA's earlier published MNC
sales data
A previous article, "Worldwide Sales by U.S. Multinational Companies,"
published in the January 1973 Survey, presented sales for MOFA's and their
parents for a sample of 298 U.S. MNC's; those data are not comparable with
the data in the current article, which cover the direct investment universe.
Also, an annual time series of universe estimates of sales by MOFA's
covering years prior to 1977 was published in various past issues of the
Survey. The universe estimates, obtained by expanding annual sample data to
universe levels based on data from prior benchmark surveys, may not be fully
comparable with data in the current article for 1977 because of the improved
methodology applied in the 1977 benchmark (see the Methodology to U.S.
Direct Investment Abroad, 1977, cited in the Introduction to this
55
Table 10.—Comparison of Export Shipments With Sales to the
United States by MOFA's, 1977, by Industry of U.S. Parent
(Millions of dollars or percent)
Total
Petroleum
Manufac- Trade
turing
Other
93,573
70,848
19,680
1,470
1,575
38,000
16,552
18,816
1,493
1,138
55,573
54,296
864
-23
436
59.4
76.6
4.4
-1.6
27.7
Line
1 Sales to United States
by MOFA's
2 Export shipments to
United States by
MOFA's
3 Difference: sales
less export
shipments
4 Percent difference
(line 3 • line 1) —
MOFA Majority-owned foreign affiliate.
NOTE.—In this table, data are only for nonbank affiliates of nonbank parents.
MOFA's are defined as affiliates that were owned more than 50 percent by all
U.S. parents combined and that had assets, sales, or net income over $3 million
in 1977.
56
collection of articles), and because some of the changes in the benchmark
survey sales universe were not reflected in the annual sample for years prior
to 1977.
Affiliates1 sales by industry of affiliate and by industry of U.S. parent
In this article, each
parent, that is, the code
largest. In effect, this
classified by industry of
MNC was assigned the industry code of the U.S.
of the industry in which the parent's sales were
meant that sales by the affiliates were also
the parent.
Table 11 compares the distribution of sales by affiliates (including
minority owned) by industry of parent (lines) with that by industry of
affiliate (columns). The intersection of a line and a column for the same
industry gives sales by affiliates that were in the same industry as their
parents. In general, most sales were by affiliates that were in the same
industry as their parents. For example, in petroleum, sales by all
affiliates of petroleum parents were $253 billion (line 3, column 1); of this
total, $232 billion were supplied by petroleum affiliates of petroleum
parents (line 3, column 3 ) . Only $20 billion were supplied by affiliates
that were not themselves classified in petroleum.
A comparison of the distribution of sales by industry of seller with that
by type of product or service rendered is not given. The two distributions
would differ because parents and affiliates often are diversified and have
product or service lines outside their own major industries of
classification.
57
Table 11.—Sales by Foreign Affiliates, 1977, Industry of Parent by Industry of Affiliate
(Millions of dollars)
Industry of affiliate
Total
Mining
Petroleum
Total
Food and
kindred
products
Chemicals
and allied
products
Primary and
fabricated
metals
Machinery,
except
electrical
Electric and
electronic
equipment
Transportation
equipment
Other
Trade
Finance
(except
banking),
insurance,
and real
estate
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
Manufacturing
Industry of parent
Line
All industries
2
3
4
5
6
7
8
9
10
11
12
13
Mining
Petroleum
Manufacturing
Food and kindred products
Chemicals and allied products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipment
Transportation equipment
Other
Trade
Finance (except banking), insurance,
and real estate
647,969
1,880
252,878
297,697
27,340
49,347
25,076
46,228
24,472
75,035
50,198
45,044
25,054
25,416
9,611
1,634
(D)
5,945
0
327
4,228
(D)
(D)
(D)
89
(D)
1,142
(D)
237,346
246,325
25,604
43,326
71
20
0
0
231,573
2,269
6,876
222,426
22,503
39,347
16,601
29,765
13,043
61,908
39,259
4,074
(D)
5,956
36,777
(D)
906
447
221
(D)
268
290
153
106
3,175
9,620
3,310
20,035
(D)
2
150
32,099
(D)
484
151
335
2,151
378
17,798
53
1,145
13,609
1,250
305
635
802
547
835
(D)
(D)
326
22,520
20,735
1,448
(D)
0
0
(D)
299
(D)
870
32,680
584
265
(D)
(D)
1,232
D Suppressed to avoid disclosure of data of individual companies.
NOTE.—Data cover nonbank minority- and majority-owned foreign affiliates and reconcile to affiliate sales data given in table 1.
33,046
69
290
661
24,498
764
4,251
1,566
160
Other
(14)
57,788
44,200
102,997
14,746
36,945
0
0
(D)
(D)
328
93
(D)
(D)
41,847
586
2,265
(D)
(D)
(D)
617
34,874
601
25
2,605
57,864
3,574
8,176
2,516
14,636
9,281
10,616
9,065
39,293
(D)
1,070
2,558
116
237
163
119
108
1,487
329
625
(D)
(D)
6,635
(D)
354
1,120
(D)
1,080
(D)
1,166
(D)
(D)
241
815
554
2,234
978
22,326
15,012
56,372
(D)
(D)
(D)
(D)
548
383
1,354
10,554
225
761
159
144
5,214
(D)
(D)
54,681
9,939 2,014
(D) 17,388
By WILLIAM K. CHUNG
Technology-Related Activities of
U.S. Multinational Companies
This article presents and analyzes two types of data on technologyrelated activities of U.S. multinational companies (MNC's) from the 1977
benchmark survey: (1) data on research and development (R&D),
specifically R&D expenditures and R&D scientists and engineers, and (2)
data on royalties and license fees.
The first part of this article discusses R&D, including the
industry distribution of U.S. parents1 R&D, U.S. parents1 R&D compared
with the R&D of all U.S. businesses,
the country and industry
distribution of foreign affiliates1 R&D, and the intensity of, and
growth from 1966 to 1977 in, R&D expenditures by U.S. parents and their
foreign affiliates. The second part will examine royalty and license
fee transactions between U.S. parents and their foreign affiliates,
between U.S parents and other foreigners, and between foreign affiliates
and other U.S. and foreign persons.
The article will cover only nonbank MNC's. Also, the data for
affiliates will cover only majority-owned foreign affiliates (MOFA's),
and those for parents will cover only the parents of MOFA's. 1/ The
coverage lost due to these data limitations is small. Bank parents and
affiliates usually do not have significant technology-related
activities, and MOFA's and their parents accounted for most of the
technology-related activities of all nonbank MNC's. For example, MOFA's
accounted for nine-tenths of the royalties and license fees of all
nonbank affiliates of nonbank U.S. parents, and nonbank U.S. parents of
nonbank MOFA's accounted for 98 percent of the R&D expenditures and 97
percent of the R&D scientists and engineers of all nonbank U.S. parents
of nonbank affiliates.
Highlights
o
Worldwide, U.S. MNC's spent $20.7 billion for R&D and employed
470,000 R&D scientists and engineers.
o
U.S. parents spent $18.6 billion, or nine-tenths of the MNC total.
Most of the spending was in manufacturing, particularly in
transportation equipment, nonelectrical machinery, and chemicals.
Compared with the R&D performed by all U.S. businesses, U.S.
parents accounted for a dominant share of the total.
1. MOFA's are defined as affiliates that were owned more than 50
percent by all U.S. parents combined and that had assets, sales, or net
income over $3 million.
NOTE.--Richard Mauery did the computer programming for the tables
in this article.
59
R&D expenditures by MOFA's were $2.1 billion, or one-tenth of the
MNC total. MOFA's in developed countries accounted for 93 percent
and those in developing countries for about 7 percent. By industry
of affiliate, most MOFA spending was in manufacturing.
In all industries combined, the R&D intensity ratio for U.S.
parents was 14, i.e., parents spent $14 on R&D per each $1,000 of
sales. The R&D intensity ratio for MOFA's was 4—considerably
below that for their U.S. parents. The lower ratio for MOFA's
probably reflected the centralization of R&D activities in U.S.
parents and the dependence of MOFA's on their parents for
technology.
From 1966 to 1977, R&D expenditures by MNC's grew at an average
annual compound rate of 7.9 percent. The growth rate for MOFA's—
12.3 percent—was higher than that for U.S. parents—7.5 percent.
Net receipts of royalties and license fees of U.S. parents from all
foreign persons were $2.8 billion. Of the total, more than twothirds were from MOFA's. MOFA's had net payments of royalties and
license fees of $2.0 billion. Transactions with U.S. persons,
particularly parents, more than accounted for the total.
