Domestic Effects of the Foreign Activities of US Multinationals
Mihir A. Desai,
C. Fritz Foley and
James Hines ()
American Economic Journal: Economic Policy, 2009, vol. 1, issue 1, 181-203
Do firms investing abroad simultaneously reduce their domestic activity? This paper analyzes the relationship between the domestic and foreign operations of US manufacturing firms between 1982 and 2004 by instrumenting for changes in foreign operations with GDP growth rates of the foreign countries in which they invest. Estimates produced using this instrument indicate that 10 percent greater foreign investment is associated with 2.6 percent greater domestic investment, and 10 percent greater foreign employee compensation is associated with 3.7 percent greater domestic employee compensation. These results do not support the popular notion that expansions abroad reduce a firm's domestic activity, instead suggesting the opposite. (JEL F23, H25, L25)
JEL-codes: F23 H25 L25 (search for similar items in EconPapers)
Note: DOI: 10.1257/pol.1.1.181
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (68) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to AEA members and institutional subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aea:aejpol:v:1:y:2009:i:1:p:181-203
Ordering information: This journal article can be ordered from
Access Statistics for this article
American Economic Journal: Economic Policy is currently edited by Matthew Shapiro
More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().