U.S. Multinational Companies: Operations in 1997.

Mataloni, Raymond J. Jr.

THE COMBINED domestic and foreign operations of nonbank U.S. multinational companies (MNC'S) continued to grow at a strong pace in 1997, according to preliminary estimates from the annual survey of U.S. direct investment abroad conducted by the Bureau of Economic Analysis (BEA).(1) Current-dollar estimates of the worldwide gross product of U.S. MNC'S (U.S. parents and majority-owned foreign affiliates (MOFA'S) combined) increased 5.6 percent in 1997, compared with an 8.1-percent increase in 1996 and an average annual increase of 5.5 percent from 1989 to 1996 (table 1).

Table 1.--Gross Product, Employment, and Capital Expenditures of Nonbank U.S. MNC's, U.S. Parents, and Foreign Affiliates 1982-97

                          MNC's worldwide
                         Parents        Parents       Parents
                         and all          and
                        affiliates       MOFA's

  Gross product
Millions of dollars:
  1982                      n.a.       101,973        796,017
  1983                      n.a.          n.a.           n.a.
  1984                      n.a.          n.a.           n.a.
  1985                      n.a.          n.a.           n.a.
  1986                      n.a.          n.a.           n.a.
  1987                      n.a.          n.a.           n.a.
  1988                      n.a.          n.a.           n.a.
  1989                      n.a.     1,364,878      1,044,884
  1990                      n.a.          n.a.           n.a.
  1991                      n.a.          n.a.           n.a.
  1992                      n.a.          n.a.           n.a.
  1993                      n.a.          n.a.           n.a.
  1994                      n.a.     1,717,488      1,313,792
  1995                      n.a.     1,831,046      1,365,470
  1998                      n.a.     1,978,948      1,480,638
  1997(p)                   n.a.     2,089,796      1,570,490

Percent change at
  annual rates:
  1982-96                   n.a.           4.8            4.5
  1989-96                   n.a.           5.5            5.1
  1995-96                   n.a.           8.1            8.4
  1996-97                   n.a.           5.6            6.1

  Number of
  employees

Thousands:
  1982                     25,345       23,727         18,705
  1983                     24,783       23,253         18,400
  1984                     24,548       22,973         18,131
  1985                     24,532       22,923         18,113
  1986                     24,082       22,543         17,832
  1987                     24,255       22,650         17,986
  1988                     24,141       22,498         17,738
  1989                     25,388       23,879         18,765
  1990                     25,264       23,786         18,430
  1991                     24,837       23,345         17,959
  1992                     24,190       22,812         17,530
  1993                     24,222       22,760         17,537
  1994                     25,670       24,273         18,565
  1995                     25,921       24,500         18,576
  1996(r)                  26,334       24,867         18,790
  1997(p)                  27,885       26,392         19,867
Percent change at
  annual rates:
  1982-96                     0.3          0.3            0.0
  1989-96                     0.5          0.6            0.0
  1995-96                     1.6          1.5            1.2
  1996-97                     5.9          6.1            5.7

  Capital
  expenditures

Millions of dollars:
  1982                    248,262      233,078        188,266
  1983                      n.a.       197,534        160,656
  1984                      n.a.       203,791        168,692
  1985                      n.a.       221,509        185,027
  1986                      n.a.       203,809        169,131
  1987                      n.a.       199,171        162,139
  1988                      n.a.       223,814        177,203
  1989                    276,790      260,488        201,808
  1990                      n.a.       274,614        213,079
  1991                      n.a.       269,221        206,290
  1992                      n.a.       272,049        208,834
  1993                      n.a.       271,661        207,437
  1994                    328,240      303,364        231,917
  1995                      n.a.       323,616        248,017
  1996(r)                   n.a.       340,510        260,048
  1997(p)                   n.a.       387,148        208,902

Percent change at
  annual rates:
  1982-96                   n.a.           2.7            2.3
  1989-96                   n.a.           3.9            3.7
  1995-96                   n.a.           5.2            4.9
  1996-97                   n.a.          13.7           14.9

                                  Affiliates
                         Total      MOFA's        Other

  Gross product

Millions of dollars:
  1982                     n.a.     223,717       n.a.
  1983                     n.a.     216,683       n.a.
  1984                     n.a.     220,331       n.a.
  1985                     n.a.     220,074       n.a.
  1986                     n.a.     231,644       n.a.
  1987                     n.a.     269,734       n.a.
  1988                     n.a.     297,556       n.a.
  1989                     n.a.     319,994       n.a.
  1990                     n.a.     358,033       n.a.
  1991                     n.a.     355,963       n.a.
  1992                     n.a.     361,524       n.a.
  1993                     n.a.     359,179       n.a.
  1994                     n.a.     403,696       n.a.
  1995                     n.a.     465,576       n.a.
  1998                     n.a.     498,310       n.a.
  1997(p)                  n.a.     519,306       n.a.