R&D Activities of U.S. MNC's
R&D consists of basic research for the advancement of scientific
knowledge, applied research for the discovery of know-how that may have
commercial application, and development of methods for translating the
findings of basic and applied research into products or processes. R&D
expenditures include all costs incurred by a company in conducting R&D
for its own account, plus the cost of R&D conducted by others on behalf
of the company, less the cost of R&D conducted for others by the
company. R&D scientists and engineers are employees who have a collegelevel knowledge of science, engineering, or mathematics and who spend a
majority of their working hours engaged in R&D work. Employment is
defined as the average number of full-time and part-time employees on
the payroll during the year.
In 1977, R&D expenditures by U.S. MNC's worldwide were $20.7
billion, about 1 percent of total MNC sales (table 1). U.S. parents
accounted for 90 percent, and their MOFA's for 10 percent, of the
expenditures. By industry of U.S. parent, about nine-tenths of the
spending was in manufacturing,
and the remainder largely in petroleum,
"other industries,11 and finance (except banking), insurance, and real
estate. 2/ In trade and mining, expenditures were negligible. Within
2. MNC data are classified by industry of U.S. parent, because an
MNC-wide industry code was not obtained in the benchmark survey.
However, in most cases, the U.S. parent's industry was probably also the
MNC-wide industry, because U.S. parents normally accounted for a large
share of total MNC operations, and a majority of MOFA's were classified
in the same industries as their parents.
60
Table 1.—Selected Data on R&D Activities of U.S. MNC's, U.S. Parents,
and MOFA's, 1977, by Industry of U.S. Parent
Mining
Petroleum
Manufacturing
Food and kindred products
Chemicals and allied products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipment
Transportation equipment
Other manufacturing
Trade
Finance (except banking), insurance,
and real estate
Other industries
R&D scientists and engineers
(Millions of dollars)
(Number of employees)
R&D
expenditures
R&D scientists
and engineers
469,707
406,662
63,045
10
13
(D)
(D)
104
22
15
21,083
2,801
12
12
381,737
11,401
66,043
14,501
73,672
50,235
110,521
55,364
331,929
8,682
55,213
13,443
63,199
46,251
97,809
47,332
49,808
2,719
10,830
1,058
10,473
3,984
12,712
8,032
9
14
12
4
5
3
10
11
13
24
16
7
14
8
12
15
2,810
2,349
461
5,639
MNC's
20,670
18,595
2,075
23
18
5
1,092
964
128
23,884
18,296
447
3,240
751
3,539
2,275
5,580
2,462
16,731
384
2,861
719
3,350
2,198
5,018
2,200
1,565
63
379
32
189
77
562
262
137
128
162
(D)
(D)
592
(D)
(D)
R&DResearch and development.
MNC Multinational company.
MOFA Majority-owned foreign affiliate.
D Suppressed to avoid disclosure of data of individual companies.
MOFA's
MOFA's
(D)
(D)
MOFA's as a
percent of MNC's
U.S. parents
U.S. parents
MNC's
Al 1 industries
R&D expenditures
(D)
16
(D)
60
59
(0)
18
4
manufacturing, expenditures were high in transportation equipment, both
electrical and nonelectrical machinery, chemicals, and "other
manufacturing," and low in metals and in food.
R&D scientists and engineers employed by U.S. MNC's worldwide
totaled 470,000, less than 2 percent of total MNC employment. The
distribution of R&D scientists and engineers between U.S. parents and
MOFA's and among industries was similar to that of R&D expenditures.
Thus, although both R&D expenditures and employment are shown in table 1
and subsequent tables, discussion will focus mainly on expenditures to
avoid repetition.
R&D of U.S. parents, by industry
R&D expenditures by U.S. parents totaled $18.6 billion. As with
MNC's worldwide, 90 percent of the spending by U.S. parents was in
manufacturing. About 5 percent was in petroleum, 3 percent in "other
industries," and less than 1 percent each in finance (except banking),
insurance, and real estate and in trade. In mining, spending was
insignificant.
Within manufacturing, three industries—transportation equipment,
nonelectrical machinery, and chemicals—accounted for more than twothirds of the total, and five industries—the above three, plus
electrical machinery and "other manufacturing"—accounted for more than
nine-tenths. Food and metals accounted for only about 2 and 4 percent,
respectively.
Spending in transportation equipment was $5.0 billion, or 30
percent, of the manufacturing total. About two-thirds was by U.S.
parents manufacturing automotive products and most of the remainder was
in aerospace. The spending in the automotive industry was probably
mainly for body design and for development of fuel-efficient engines,
pollution abatement equipment, and vehicle safety devices. It was
partly in response to the shift in consumers1 preferences toward smaller
cars in the wake of soaring petroleum prices.
Spending in nonelectrical machinery was $3.4 billion. Nearly twothirds was by U.S. parents manufacturing office and computing equipment.
The high spending reflected the rapid technological progress in this
industry and strong competition that U.S. parents faced both in the
United States and abroad.
In chemicals, $2.9 billion was spent on R&D. The spending was
concentrated in industrial chemicals—especially in the fast-growing
petrochemical and plastic products industries—and in drugs—probably
largely for development of new products.
In electrical machinery and in "other manufacturing," $2.2 billion
was spent. More than four-fifths of the spending in electrical
machinery was accounted for by U.S. parents manufacturing radio,
television, and communication equipment; in electronic components and
62
accessories, spending was relatively
small. Nearly one-half of the
spending in "other manufacturing11 was accounted for by U.S. parents
manufacturing instruments and related products, particularly
photographic equipment and scientific instruments; spending was also
sizable in paper and in rubber products.
R&D of U.S. parents and all U.S. businesses compared
Table 2 shows R&D expenditures and the number of R&D scientists and
engineers employed by all U.S. businesses and by U.S. parents. The data
for all U.S. businesses are from the National Science Foundation
(NSF). 3/ They differ significantly from the BEA data for U.S. parents
in definition, industry coverage, and survey methodology. (See the
technical notes for a discussion of these differences.) Consequently,
the U.S. parent data exceeded the all-U.S. business data in several
industries for R&D expenditures, and in total and most industries for
the number of R&D scientists and engineers employed. However, these
differences do not negate the primary conclusion of a comparison of the
two data sets—i.e., that U.S. parent companies accounted for the bulk
of both the R&D expenditures and R&D scientists and engineers employed
by all U.S. companies.
U.S. parents accounted for 96 percent of the $19.4 billion of R&D
expenditures by all U.S. businesses. Within manufacturing, parents1
shares were particularly large in transportation equipment,
nonelectrical machinery, and chemicals.
In no industry within
manufacturing was the parents1 share below 90 percent.
The data on R&D expenditures for all U.S. businesses and for U.S.
parents discussed thus far cover only those expenditures that were
company-funded. In addition to company-funded R&D expenditures, BEA's
benchmark survey also collected data on federally funded R&D
expenditures by U.S. parents. Such data are compared with NSF data for
all U.S. businesses in table 3. Federally funded R&D expenditures by
all U.S. companies were $10.5 billion in 1977; U.S. parents accounted
for three-fourths--$7.9 billion—of the total. Parent shares varied
among industries. They were relatively high in primary and fabricated
metals and in nonelectrical machinery, and low in chemicals and in
transportation equipment.
It is not surprising that U.S. parent companies dominated R&D
activity in the United States. U.S parents are among the largest and
most technologically advanced companies in the United States.
Exploitation of technological advantages has enabled them to expand
their markets, often by investing abroad. Also, because of their size,
U.S. parents, to a greater extent than other U.S. firms, can derive the
benefits of economies of scale in their R&D activities.
3.
See footnote to table 2 for data sources.
63
Table 2.--R&D Expenditures and R&D Scientists and Engineers of All U.S. Businesses
and U.S. Parents, 1977, by Industry
R&D
R&D expenditures J/ scientists and engineers
(Millions of dollars)
(Thousands of employees)
All U.S,
U.S.
All U.S.
U.S.
businesses parents
businesses parents
Al 1 industries
19,407
18,595
393
407
2/ 371
Manufacturing
18,059
2/ 17,100
369
2,956
2,861
47
55
Chemicals and allied products
856
719
15
13
Primary and fabricated metals
3,391
3,350
57
63
Machinery, except electrical
3,238
2/ 2,567
85
2/ 86
4,520
5,018
108
98
Electric and electronic equipment
3,098
2,584
56
56
Transportation equipment
36
1,348
25
1,495
Other manufacturing
842
964
10
21
Nonmanufacturi ng
506
531
15
15
Petroleum extracting and refining
Other 3/
R&D Research and development.
