The U.S. Multinational Advantage during the 2008-2009 Financial Crisis: The Role of Services Trade

Fariha Kamal and Zachary Kroff

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We document the augmenting role of services exports in U.S. multinationals' goods-export growth during the global financial crisis. Using newly linked data on U.S. firms' foreign sales of goods and services and a triple-difference identification strategy combined with propensity-score matching, we find that compared to multinationals that only export goods (mono-exporters), multinationals that also export services to the same destination (bi-exporters) experienced higher goods-export growth. This result is driven by sales of intellectual property rights related to industrial processes (e.g., patents, trademarks). We also find higher growth in bi-exporters' foreign affiliate services sales and domestic employment in services sectors. These results reveal a pivotal role of services exports in supporting foreign demand for U.S. goods during the crisis.

Keywords: multinationals; financial crisis; services exports; goods exports (search for similar items in EconPapers)
JEL-codes: F1 F13 F14 F23 H2 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:26-04

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