Percent change at
  annual rates:
  1982-96                  n.a.         5.9       n.a.
  1989-96                  n.a.         6.5       n.a.
  1995-96                  n.a.         7.0       n.a.
  1996-97                  n.a.         4.2       n.a.

  Number of
  employees

Thousands:
  1982                    6,640       5,022      1,618
  1983                    6,383       4,854      1,530
  1984                    6,418       4,842      1,576
  1985                    6,419       4,810      1,609
  1986                    6,250       4,711      1,539
  1987                    6,270       4,664      1,605
  1988                    6,404       4,761      1,643
  1989                    6,622       5,114      1,508
  1990                    6,834       5,356      1,478
  1991                    6,878       5,387      1,492
  1992                    6,660       5,282      1,378
  1993                    6,685       5,223      1,461
  1994                    7,105       5,707      1,398
  1995                    7,345       5,924      1,421
  1996(r)                 7,544       6,077      1,467
  1997(p)                 8,018       6,525      1,493

Percent change at
  annual rates:
  1982-96                   0.9         1.4       -0.7
  1989-96                   1.9         2.5       -0.4
  1995-96                   2.7         2.6        3.2
  1996-97                   6.3         7.4        1.8

  Capital
  expenditures

Millions of dollars:
  1982                   59,998      44,812     15,184
  1983                     n.a.      36,878       n.a.
  1984                     n.a.      35,099       n.a.
  1985                     n.a.      36,482       n.a.
  1986                     n.a.      34,678       n.a.
  1987                     n.a.      37,032       n.a.
  1988                     n.a.      46,611       n.a.
  1989                   74,982      58,680     16,302
  1990                     n.a.      61,535       n.a.
  1991                     n.a.      62,931       n.a.
  1992                     n.a.      63,215       n.a.
  1993                     n.a.      64,224       n.a.
  1994                   98,323      71,447     24,878
  1995                     n.a.      75,599       n.a.
  1996(r)                  n.a.      80,482       n.a.
  1997(p)                  n.a.      88,246       n.a.

Percent change at
  annual rates:
  1982-96                  n.a.         4.2       n.a.
  1989-96                  n.a.         4.6       n.a.
  1995-96                  n.a.         6.4       n.a.
  1996-97                  n.a.         9.7       n.a.

(p) Preliminary

(r) Revised.

n.a. Not available

MNC Multinational company

MOFA Majority-owned foreign affiliate

Two other key measures of MNC operations grew much faster in 1997 than in 198996. MNC employment increased 6.1 percent, compared with a 1.5-percent increase in 1996 and negligible growth in 1989-96. Capital expenditures increased 13.7 percent, compared with a 5.2-percent increase in 1996 and an average annual increase of 3.9 percent in 1989-96.

The strong growth in MNC operations in 1997 reflected continued economic growth and a strong upturn in new investments. In 1997, real gross domestic product (GDP) increased 3.9 percent in the United States, up from a 3.4-percent increase in 1996; in major host countries, real GDP increased 3.2 percent, on average, up from a 2.4-percent increase in 1996.(2) These favorable economic conditions resulted in the expansion of existing MNC operations and the growth of MNC operations through acquiring or establishing other businesses, both in the United States and abroad. The upturn in new investment partly reflected the growing availability of investment opportunities abroad as a result of legal and economic changes--such as the privatization of electric utilities and telephone companies and the liberalization of direct investment policies in foreign host countries.

Additional highlights of U.S.-MNC operations in 1997 follow:

* Worldwide production and productive resources of U.S. MNC'S remained concentrated in the United States: U.S. parents accounted for about three-fourths, and MOFA'S for about one-fourth, of MNC gross product, capital expenditures, and employment. These shares have been relatively stable since at least 1989.

* U.S. exports of goods involving U.S. parents, their foreign affiliates, or both accounted for 63 percent of all U.S. exports of goods, down from 65 percent in 1989. Intra-MNC exports (goods shipped by U.S. parents to their foreign affiliates) accounted for 42 percent of the MNC-associated exports, up from 38 percent in 1989.