1. The definition of R&D expenditures by all U.S. businesses differs from that by U.S. parents. See the
technical notes for discussion.
2. These numbers differ from those in other tables due to the reelassification by industry of two U.S.
parents in order to improve comparability of BEA and NSF data.
3. Data for both all-U.S. businesses and U.S. parents include mining; trade (including petroleum wholesale
trade, retail trade, etc.); finance, insurance, and real estate; and "all other industries." Within finance,
banking is included in the data for all U.S. businesses, but excluded from those for U.S. parents; within
"other industries," the data for all U.S. businesses exclude, but those for U.S. parents include,
"agricultural production," and "motion pictures."
Source: Data on R&D expenditures for all U.S. businesses were obtained from National Science Foundation,
Research and Development in Industry, 1978: Detailed Statistical Tables (NSF 80-307), p. 14, except that data
for "transportation equipment" were from the 1977 issue of the same publication (NSF 79-313), p. 12, because
data for this industry were incomplete in the 1978 issue.
64
Table 3.--Federally Funded R&D Expenditures by All
U.S. Businesses and U.S. Parents, 1977, by Industry
(Millions of dollars)
All U.S.
businesses
All industries
U.S.
parents
10,521
7,938
Manufacturing
10,030
Chemicals and allied products
300
Primary and fabricated metals
70
Machinery, except electrical
576
Electrical and electronic equipment... 2,699
Transportation equipment
5,977
Other manufacturing
408
JJ 7,501
66
163
1,083
\J 1,302
4,679
208
Nonmanuf acturing
Petroleum extracting and refining
Other
491
76
415
437
53
384
R&D Research and development.
1. These numbers differ from those published in U.S. Direct Investment
Abroad, 1977 due to the reclassification by industry of two U.S. parents
in order to improve comparability of BEA and NSF data.
Source: Same as in table 2, except that data are from p. 17, instead of
p. 14.
65
R&D of MOFA's, by industry and area
Worldwide, MOFA's spent $2.1 billion on R&D and employed 63,000
R&D scientists and engineers. In table 1, these R&D data are
disaggregated by industry of U.S. parent. In tables 4 and 5, they are
disaggregated by each MOFA's own industry. By industry of U.S. parent,
75 percent of MOFA spending was in manufacturing, 12 percent in finance
(except banking), insurance, and real estate, 6 percent each in
petroleum and "other industries,11 and less than 1 percent each in trade
and mining. By industry of affiliate, 86 percent of the spending was in
manufacturing, 5 percent in petroleum, 4 percent each in trade and
"other industries," and less than 1 percent each in mining and in
finance (except banking), insurance, and real estate.
The distributions of MOFA spending on the two bases differ
significantly. Spending by trade MOFA's was ten times as large as that
by MOFA's of trade parents. Nearly all of the difference was accounted
for by trade MOFA's of manufacturing parents, which served as
distributors of goods produced by their parents and other foreign
affiliates of their parents. Spending by mining MOFA's was three times
as large as that of MOFA's of mining parents, because a large share of
U.S. direct investment in mining was by parents not classified in that
industry. Spending by manufacturing MOFA's was slightly larger than
that by MOFA's of manufacturing parents. Manufacturing MOFA's of
parents in finance (except banking), insurance, and real estate
accounted for most of the difference.
In contrast, spending by petroleum MOFA's was smaller than that by
MOFA's of petroleum parents, mainly because petroleum parents had a
number of MOFA's in chemicals with large expenditures. Also, spending
by MOFA's in finance (except banking), insurance, and real estate was
much smaller than spending by MOFA's whose parents were classified in
this industry; as noted above, parents in this industry had several
manufacturing MOFA's with sizable expenditures. 4/
By area, 92 percent of R&D expenditures by MOFA's were in developed
countries and about 7 percent were in developing countries. The small
share in the latter may have partly reflected the limited technical
absorptive capacity of these countries, due to the generally low levels
of education among the population, low rates of capital formation, and
the limited size of these countries' markets.
Within developed countries, R&D expenditures were highly
concentrated. Expenditures by MOFA's in 4 countries—Germany, the
United Kingdom, France, and Canada—accounted for almost three-fourths
of the total, and that in 10 countries—the above 4, plus Australia,
Belgium, Italy, the Netherlands, Switzerland, and Japan—accounted for
nearly all—94 percent. Within developing countries, expenditures were
also concentrated in a few areas, primarily Brazil, Mexico, and "other
Asia and Pacific."
4. One such parent was a large conglomerate that was classified
in insurance but engaged in a wide range of other activities, both in
the United States and abroad, including telecommunications, engineering
services, and consumer products.
66
Table 4.--R&D Expenditures of MOFA's, 1977, Country by Industry of Affiliate
(Millions of dollars)
Manufacturing
_Trade
All
industries
Mining
Petroleum
Total
Food and
kindred
products
Chemicals Primary and
and allied fabricated
products
metals
Machinery,
except
electrical
Electric and T r a n s p o r t a t i o n O t h e r
electronic
equipment
manufacturing
equipment
Finance (except
banking),
insurance and
real estate
Other
industries
2,075
16
109
1,785
66
346
42
169
307
624
231
91
73
1,916
15
93
1,652
60
321
39
158
283
583
207
86
69
Canada
255
5
44
191
12
45
14
12
24
47
36
9
6
Europe
1,515
1
48
1,337
42
247
24
141
248
473
161
66
62
1,395
92
4
291
462
11
85
3
55
393
0
0
0
0
0
0
0
0
0
0
44
3
(*)
41
(*)
0
1
18
1,253
72
3
258
430
11
74
3
50
352
233
30
(*)
43
43
1
28
1
21
65
24
1
(*)
2
11
(*)
(*)
0
2
7
127
(D)
0
24
31
(D)
13
(*)
11
40
211
(D)
1
(D)
86
(*)
19
(*)
4
44
4
84
1
15
(*)
14
37
27
1
17
(*)
1
6
Al1 countries
Developed countries
European Communities (9)
Belgium
Denmark
France
Germany
Ireland
Italy
Luxembourg
Nether!ands
United Kingdom
Other Europe
Japan
Australia, New Zealand, and South Africa
Developing countries
(D)
5
13
2
2
0
5
14
1
98
5
12
1
4
6
63
7
1
(D)
132
6
25
2
11
24
40
24
4
1
4
100
5
21
2
40
19
3
2
1
1
(*)
1
0
1
2
80
13
54
14
20
19
1
(*)
3
(*)
16
3
10
2
5
5
(*)
0
2
0
(*)
2
1
(*)
(*)
(*)
0
0
(*)
(*)
0
(*)
(*)
1
2
1
(*)
(*)
(*)
5
0
(*)
4
31
0
(D)
27
1
4
0
(D)
0
0
0
0
0
(*)
10
1
2
(*)
(D)
10
R&D Research and development.
MOFA Majority-owned foreign a f f i l i a t e .
* Less than $500,000 (+).
D Suppressed to avoid disclosure of data of individual companies.
(*)
0
5
0
0
(*)
(*)
(*)
18
0
(*)
0
(*)
1
0
(*)
0
(*)
0
1
(*)
1
1
1
0
2
(*)
(D)
(D)
0
(*)
3
26
0
(D)
(D)
(D)
0
0
0
0
Middle East
,
o
(D)
0
2
(D)
9
0
Addendum: OPEC
(D)
(D)
111
(*)
4
,
(D)
59
14
0
(D)
1
85
16
55
14
23
19
4
3
International
() 1
(D)
(D)
8
2
6
51
(*)
(*)
0
0
0
0
0
0
0
(*)
0
Other Africa
Other Asia and Pacific
0
131
(D)
0
3
0
1
131
40
4
1
12
14
0
(D)
0
2
(D)
36
111
South America
Argentina
Brazil
Other
Central America
Mexico
Other
Other Western Hemisphere
0
(D)
(D)
119
(D)
Latin America
(D)
(D)
(D)
(*)
(*)
(*)
(*)
(*)
0
(*)
Table 5.--R&D Scientists and Engineers of MOFA's, 1977, Country by Industry of Affiliate
(Number of employees)
Manufacturing
All
industries
Mining
Petroleum
_Trade
T o t a l F o o d a n d C h e m i c a l s P r i m a r y a n d M a c h i n e r y , E l e c t r i c andTransportation
and allied fabricated
except
electronic
equipment
kindred
products
metals
electrical equipment
product
Other
manufacturing
Finance (except
banking),
insurance and
real estate
Other
industries
63,045
248
2 747
55,550
2,435
10,255
1,291
10,298
10,986
11,814
8,471
2,372
69
2,059
54,998
109
2,032
49,069
1,994
8,631
1,201
9,840
9,887
10,492
7,024
2,221
(D)
(D)
Canada
5,848
66
686
4,877
369
1,107
241
724
874
727
835
115
(D)
(D)
Europe
44,263
(D)
1,275
39,853
1,473
6,662
931
8,550
8,716
7,848
5,673
1,765
(D)
(D)
41,292
1,900
(D)
6,336
9,758
183
2,567
(D)
1,797
18,403
(D)
1,169
(D)
0
(D)
(D)
(D)
(D)
0
57
474
37,469
1,676
152
5,189
9,208
(D)
2,285
(D)
1,632
16,955
1,387
(D)
(D
115
281
(D)
37
0
101
774
6,368
458
893
19
8,068
93
0
1,389
2,078
7,873
(D)
(D)
1,360
(D)
(D)
(D)
(D)
153
260
0
43
0
85
(D)
(D)
0
0
0
0
0
0
0
0
(D)
2,971
(D)
All countries
Developed countries
European Communities (9)
Bel gi urn
Denmark
France
Germany
Ireland
Italy
Luxembourg
Netherlands
United Kingdom
»..
