MNC trade does account for a substantial share of US trade. MNC associated US exports accounted for 63 per cent of total US exports in 1999, having fallen from 77 per cent in 1982 (Table 4). A substantial chunk of those exports were to MNC affiliates abroad. Thus intra-firm trade accounted for 25 per cent of all exports. If the surveyed MNCs account for all of these intra-firm exports, then it follows that close to 40 per cent of MNC exports from the US is intra-firm. Intangibles embodied in these goods and those sold to other persons account for a substantial share of parent gross product. What is surprising, is that MNCs have a much smaller role in US imports than in US exports. The share of MNC associated US imports has fallen from 50 per cent in 1982 to 37 per cent in 1999, and only 17 per cent of US imports are intra-firm. Thus the view that American firms are increasingly relocating abroad to cater to US markets appears to be far from the truth. US imports come from other sources. US multinational parents and MOFAs are still predominantly targeting local markets, and if at all US MNCs are targeting foreign markets based on US production rather than US markets based on global production.
Table 4 >>
 
This, however, does not mean that MNC presence is not an important factor affecting developing countries. This is the view often gleaned from the fact that even now a large share of global FDI flows are to the developed countries. But developing countries are the ones in which US MNCs account for a significant share of host GDP (Table 3). In fact, 11 out of the top 20 countries ranked according to MNC share in host GDP are developing countries, including Singapore, Malaysia, Hong Kong, Indonesia, Chile, Mexico and Philippines, which are known to have followed strategies aimed at attracting FDI. There are many more developing countries in the list of the top 40 in terms of MNC contribution to host GDP. Even this evidence should be treated with caution, since it does not include joint ventures in which US MNCs have a minority share.
Table 3 >>
 
What needs to be noted is that the expansion of US capital abroad has increasingly taken the form of acquisitions of existing firms as opposed to investment in green-field projects. Such acquisitions, which are followed by the modernization or even replacement of the acquired firms’ assets, allows for US firms to capture market shares in which pre-existing brands are replaced by those of the acquiring firm. In 1999, for example, 577 of 1077 newly established affiliates of US MNCs were acquired rather than newly established. The consequent standardization of brands sold worldwide has been widely noted. Underlying such standardization is the growing command of US firms of the gross product of host countries. Combined with the emergence of new industries like the information sector where US MNCs dominate, this could mean that the next benchmark survey could reflect a qualitative shift in MNC presence in the developing world. But, the evidence as of now indicates that that presence would not be so much a sign of relocation of US economic activity to low cost sites abroad, but the growing dominance of these MNCs over world markets through exports and local production.