U.S. MNC'S accounted for 40 percent of U.S. imports of goods, down from 42 percent in 1989. Intra-MNC imports (goods shipped by foreign affiliates to their U.S. parents) accounted for 42 percent of these MNC-associated imports, up from 38 percent in 1989.

* Newly acquired or established foreign affiliates continued to be concentrated in countries with large and prosperous markets rather than in countries with low labor costs. Although low-wage countries have been attracting a rising share of the new investments, affiliates in high-wage countries still accounted for 71 percent of all new affiliates and for 59 percent of their employment.

* The return on assets for nonfinancial MOFA'S, at 10.8 percent, continued to exceed the return on assets for all nonfinancial corporations (chart 1). The higher rate of return for MOFA'S may be needed to offset the added risks and costs to U.S. parents of operating abroad.

[CHART 1 OMITTED]

* Real gross product of MOFA'S in manufacturing grew more than twice as fast in 1997 (7.7 percent) as in 1989-96 (3.5 percent). The strong growth reflected both the economic growth in most host countries and the addition of newly acquired or established affiliates.

Revisions to the 1996 estimates.--The estimates of U.S.-MNC operations for 1996 were revised to incorporate the final results of the 1996 Annual Survey of U.S. Direct Investment Abroad.(3) The year-to-year percent changes for the three key measures were revised less than 1 percentage point from the changes shown in the preliminary estimates: The increase in gross product was revised up 0.8 percentage point to 8.1 percent; the increase in employment was revised down 0.2 percentage point to 1.6 percent; and the increase in capital expenditures was revised up 0.2 percentage point to 5.3 percent.

Organization of the article.--The first part of this article analyzes the worldwide operations of U.S. MNC'S; the second part analyzes their domestic (U.S.-parent) operations; and the third part analyzes their foreign (foreign-affiliate) operations.

Worldwide Operations of U.S. MNC'S

This section examines worldwide U.S.-MNC operations and compares the domestic and foreign aspects of these operations.(4)

Changes in gross product

Gross product of all U.S. MNC'S grew 5.6 percent in 1997, to $2,090 billion; the U.S.-parent component of U.S.-MNC gross product grew 6.1 percent, and the MOFA component grew 4.2 percent. Available evidence suggests that for both parents and MOFA'S, these increases reflected increases in real gross product to a greater extent than they reflected increases in prices. The growth of U.S. parents' gross product, at 6.1 percent, substantially exceeded the 1.4-percent rate of U.S. price inflation (as measured by the GDP implicit price deflator for all private U.S. businesses, except depository institutions). Despite the dampening effect of the significant appreciation of the U.S. dollar, the gross product of MOFA'S grew 4.2 percent in dollar value, exceeding the 2.8-percent average rate of price inflation in the host countries.(5)

Domestic and foreign shares of MNC operations

Worldwide production and the productive resources of U.S. MNC'S remained concentrated in the United States: In 1997, U.S. parents accounted for about three-fourths of MNC gross product, capital expenditures, and employment and for over two-thirds of MNC profit-type return. From 1989 to 1997, however, the distribution of gross product and employment shifted slightly from the United States to abroad: The MOFA share of worldwide MNC gross product edged up from 23 percent to 25 percent, and the MOFA share of MNC employment rose from 21 percent to 25 percent (table 2). In contrast, the MOFA share of worldwide MNC profit-type return fell from 34 percent to 31 percent, probably in response to cyclical factors here and abroad that were relatively less favorable to MOFA'S in 1997 than in 1989.

[TABULAR DATA 2 NOT REPRODUCIBLE IN ASCII]

By industry, the most significant shift towards foreign operations was in manufacturing: The MOFA share of MNC gross product rose from 26 percent in 1989 to 29 percent in 1997; the MOFA share of MNC capital expenditures rose from 26 percent to 30 percent; and the MOFA share of MNC employment rose from 27 percent to 33 percent.

Production abroad by U.S. MNC'S may have been stimulated by new market opportunities and improved business conditions abroad, such as the further integration of the European Union, the end of hyperinflation in Brazil and Argentina, and the economic liberalizations in Eastern Europe.