:
Other Europe
Japan
1,460
Australia, New Zealand, and South Africa.
3,427
Developing countries
0
0
0
0
0
0
0
0
(D)
0
(D)
139
(D)
5,226
(D)
3,465
979
2,011
475
1,627
1,331
296
134
D)
D)
D)
D
D)
Other Africa
242
D)
Mi ddle East
114
Latin America
South America
Argentina
Brazil
Other
Central America
Mexico
Other
Other Western Hemisphere
Other Asia and Pacific
(D)
International
(D)
Addendum:
OPEC
861
0
D)
D)
0
D)
0
D)
R&D Research and development.
MOFA Majority-owned foreign a f f i l i a t e .
D Suppressed t o avoid disclosure of data of individual companies.
(D)
776
912
(D)
731
(D)
469
2,901
(D)
85
280
(D)
23
(D)
88
356
361
(D)
721
3,407
306
2,067
19
505
(D)
41
3,978
3,511
(D)
193
(D)
884
1,363
(D)
(D)
(D)
(D)
2,028
482
843
(D)
(D)
(D)
(D)
0
1,634
2,227
0
(D)
0
(D)
106
2,384
86
294
38
(D)
405
(D)
(D)
1,207
(D)
458
(D)
(D)
173
0
159
151
(D)
(D)
3,132
(D)
404
(D)
(D)
124
1,917
357
190
0
(D)
90
0
(D)
(D)
0
(D)
0
23
194
72
59
(D)
6,481
441
1,624
458
1,099
1,322
1,447
151
(D)
(D)
105
4,621
330
1,272
(D)
446
240
(D)
933
113
(D)
(D)
89
64
(D)
(D)
(D)
(D)
(D)
(D)
3,198
810
1,946
442
1,390
1,299
91
33
205
60
120
25
(D)
106
(D)
(D)
808
239
457
112
(D)
411
12
0
8
4
(D)
75
0
0
0
(D)
(D)
30
0
0
0
0
0
0
0
0
(D)
(D)
(D)
(D)
(D)
744
(D)
(D)
204
(D)
156
(D)
(D)
(D)
69
(D)
(D)
158
(D)
(D)
(D)
(D)
407
40
367
0
39
39
0
0
(D)
0
0
(D)
0
0
(D)
(D)
82
0
0
0
0
0
0
0
(D)
(D)
38
(D)
(D)
0
0
0
0
184
(D)
0
20
17
1,620
(D)
0
12
(D)
0
0
0
0
0
493
339
14
58
0
0
491
(D)
150
(D)
(D)
(D)
90
(D)
(D)
872
359
420
93
(D)
(D)
0
(D)
65
(D)
(D)
0
(D)
0
(D)
8
195
(D)
171
(D)
R&D intensity of U.S. parents and MOFA's
The R&D intensity of parents or MOFA's in an industry can be
measured as the amount of R&D expenditures per $1,000 of sales or the
number of R&D scientists and engineers per 1,000 employees in that
industry (table 6). (Unless otherwise specified, parent expenditures
hereafter refer only to company-funded, not federally funded,
expenditures; no affiliate expenditures were federally funded.)
In all industries combined, the intensity ratio for U.S. parents
based on expenditures was 14, i.e., out of e\fery $1,000 of sales, U.S.
parents spent $14 on R&D. Among the six major industries, manufacturing
was the most R&D intensive, with a ratio of 24. In contrast, the ratios
were only about 4 or 5 in "other industries," petroleum, and mining, and
about 1 in finance (except banking), insurance, and real estate and in
trade.
Within manufacturing, ratios were between 30 and 44 in four
industries; in two industries, they were 8 or lower and, in one, the
ratio was 16. Nonelectrical machinery, with a ratio of 44, was the most
R&D intensive, primarily because of the very heavy investment in R&D by
U.S. parents manufacturing office and computing equipment.
In electric and electronic equipment, the ratio was 38. The ratios
for U.S. parents manufacturing electronic components and radio,
television, and communication equipment were especially high. In
transportation equipment and chemicals, ratios were 31 and 30,
respectively. The high ratio in the former was attributable mostly to
U.S. parents manufacturing aerospace equipment, and, in the latter, to
those manufacturing drugs. Within "other manufacturing," the ratio for
U.S. parents manufacturing instruments and related products was
particularly high.
MOFA's were, overall, much less R&D intensive than their U.S.
parents. In all industries combined, MOFA's spent $4 on R&D per every
$1,000 of sales. Among the six major industries, the ratio for MOFA's
was relatively high in manufacturing—-9. It was 3 in each of "other
industries" and mining and about 1 in each of trade, petroleum, and
finance (except banking), insurance, and real estate. Within
manufacturing, MOFA's were relatively R&D intensive in electric and
electronic equipment (17), transportation equipment (13), and chemicals
(11), and less intensive in food and kindred products (3), primary and
fabricated metals (4), nonelectrical machinery (6), and "other
manufacturing" (7).
In all industries combined, U.S. parents employed 23 R&D scientists
and engineers out of every 1,000 employees, compared with 12 for MOFA's.
The industry distribution of the employment ratios was similar to that
of the expenditure ratios for both parents and MOFA's, except in
petroleum. In petroleum, the expenditure ratios for both parents and
MOFA's were relatively low compared with their employment ratios. The
expenditure ratios were lower, perhaps due to the overstatement of
69
Table 6.--R&D Expenditures per $1,000 of Sales and Number of R&D Scientists and Engineers per
1,000 Employees of U.S. Parents and MOFA's, 1977, by Industry of U.S. Parent/Affiliate
R&D
expenditures
Sales
Millions of dollars
All industries
Mining
18,595
18
1,325,546
4,631
U.S. Parents
R&D
R&D
expenditures scientists Total
per $1,000
and
employment
of sales
engineers
Number of employees
14
4
406,662
(D)
17,509,800
60,225
Number of
R&D scientists R&D
Sales
and engineers expenditures
per 1,000
employees
Millions of dollars
23
(D)
2,075
MOFA's
R&D
R&D
Total
expenditures scientists
employment
and
per $1,000
engineers
of sales
Number of employees
507,019
4
63,045
5,368,826
16
5,086
3
248
79,241
3
198,624
1
2,747
287,826
10
1,785
66
346
42
169
307
624
231
194,200
21,756
32,396
11,560
28,406
18,655
48,686
32,741
9
3
11
4
6
17
13
7
55,550
2,435
10,255
1,291
10,298
10,986
11,814
8,471
3,773,325
377,306
464,437
228,964
523,234
628,779
740,480
810,125
15
7
22
6
20
18
16
11
964
219,556
4
21,083
865,470
16,731
384
2,861
719
3,350
2,198
5,018
2,200
697,804
78,230
94,168
87,266
76,751
57,227
162,414
141,747
24
5
30
8
44
38
31
16
331,929
8,682
55,213
13,443
63,199
46,251
97,809
47,332
11,009,671
968,273
1,181,468
1,355,755
1,480,613
1,168,578
2,225,839
2,629,145
30
9
47
10
43
40
44
18
Trade
128
157,243
1
2,349
2,173,252
91
77,362
1
2,372
637,515
Finance (except banking), insurance, and
real estate
Other industries
162
592
114,492
131,819
1
5
5,630
(D)
817,692
1
10,002
(*)
69
62,560
73
21,745
3
2,059
528,359
Petroleum
R&D Research and development.
