MULTINATIONALS AND MANUFACTURED EXPORTS FROM LESS DEVELOPED COUNTRIES

The primary focus of this dissertation is the role that U.S. majority-owned foreign affiliates (MOFAs) played in the expansion of manufactured exports from sixteen underdeveloped Latin American and Asian host countries during the 1966-1974 period. The study utilizes two measures to assess the export performance of U.S.-owned affiliates in eight two-digit manufacturing industries. The growth of export sales by U.S. MOFAs is compared with the growth of overall exports, the U.S. affiliates' share of overall exports is compared with their share of total production in the host country. U.S. MOFAs were judged to be superior exporters if their export sales had been growing more rapidly than their total exports and if their share of exports by the overall industry had been exceeding their share of total production in that country. A clear pattern of export superiority on the part of U.S. majority-owned affiliates during the period under study did not emerge. Indeed, in a substantial majority of the country/industry observations, U.S. MOFAs' export sales were growing more slowly than were their overall exports. Furthermore, in a significant number of cases, U.S. MOFAs were judged to be less export oriented than were their rivals because their share of the host country's exports was less than their share of total production. The evidence developed in the thesis did not show an accelerating tendency on the part of U.S. MOFAs to "world-wide source." Instead, U.S. MNCs appeared to be more interested in expanding their shares of the host countries' internal markets. In addition, what world-wide sourcing there was, looked to be limited to a select number of Far Eastern countries. The evidence shows that locally-owned firms played a major role in expanding manufactured exports from all sixteen of the LDCs in the sample. This was particularly true in the more labor intensive and less technologically advanced categories of manufactured exports. The dissertation concludes that underdeveloped countries should not rely on MNCs to play a major role in diversifying their exports. Furthermore, the thesis strongly recommends that host countries utilize an array of performance requirements in order to increase the contributions of MNCs to export growth and diversification. The thesis also explores a number of other issues related to foreign investment in less developed countries. A measure of U.S. MOFAs' share of the host country's market in the eight two-digit industries is developed and the trend over the period is examined. The methods used by MNCs to set up and finance their subsidiaries are examined. An assessment of the MNCs' impact on the host country's balance of payments via the capital account and import substitution is also undertaken.