Production and Trade in Services by U.S. Multinational Firms

Irving B. Kravis and Robert Lipsey

No 2615, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Direct investment in foreign countries by U.S. goods industries represents a response to differences in labor costs to a much greater extent than the more rapidly growing investment by service industries. The latter seem to be less able to allocate different types of production to different areas of the world, probably because services are less tradable than goods; they must more often be produced where they are consumed or consumed where they are produced. Therefore, while direct Investment abroad in goods industries represents an allocation of production that Increases the demand for high-skill labor and for R & D input in the U.S. and decreases the demand for low-skill labor, direct investment in service industries, while it increases a firm's share of foreign markets, is likely to have little effect on the firm's demand for labor in the U.S. or on the composition of its labor force.

Date: 1988-06
Note: ITI IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as "Parent Firms and their Foreign Subsdiaries in Goods and Service Industries" , International Trade and Finance Association, 1992, Proceedings, pp. 207-222. See also NBER Reprint #1828 and NBER Working Paper #2760.

Downloads: (external link)
http://www.nber.org/papers/w2615.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:2615

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w2615

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().