MOFA Majority-owned foreign a f f i l i a t e .
D Suppressed to avoid disclosure of data of individual companies.
* Less than 0.5.
2,583,490
(D)
12
109
24
Manufacturing
Food and kindred products
Chemicals and allied products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipment
Transportation equipment
Other manufacturing
Number of
R&D scientists
and engineers
per 1,000
employees
petroleum sales that results from sales among members of the same MNC
being counted more than once; as noted in the Lupo article, sales among
members of the same MNC often occur in petroleum. Thus, for this
industry, the employment ratio is perhaps a better measure of R&D
intensity than the expenditure ratio.
The much lower R&D intensity for MOFA's than for their U.S.
parents and the small share of total R&D expenditures by MNC's that was
accounted for by MOFA's reflected their apparent dependence on parents
for technology. This dependence was attributable to several factors.
First, R&D facilities tended to be concentrated in U.S. parents,
because supplies of scientific and technical talents were more readily
available in the United States than in many areas abroad. Also, because
more than two-thirds of total sales by MNC's
worldwide were by U.S.
parents, and because most of the parents1 sales were to U.S. customers,
a very large share of the worldwide R&D activities of MNC's was located
in the United States to serve U.S. markets more efficiently.
Furthermore, U.S. parents can minimize R&D costs of the MNC as a whole
if they assume the major burden of investment in R&D. MOFA's may
benefit from the technology but spend only a fraction of what their
parents spend on R&D because use of technology by an affiliate abroad
will involve only small additional cost.
Growth in R&D expenditures
Table 7 presents data on growth of R&D expenditures by MNC's for
1966-77, by industry of U.S. parent. Growth in expenditures by U.S.
parents and MOFA's is separately discussed.
1966 data are from BEA's 1966 benchmark survey of U.S. direct
investment abroad. 5/ The definition of a MOFA differs in the 1966 and
1977 surveys. To improve comparability, the 1966 data have been
adjusted to be as consistent as possible with the 1977 data. Details of
the adjustments are presented in the technical notes.
R&D expenditures by MNC's increased from $8.9 billion in 1966 to
$20.7 billion in 1977, or at a compound annual rate of 7.9 percent. In
contrast, the growth rate of MNC total assets was 11.1 percent.
Apparently, MNC spending on R&D has failed to keep pace with the growth
of total assets in 1966-77. 6/
5. See U.S. Department of Commerce. Bureau of Economic Analysis,
U.S. Direct Investment Abroad, 1966, Final Data (Washington, D.C.: U.S.
G.P.O., n.d.).
6. See Howenstine, "Growth," p. 35. Note that the data coverage
of affiliate assets differs from that of affiliate R&D expenditures.
For assets, affiliates are defined to include "allied affiliates"—those
in which U.S. parents had equity ownership of 25 percent or more; for
R&D expenditures, they are defined to include only MOFA's. The effect
of this difference in coverage is not likely to be large, because the
total assets of "allied affiliates" that were not MOFA's accounted for
less than 10 percent of total affiliate assets in 1977.
71
Table 7.—Growth in R&D Expenditures by U.S. MNC's, U.S. Parents, and MOFA's,
1966-77, by Industry of U.S. Parent
(Millions of dollars, or percent)
MNC's
All industries
Mining
Petroleum
Manufacturing
Food and kindred products
Chemicals and allied products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipment
Transportation equipment
Other manufacturing
Trade
Finance (except banking), insurance, and
real estate
Other industries
1966 1/
1977
(1)
(2)
Compound
annual rate
of growth
(3)
U.S. parents
Compound
annual rate
1966 1/
1977
of growth
(4)
(5)
(6)
MOFA's
1966 1/
~~
(7)
1977
(8)
Compound
annual rate
of growth
(9)
8,941
20,670
7.9
8,361
18,595
7.5
580
2,075
12.3
22
23
0.4
21
18
-1.7
1
5
14.6
474
1,092
7.9
441
964
7.4
33
128
13.1
8,110
153
1,357
326
795
1,927
2,674
878
18,296
447
3,240
751
3,539
2,275
5,580
2,462
7.7
10.2
8.2
7.8
14.5
1.5
6.9
9.8
7,573
136
1,254
311
740
1,811
2,537
784
16,731
384
2,861
719
3,350
2,198
5,018
2,200
7.5
9.8
7.8
7.9
14.7
1.8
6.4
9.8
537
17
103
15
55
116
137
94
1,565
63
379
32
189
77
562
262
10.2
12.5
12.6
7.2
11.9
-3.7
13.7
9.8
11
137
26.0
10
128
26.0
20.4
5
(D)
(D)
4
162
41.5
(D)
(D)
319
(D)
(D)
312
592
6.0
(D)
(D)
R&D Research and development.
MNC Multinational company.
MOFA Majority-owned foreign affiliate.
D Suppressed to avoid disclosure of data of individual companies.
1. Data for 1966 were adjusted to improve comparability with data for 1977; therefore, they differ from previously published data. See the
technical notes for details of the adjustments.
R&D expenditures by U.S. parents grew from $8.4 billion to $18.6
billion, or at a 7.5-percent rate. About nine-tenths of the growth was
in manufacturing.
R&D expenditures by U.S. manufacturing parents, which more than
doubled, grew at a 7.5-percent rate. Within manufacturing, growth was
widespread. By far the fastest growth--14.7 percent—was in
nonelectrical machinery. The growth was largely accounted for by U.S.
parents manufacturing office and computing equipment, whose expenditures
increased more than sixfold over the period. Expenditures grew at a
9.8-percent rate in both food and "other manufacturing." Nearly onehalf of the growth in the latter was accounted for by U.S. parents
manufacturing instruments, particularly photographic equipment and
scientific instruments. Also strong was the growth in both paper and
rubber products.
R&D expenditures in primary and fabricated metals grew at a 7.9percent rate. The growth was largely in primary metals. In chemicals,
expenditures grew at a 7.8-percent rate. The growth was accounted for
mainly by U.S. parents manufacturing drugs and industrial chemicals. In
drugs, spending more than tripled over the period.
In transportation equipment, the growth rate was 6.4 percent. Much
of the growth was in spending by U.S. parents manufacturing automotive
products. In aerospace equipment, where federally funded R&D spending
was large, company-funded spending grew relatively slowly. The slowest
growth--!.8 percent a year--was in electrical machinery. Spending
actually declined in radio, television, and communication equipment,
because a few large companies classified in this industry group in 1966
were in other industries in 1977.
Among industries other than manufacturing, growth was unusually
strong in finance (except banking), insurance, and real estate and
trade. Growth in each industry was from a small 1966 base. Also, a
number of companies in these industries were either new in 1977 or were
classified in these industries in 1977, but not in 1966. R&D
expenditures by U.S. petroleum parents grew at a 7.4-percent rate, to
$1.0 billion. In contrast, R&D expenditures by mining parents, which
were small in both 1966 and 1977, declined at a 1.7-percent rate. The
decline was attributable mainly to several large companies that were
classified in this industry in 1966, but in primary metals manufacturing
in 1977.
R&D expenditures by MOFA's, at $2.1 billion, grew faster than those
of their U.S. parents—12.3 percent as compared with 7.5 percent—over
73
1966-77. The faster growth for MOFA's was attributable to several
factors. First, during the period, inflation rates were higher abroad
than in the United States. Second, when the expenditures for 1966 and
1977 were translated from foreign currencies into U.S. dollars, a given
unit of foreign currency could be translated into more dollars after the
1971 depreciation of the dollar than before. Third, the 1966 bases for
the MOFA data in many industries were small.
By industry of U.S. parent, more than two-thirds of the growth in
R&D expenditures by MOFA's was in manufacturing. 7/ The remainder was
mostly in finance (except banking), insurance, and real estate, "other
industries," and petroleum. In trade and mining, growth was rapid, but
spending remained small in 1977.
R&D expenditures by MOFA's of
of 10.2 percent per annum, to $1.6
than four-tenths of the growth was
of the remainder was in chemicals,
manufacturing."
manufacturing parents grew at a rate
billion. Among industries, more
in transportation equipment and most
nonelectrical machinery, and "other
In transportation equipment, MOFA spending increased at a 13.7percent rate. This rapid growth was mostly attributable to MOFA's in
France, Germany, and the United Kingdom whose U.S. parents were in
automotive manufacturing. Spending by MOFA's in Canada, Australia, and
Latin America also grew rapidly.