Origin of output

The output of U.S. MNC'S (sales to unaffiliated customers plus inventory change) consists of both the gross product that originates within the MNC'S themselves and the gross product that originates elsewhere and is incorporated in the intermediate inputs purchased by MNC'S from unaffiliated suppliers. The gross product originating in U.S. MNC'S consists of the gross product of both the U.S. parents and their foreign affiliates.

The origins of U.S.-MNC output in 1997 were essentially unchanged from 1989: The share of the output of U.S. MNC'S that originated within the MNC'S edged down from 36 percent to 34 percent (table 3, column 8). Underlying this stability were offsetting changes by industry. For example, in industrial machinery and equipment, the share of output originating within MNC'S decreased from 46 percent to 36 percent.

Table 3.--Origin of Output of Nonbank U.S. MNC's, by Major Industry of U.S. Parent, 1989, 1996, and 1997

                                        Millions of dollars
                                 Sales to
                                 unaffili-     Inven-     Total
                                  ated         tory      output(1)
                                 persons      change

                                               1989

    All Industries              3,780,150     15,656    3,795,806

Petroleum                         454,570       -335      454,235
Manufacturing                   1,949,221     10,151    1,959,372
  Food and kindred products       238,629       -564      238,065
  Chemicals and
    allied products               321,167      1,745      322,912
  Primary and
    fabricated metals             122,068        610      122,678
  Industrial machinery
    and equipment                 249,741      2,935      252,676
  Electronic and
    other electric
    equipment                     169,909      1,898      171,807
  Transportation equipment        432,713      1,133      433,846
  Other manufacturing             414,994      2,395      417,389
Wholesale Finance                 254,746      1,234      255,980
  (except trade depository
  institutions), insurance,
  and real estate                 433,328     -1,058      432,270
Services                          125,561        545      126,106
Other industries                  562,724      5,119      567,843

                                               1996

  All industries                  564,652     11,484    5,657,986

Petroleum                         623,595       8381      624,433
Manufacturing                   2,800,312      1,832    2,802,144
  Food and kindred products       308,270     -2,656      305,614
  Chemicals and
    allied products               476,671      1,789      478,460
  Primary and
    fabricated metals             142,579        636      143,215
  Industrial
    machinery and
    equipment                     399,720     -1,431      398,289
  Electronic and other
    electric equipment            358,720      3,822      360,542
  Transportation equipment        587,987         33      588,020
  Other manufacturing             528,363       -362      528,001
  Wholesale trade                 428,822      5,367      434,189
  Finance (except
    depository institutions),
    insurance, and
    real estate                   602,021        413      602,434
Services                          277,880        738      278,618

Other industries                  913,903      2,296      916,199

                                               1997

    All Industries              6,068,351     24,765    6,093,116

Petroleum                         603,962     -1,157      602,805
Manufacturing                   2,899,447     15,525    2,914,972
  Food and
    kindred products              313,201        772      313,973
  Chemicals and
    allied products               481,990      2,433      484,423
  Primary and
    fabricated metals             153,719       -781      152,938
  Industrial
    machinery and equipment       413,411       -572      412,839
  Electronic and
    other electric equipment      383,665      2,959      386,624
  Transportation equipment        623,904      8,370      632,274
  Other manufacturing             529,559      2,344      531,903
Wholesale trade                   488,712      5,527      494,239
Finance (except
  depository institutions),
  insurance,and real estate       655,657        683      656,340
Services                          314,483        800      315,283
Other industries                1,106,086      3,387    1,109,473

                                     Millions of dollars
                                                             Pur-
                                                            chases
                                 Gross product              from
                                                            outside
                          Total        U.S.       MOFA's     the
                                     parents                MNC(2)

                                            1989

    All Industries      1,364,878   1,044,884   319,994   2,430,428

Petroleum                 165,680      93,128    72,552     288,555
Manufacturing             793,771     586,568   207,203   1,165,601
  Food and
    kindred products       79,472      60,310    19,162     159,593
  Chemicals and
    allied products       141,006      97,119    43,887     181,906
  Primary and
    fabricated metals      45,775      37,556     8,219      76,903
  Industrial
    machinery
    and equipment         116,146      70,887    45,259     136,530
  Electronic and
    other electric
    equipment              68,515      56,139    12,376     103,292
  Transportation
    equipment             160,292     121,141    39,151     273,554
  Other
    manufacturing         182,567     143,417    39,150   2,134,822
Wholesale trade            28,766      22,587     6,179     227,214
   Finance
  (except trade
  depository
  institutions),
  insurance,
  and real estate          62,715      50,535    12,180     369,555
Services                   66,999     570,980     9,909      59,107
Other industries          246,946     234,975    11,971     320,897