In chemicals, MOFA's increased their R&D expenditures at a 12.6percent rate. More than one-third of the growth was in drugs, largely
in several EC(9) countries, Canada, and Japan. R&D expenditures in food
grew at a 12.5-percent rate from a small base in 1966. In nonelectrical
machinery, the growth rate was 11.9 percent. About one-half was
accounted for by MOFA's in the EC(9) and "other Asia and Pacific" whose
parents manufactured office and computing equipment. In "other
manufacturing," expenditures grew at a 9.8-percent rate. The growth,
which was mostly in instruments and rubber products, was largely
accounted for by MOFA's in Europe and Canada. In metals, MOFA
expenditures increased at a 7.2-percent rate, from a small base in 1966.
Expenditures in electrical machinery declined at a 3.7-percent rate,
partly because a number of affiliates whose U.S. parents were classified
in this industry in 1966 were in other industries in 1977, as noted
earlier.
Outside manufacturing, R&D expenditures in petroleum grew at a
13.1-percent rate, from a small 1966 base. MOFA's in Canada and EC(9)
largely accounted for the growth. Growth in finance (except banking),
insurance, and real estate and "other industries" was unusually rapid.
7. Affiliate data in this table are classified by industry of
U.S. parent in order to be consistent with the classification of the MNC
and parent data in the table.
74
This rapid growth was partly due to a number of affiliates whose parents
were classified in these industries in 1977 but not in 1966, as noted
above.
Royalties and License Fees
Royalties and license fees are fees, arising from licensing
agreements, that are received by licensors in return for providing
licensees with access to a particular technology. The technology
transferred may include trademarks, copyrights, patents, know-how (e.g.,
designs, formulas, industrial processes, and other unpatented private
technology), or any combination of the above.
Royalties and license fees are frequently viewed as a measure of
technology transfer because they arise from licensing agreements, which
facilitate such transfers; however, for the following reasons, they are,
at best, an imperfect measure.
First, royalties and license fees do not include all compensation
that can arise from licensing agreements. Other compensation may take
forms such as cross-licensing, buy-back agreements in which goods
produced by licensees are receivea by licensors at a discount, or sale
of material inputs to licensees by licensors. Second, technology can
also be transferred through means other than licensing agreements, such
as the sale of turnkey plants, joint ventures, product inspection, etc.,
all of which do not give rise to royalties and license fees. 8/ Despite
these shortcomings, data on royalties and license fees are useful
because they constitute one of the few statistical series available on
this subject.
Matrix of flows
The 1977 benchmark survey collected most of the data needed to
construct a matrix of royalties and license fees of U.S. parents and
MOFA's with all transactors. 9/ As shown in table 8, data are
available for transactions between U.S. parents and all affiliated and
unaffiliated foreign persons, and between MOFA's and all affiliated and
unaffiliated U.S. and foreign persons. No data are available for one
component—transactions between U.S. parents and other U.S. persons.
8. For discussion of other limitations, see Mary Frances Teplin,
"U.S. International Transactions in Royalties
and Fees: Their
Relationship to the Transfer of Technology,11 Survey 53 (December 1973):
14-18.
9. Data on royalties and license fees presented in this article
are just one of several components of the account, "fees and royalties
with affiliated foreigners," in the U.S. international transactions
accounts. The relationship between this component and the account is
discussed in the technical notes.
75
Table 8. ~ Net Receipts, Receipts, and Payments of Royalties and
License Fees by MOFA's and Their U.S. Parents, 1977, by Transactor
(Millions of dollars; (-) indicates net payments)
Net receipts
Line
1
2
3
4
5
6
7
8
9
10
11
12
13
14
U.S. parents1 receipts/payments
From or to other U.S. persons
From or to foreign persons
From or to foreign affiliates
MOFA's
Other affiliates 2/
From or to unaffiliated foreign persons
MOFAs' receipts/payments
From or to U.S. persons
U.S. parents (net=line 5 with opposite sign)
Other U.S. persons
From or to forei gn persons
Foreign affiliates, including MINOFA's
Unaffi1i ated forei gn persons
Receipts
Payments
n.a.
n.a.
-V 2,808
2,157
1,914
243
1/ 651
n.a.
n.a.
3,110
2,208
1,962
246
902
n.a.
n.a.
1/ 302
51
48
3
1/ 251
-2,033
-2,045
-1,914
-130
12
-45
56
548
64
48
16
484
189
295
2,582
2,108
1,962
146
473
234
239
MOFA Majority-owned foreign affiliate.
MINOFA Minority-owned foreign affiliate,
n.a. Not available.
1. These numbers are different from those published in U.S. Direct Investment Abroad, 1977 and the U.S. international transactions
accounts due to correction of an error in originally reported data.
2. U.S. parents of MOFA's may also have minority-owned foreign affiliates.
Net receipts (receipts minus payments) of royalties and license
fees by U.S. parents from all foreign persons were $2.8 billion in 1977.
They consisted of receipts of $3.1 billion less payments of $0.3
billion. More than two-thirds of the receipts were from foreign
affiliates, mostly MOFA's, and less than one-third were from
unaffiliated foreigners. The payments were mostly to unaffiliated
foreign persons; payments to foreign affiliates were very small.
These data indicate that, overall, U.S. parents were net exporters
of technology under licensing agreements, and that they tended to favor
affiliated over unaffiliated foreigners in licensing. The tendency to
favor affiliates probably reflected the parents1 desires to maintain
control over use of the technology. Control was more assured if
agreements were with affiliated 1 foreigners than with unaffiliated
foreigners, because the parents relationship with their affiliates
was
generally longer and closer. Thus, with affiliates, parents1 control
over the technology often endured beyond the expiration of the licensing
agreement, while with unaffiliated foreigners, it was usually limited to
the life of the agreement.
In contrast to their U.S. parents, MOFA's had net payments of
royalties and license fees (shown as negative net receipts in table 8
and subsequent tables) of $2.0 billion worldwide. Net payments to U.S.
persons more than accounted for the total; there were small net receipts
from all foreign persons.
Of the net payments to U.S. persons, nearly all, $1.9 billion, were
to U.S. parents; net payments to other U.S. persons were only $0.1
billion. In transactions with foreign persons, small net receipts by
MOFA's from unaffiliated foreigners were nearly offset by small net
payments to other foreign affiliates of their U.S. parents.
Royalties and license fees of U.S. parents, by industry
In table 9, U.S. parents1 net receipts of royalties and license
fees from foreigners are classified by industry of parent and
crossclassified by transactor. Of the six major industries,
manufacturing accounted for nearly all—92 percent--of net receipts by
U.S. parents from foreigners. "Other industries" accounted for 4
percent and petroleum for 2 percent.
Within manufacturing, net receipts by U.S. parents were highly
concentrated. U.S. parents in nonelectrical machinery accounted for
nearly one-half of the total. U.S. parents in this industry, "other
manufacturing," and chemicals combined accounted for more than threefourths.
In nonelectrical machinery, net receipts by U.S. parents were
mostly from MOFA's, and a large share of the receipts from MOFA's were
by U.S. parents manufacturing office and computing equipment. In "other
manufacturing," about three-fourths of net receipts by U.S. parents were
from MOFA's, mainly by U.S. parents manufacturing instruments, paper and
77
Table 9. ~ U.S. Parents' Net Receipts of Royalties and License Fees From Foreign Persons, 1977,
Industry of U.S. Parent by Transactor
(Millions of dollars; (-) indicates net payments)
Net receipts
from all
All industries
Mining
Petroleum
Manufacturing
Food and kindred products
Chemi cal s and al 1 i ed products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipment...
Transportation equipment
Other manufacturing
Trade
Finance (except banking), insurance,
and real estate
Other industries
From foreign a f f i l i a t e s
foreigners
Total
(1)
(2)
(3)
1/ 2,808
2,157
4
70
2,581
101
378
91
1,151
280
153
426
From MOFA's
Recei pts
From u n a f f i l i a t e d foreigners
From other a f f i l i a t e s
Receipts
Payments
Receipts
Payments
(9)
(10)
(11)
i/651
902
1/251
4
(*)
62
25
Payments
Net
receipts
(4)
(5)
(6)
(7)
1,914
1,962
48
243
246
3
(*)
(*)
(*)
0
(*)
(*)
0
4
32
16
16
0
17
17
0
37
1,821
78
311
24
967
(D)
34
(D)
1,866
78
319
24
971
121
35
318
45
(*)
8
(*)
4
(D)
202
(D)
39
8
69
(D)
17
36
205
(D)
39
8
71
(D)
17
36
3
0
(D)
(D)
2
(*)
0
1
(*)
558
(D)
29
60
114
138
102
(D)
2,023
(D)
350
31
1,036
142
51
(D)
Net
receipts
17
13
(D)
(D)
11
126
8
81
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(D)
(8)
r-s
receipts
111
33
144
65
121
150
113
146
214
(D)
115
4
7
11
11
(D)
4
6
2
(*)
3
3
(*)
(*)
45
55
10
MOFA Majority-owned foreign affiliate.
* Less than $500,000 (+).
0 Suppressed to avoid disclosure of data of individual companies.
1. These numbers are different from those published in U.S. Direct Investment Abroad, 1977 and the U.S. international transactions accounts due to
correction of an error in originally reported data.
Net
allied products, and textiles and apparel. In chemicals, nearly twothirds of net receipts by U.S. parents were from MOFA's by U.S. parents
manufacturing industrial chemicals and soap, cleaners, and toilet goods.
In drugs, large receipts by U.S. parents from MOFA's were partly offset
by payments by U.S. parents to unaffiliated foreigners.
Royalties and license fees of U.S. parents, by country
Parent data on royalty and license fee transactions with foreign
affiliates, by country of affiliate, are shown in table 10.
Transactions with unaffiliated foreign persons are excluded, because
such data were not available by country in the benchmark survey.
Of the $2.2 billion net receipts by U.S. parents from foreign
affiliates, more than nine-tenths were from affiliates in developed
countries and 7 percent from those in developing countries. The small
share from developing countries reflected the smaller amount of
technology embodied in goods and services in these markets and a smaller
share of the operations of U.S. MNC's in these countries.
Net receipts from developed countries were highly concentrated.
Five countries—Germany, France, the United Kingdom, Canada, and Japan—
accounted for more than two-thirds of the total, with shares ranging
from 17 percent for Germany to 11 percent for Japan. In each country,
except Japan, net receipts from MOFA's accounted for most of the
receipts. In contrast, a large share—about two-fifths—of net receipts
from Japan were from minority-owned foreign affiliates (MINOFA's). A
large number of Japanese affiliates were minority owned because, until
the early 1970's, the Japanese Government restricted equity
participation in Japanese firms by foreigners to less than a majority
share. JTO/
Most of the net receipts from developing countries were from a few
countries in Latin America and "other Asia and Pacific," where economic
growth was rapid.
Royalties and license fees of MOFA's, by industry and country
By industry of affiliate, MOFA's in manufacturing accounted for 87
percent of the net payments of royalties and license fees by MOFA's
worldwide (table 11). Particularly large were net payments in
nonelectrical machinery, chemicals, and "other manufacturing." By area,
nearly nine-tenths of the total was payments by MOFA's in developed
countries. As shown in column 3 of table 11, most of the net payments
arose from transactions with U.S. parents, which were discussed in the
last section. This section will focus on transactions with U.S.
persons other than U.S. parents and with all foreign persons.
Net payments to "other U.S. persons" were $0.1 billion. They
consisted mostly of payments; receipts were small. The payments were
largely by MOFA's in manufacturing and trade in the EC(9) and Canada.
10. See Barker, "A Profile," p. 53.
79
Table 10.--U.S. Parents1 Net Receipts of Royalties and License Fees From
Foreign Affiliates, 1977, Country of Affiliate by Transactor
(Millions of dollars)
Total
From MOFA's
Net
receipts
(2)
(1)
Receipts
From other affiliates
Payments Net
receipts
Receipts
Payments
(3)
(47
(5)
(6)
(7)
All countries
2,157
1,914
1,962
48
243
246
3
Developed countries
1,999
1,790
1,835
45
209
212
3
Canada
266
258
(D)
(D)
8
8
Europe
1,419
1,328
1,347
18
90
91
1,253
102
21
281
338
10
124
2
107
269
1,178
1,191
94
19
244
333
9
13
(*)
75
9
2
38
75
166
150
226
126
European Communities (9)
Belgium
Denmark
France
Germany
Ireland
Italy
Luxembourg
Netherlands
United Kingdom
Other Europe
Japan
94
19
242
331
9
116
2
104
261
2
106
266
0
1
2
0
1
0
2
5
7
1
7
(*)
3
8
9
2
38
7
1
7
(*)
3
8
156
6
16
16
(D)
99
102
117
(D)
(*)
1
(*)
0
0
0
(*)
(*)
(*)
0
0
(*)
(*)
2
Australia, New Zealand, and South
Africa
Developing countries
Latin America
South America
Argentina
Brazil
Other
Central America
Mexico
Other
Other Western Hemi sphere
99
25
7
5
14
68
(D)
(D)
6
4
Middle East
10
Other Asia and Pacific
45
Addendum: OPEC
78
1
11
11
(*)
124
127
3
34
34
(*)
75
17
7
4
6
78
(D)
(D)
(D)
(D)
24
9
(*)
1
8
(D)
12
1
24
9
(*)
(D)
(D)
(D)
3
(*)
(*)
(*)
0
3
1
2
0
(D)
(D)
(*)
(*)
0
0
(*)
(*)
(*)
(*)
(*)
3
4
(*)
(*)
(*)
0
7
7
0
3
3
0
38
38
(*)
7
7
0
0
0
0
0
0
0
(0)
(D)
0
(D)
(0)
0
158
Other Africa
International
78
89
(0)
17
7
4
6
0
17
MOFA Majority-owned foreign affiliate.
* Less than $500,000(+),
D Suppressed to avoid disclosure of data of individual companies.
80
1
8
(D)
12
1
Table 11.—Net Receipts of Royalties and License Fees by MOFA's from U.S. and Foreign Persons,
1977, Industry and Country of Affiliate by Transactor
(Millions of dollars; (-) indicates net payments)
From all U.S. persons
i other U.S. persons
From U.S.
NetReceipts
parents
Payments
receipts
Net
receipts from
all persons
—ur
Total
2,033
-2,045
Total
From all foreign persons
From other foreign affiliates
From unaffiliated foreigners"
g
Rit
Receipts Payments
Rel
Receipts Payments
receipts
receipts
irr
1TTT
iizr
T2~
—56-
"295"
TT3T
-1,514
-131
(*)
(D)
0
(*)
-18
-17
17
(D)
2
(D)
-94
-92
94
-112
-7
-74
-4
8
8
-9
-35
By industry:
Mining
19
Petroleum
Manufacturing
Food and kindred products
Chemicals and allied products
Primary and fabricated metals
Machinery, except electrical
Electric and electronic equipment
Transportation equipment
Other manufacturing
Trade
-112
-18
-1,770
-73
-352
-44
-816
-118
-28
-339
-296
1,658
-66
-279
-40
-823
-125
-19
-305
-1,590
-61
-273
-38
-817
-119
-18
-265
-67
-5
-6
-3
-7
-6
-1
-39
13
(*)
(*)
(*)
80
5
11
3
7
13
1
40
-312
-263
-49
(*)
49
3
(*)
(*)
-106
-3
-76
-3
10
-8
-11
-16
83
9
18
1
(D)
16
6
(D)
18
52
189
12
94
4
(D)
24
16
(D)
-6
-5
3
(*)
15
2
-19
73
1
23
1
7
22
8
10
-2
28
79
6
21
1
10
7
6
29
Finance (except banking), insurance, and
real estate
2
(*)
(*)
(*)
23
22
22
(*)
1
(D)
(*)
(D)
196
24
30
6
173
(D)
(D)
(D)
(D)
1,903
-1,790
-113
16
129
84
-41
175
215
125
265
140
-288
-258
-30
1
32
-21
-9
9
18
-12
30
42
1,400
-1,328
-71
14
85
98
-11
163
175
109
193
85
1,246
-90
-19
-258
-347
-10
-121
-4
-107
-290
-1,178
-94
-19
-242
-331
-9
-116
-2
-104
-261
-68
3
(*)
-15
-16
-1
-4
-3
-4
-29
14
5
0
(D)
(D)
0
1
0
0
(*)
82
1
(*)
(D)
(D)
5
3
4
29
34
2
(*)
-10
-13
-3
8
1
23
26
-65
-6
(*)
-22
-36
-2
-6
1
(D)
(D)
81
4
1
9
8
0
3
1
(D)
(D)
146
10
1
30
44
2
9
0
27
21
99
8
(*)
12
23
-1
14
(*)
(D)
(D)
168
9
(*)
25
49
0
21
(*)
(D)
(D)
69
1
(*)
13
26
1
7
(*)
-154
-150
-4
(*)
4
63
54
83
29
10
25
15
-127
-126
(*)
(*)
(*)
11
-6
1
8
17
20
3
-89
-78
-11
(*)
11
-3
-15
1
16
12
22
10
-142
-124
-18
(*)
18
-71
-3
14
17
-68
30
98
-87
-75
-11
(*)
11
7
-3
8
10
10
30
20
-19
-7
-6
-6
-17
-7
-4
-6
-2
(*)
-2
(*)
ft
ft
ft
2
(*)
10
-2
8
5
-4
-1
-1
-2
2
(*)
1
6
1
2
3
14
-1
9
7
19
Sol
5
1
(D)
(D)
(D)
2
-2
3
5
1
5
4
2
1
(D)
(D)
10
(D)
(D)
(D)
(D)
(*)
25
-59
Other industries
138
(D)
By area:
Developed countries
Canada
Europe
European Communities (9)
Belgium
Denmark
France
Germany
Ireland
Italy
Luxembourg
Nether 1 ands
United Kingdom
Other Europe
Japan
Australia, New Zealand, and South Africa
Developing countries
Latin America
1,819
-309
-1,302
-1,211
-89
-20
-268
-360
-13
-112
-3
-84
-264
-91
-116
-92
-213
-79
South America
Argentina
Brazil
Other
Central America
Mexico
Other
-8
-9
2
-2
-55
-37
-18
(D)
-33
(D)
(D)
(D)
(D)
Other Western Hemisphere
-15
(D)
(D)
Other Africa
-5
-5
-6
(D)
(D)
-3
,
(*)
6
(D)
(D)
-3
3
(D)
(*)
0
(*)
(D)
(*)
(D)
-1
0
1
(*)
(D)
(*)
(*)
(*)
(*)
(D)
(*)
(*)
(D)
(D)
-7
-7
(*)
0
(*)
Other Asia and Pacific
(D)
-43
-38
-5
(*)
5
0
(*)
0
-2
0
Addendum: OPEC
-2
(*)
-85
(D)
MOFA Majority-owned foreign affiliate.
* Less than $500,000 (+).
D Suppressed to avoid disclosure of data of individual companies.
(D)
(D)
0
0
Middle East
International
(D)
20
3
4
1
-3
2
6
(*)
(D)
-1
-1
0
2
(D)
-3
1
0
1
1
(*)
-1
0
(D)
-1
4
(D)
(D)
(D)
Transactions between MOFA's and all other foreign persons were
nearly in balance, as net receipts of $0.2 billion by MOFA's in "other
industries" were nearly offset by net payments of $0.1 billion each by
MOFA's in manufacturing and petroleum. In "other industries," the net
receipts were largely from unaffiliated foreigners to MOFA's located in
Europe and Canada. U / A sizable share of the net payments by MOFA's in
manufacturing were by chemical MOFA's located in Europe. The net
payments in petroleum were largely to unaffiliated foreigners by MOFA's
in the Middle East.
Technical Notes
BEA and NSF data on R&D activities
The U.S. parent data used in this article were obtained from BEA's
1977 benchmark survey, or census, of U.S. direct investment abroad. The
data for all U.S. businesses were universe estimates derived from an NSF
sample survey. Both surveys used the business enterprise as the
reporting unit, and both covered calendar year 1977. The two surveys,
however, differed in several important respects.
Company-funded R&D expenditures were defined differently in the two
surveys. In accordance with Financial Accounting Standards Board
Statement No. 2, "Accounting for R&D Costs," the BEA data for U.S.
parents were defined on the basis of for whom the R&D was performed.
They included the cost of R&D performed by U.S. parents for their own
account and the cost of R&D performed for U.S. parents by others on
contract, but excluded the cost of R&D performed by U.S. parents for
others on contract. In contrast, the NSF data for all U.S. companies
were defined on the basis of who performed the R&D. They included the
cost of R&D performed by the companies for their own account and for
others on contract, but excluded the cost of R&D performed for the
companies by others on contract. For example, if a U.S. company
contracted out R&D to its foreign affiliates, such expenditures would
have been included in BEA's parent data but excluded in NSF's data for
all U.S. businesses.
The number of R&D scientists and engineers employed was also
defined differently in the two surveys. In the BEA survey, it was
defined as the average number of full-time and part-time R&D employees
for the year; in the NSF survey, it was defined as the number of fulltime R&D employees, plus the full-time equivalent of part-time R&D
employees, on the payroll in January of the year. Partly because parttime employees were each counted as a whole employee in the BEA data,
but were converted to a full-time equivalent basis in the NSF data, the
BEA data for U.S. parents were higher than the NSF data for all U.S.
companies in total and in most industries shown in table 2.
11. Net receipts of royalties and license fees by MOFA's in "other
industries" included a substantial amount of fees for leasing film and
television tapes. If such fees had instead been excluded from this
account, transactions of MOFA's with unaffiliated foreigners would have
shifted from net receipts to net payments.
82
Industry coverage also differed in the two surveys. As noted in
table 2, footnote 3, both surveys covered most major industries.
However, within finance, banking was excluded in the BEA data, but
included in the NSF data. In addition, within "other industries,11 the
BEA data included, but the NSF data excluded, agricultural production
and motion pictures.
It should be noted that unlike company-funded R&D expenditures,
federally funded R&D expenditures were defined similarly in both the BEA
and NSF surveys. They included the cost of R&D performed by companies
on contract or subcontract with the Federal Government, but excluded the
cost of R&D subcontracted to others. Because the BEA data on federally
funded R&D expenditures were defined on the basis of who performed the
R&D, but the BEA data on company-funded expenditures were defined on the
basis of for whom the R&D was performed, the two expenditure categories
for U.S. parents are not additive.
Adjustments to 1966 data to improve comparability with 1977 data
Data collected in BEA's 1966 benchmark survey of U.S. direct
investment abroad are not strictly comparable with the 1977 benchmark
survey data because of changes in concept and definitions between the
two surveys. To improve comparability, the 1966 data were adjusted to
be as consistent as possible with the 1977 data.
In the 1966 survey, MOFA's were defined to include foreign
affiliates in which U.S. parents had equity ownership of 50 percent or
more. However, in the 1977 survey, the definition
was revised tp
include foreign affiliates in which U.S. parents1 equity ownership
exceeded 50 percent. Thus, as shown in table A, data for foreign
affiliates owned exactly 50 percent were removed from the 1966 total.
Table A.—Adjustments to 1966 Data to Improve Comparability With
1977 Data on R&D Expenditures by MOFA's and Their U.S. Parents
(Millions of dollars)
U.S. parents
of MOFA's
Published 1966 totalLess: Data for affiliates owned
exactly 50 percent
Less: Data for U.S parents that did
not have at least one M O F A —
Plus: Data for affiliates owned more
than 50 percent solely by virtue
of combined ownership by more
than one U.S. parent
Equals: Adjusted total
R&D Research and development.
MOFA Majority-owned foreign affiliate.
83
MOFA's
8,386
0
12
25
0
0
3
8,361
580
Further, the parent data for 1977 included only U.S. parents that
had at least one MOFA; in contrast, the 1966 data included, in addition,
parents that had only MINOFA's and no MOFA's. Therefore, data for
parents that had only MINOFA's were subtracted from the 1966 parent
data.
Finally, in 1977, MOFA's were defined as affiliates owned more
than 50 percent by all U.S. parents combined. In 1966, in contrast, a
single-owner criterion was used in defining a MOFA for purposes of
reporting data on R&D expenditures. Thus, the 1966 data for affiliates
were adjusted to include data for MOFA's owned more than 50 percent
solely by virtue of combined ownership by more than one U.S. parent.
The net effects of these adjustments were small—previously
published 1966 data on R&D expenditures were adjusted downward by less
than one-half of 1 percent for U.S. parents and by about 2 percent for
MOFA's.
Relationship between royalties and license fees and total fees and
royalties
Royalties and license fees from foreign affiliates to U.S.
parents, which are discussed in this article, constitute just one
component of "fees and royalties from affiliated foreigners," which
appears in the U.S. international transactions accounts. In addition to
this component, total fees and royalties also include: (1) rentals for
the use of tangible property, (2) film and television tape rentals, and
(3) service charges, which are fees for services rendered—including
management, professional, and technical services—and allocated
expenses. Amounts for the total and for each component are shown in
table B for 1977.
Table B.—Fees and Royalties From Affiliated Foreigners, 1977,
Total and by Component
(Millions of dollars)
Net receipts by U.S. persons
Total
Royalties and license fees
Rentals for use of tangible property
Film and television tape rentals
Service charges
Amount
3^553
2,173
-221
300
1,631
84