                                            1996

  All industries        1,978,948   1,480,638   498,310   3,679,038

Petroleum                 229,827     125,380   104,447     394,606
Manufacturing           1,071,324     764,725   306,599   1,730,820
  Food and
    kindred products      114,050       7,290    36,760     291,564
  Chemicals and
    allied products       196,665     127,284    69,381     281,795
  Primary and
    fabricated metals      58,014      38,420    19,594      85,201
  Industrial
    machinery and
    equipment             148,792      95,342    53,450     249,497
  Electronic
    and other
    electric
     equipment            119,637      87,732    31,905     240,905
  Transportation
    equipment             215,534     168,884    46,650     372,486
  Other
    manufacturing         218,632     169,773    48,859     309,369
  Wholesale trade          56,708      41,753    14,955     377,481
  Finance (except
    depository
    institutions),
    insurance, and
    real estate            96,029      71,797    24,232     506,405
Services                 142,684      116,126    26,558     135,934

Other industries          382,376     360,857    21,519     533,823

                                            1997

    All Industries      2,089,796   1,570,490   519,306   4,003,320

Petroleum                 229,602     125,214   104,388     373,203
Manufacturing           1,080,824     765,122   315,702   1,834,148
  Food and
    kindred products      107,813      69,852    37,961     206,160
  Chemicals and
    allied products       199,911     126,931    72,980     284,512
  Primary and
    fabricated metals      55,242      41,926    13,316      97,696
  Industrial
    machinery
    and equipment         148,586      92,094    56,492     264,253
  Electronic and
    other
    electric
    equipment             127,535      94,413    33,122     259,089
  Transportation
    equipment             220,862     167,277    53,585     411,412
  Other
    manufacturing         220,876     172,630    48,246     311,027
Wholesale trade            69,184      51,621    17,563     425,055
Finance (except
  depository
  institutions),
  insurance,and
  real estate             106,548      81,872    24,676     549,792
Services                  160,626     130,070    30,556     154,657
Other industries          443,012     416,591    26,421     666,461

                         Share of total output, in percent
                                                     Purchases
                                                        from
                               Gross product          outside
                        Total     U.S.                  the
                                 parents    MOFA's      MNC

                                        1989

    All Industries       36        28         8         64

Petroleum                36        21        16         64
Manufacturing            41        30        11         59
  Food and
    kindred products     33        25         8         67
  Chemicals and
    allied products      44        30        14         56
  Primary and
    fabricated metals    37        31         7         63
  Industrial
    machinery
    and equipment        46        28        18         54
  Electronic and
    other electric
    equipment            40        33         7         60
  Transportation
    equipment            37        28         9         63
  Other
    manufacturing        44        34         9         56
Wholesale trade          11         9         2         89
   Finance
  (except trade
  depository
  institutions),
  insurance,
  and real estate        15        12         3         85
Services                 53        45         8         47
Other industries         43        41         2         57

                                       1999

  All industries         35        26         9         65

Petroleum                37        20        17         63
Manufacturing            38        27        11         62
  Food and
    kindred products     37        25        12         63
  Chemicals and
    allied products      41        27        15         59
  Primary and
    fabricated metals    41        27        14         59
  Industrial
    machinery and
    equipment            37        24        13         63
  Electronic
    and other
    electric
     equipment           33        24         8         67
  Transportation
    equipment            37        29         8         63
  Other
    manufacturing        41        32         9         59
  Wholesale trade        13        10         3         87
  Finance (except
    depository
    institutions),
    insurance, and
    real estate          16        12         4         84
Services                 51        42        10         49

Other industries         42        39         2         58

                                       1997

    All Industries       34        26         9         66

Petroleum                38        21        17         62
Manufacturing            37        26        11         63
  Food and
    kindred products     34        22        12         66
  Chemicals and
    allied products      41        26        15         59
  Primary and
    fabricated metals    36        27        98         64
  Industrial
    machinery
    and equipment        36        22        14         64
  Electronic and
    other
    electric
    equipment            33        24         9         67
  Transportation
    equipment            35        26         8         65
  Other
    manufacturing        42        32         9         58
Wholesale trade          14        10         4         86
Finance (except
  depository
  institutions),
  insurance,and
  real estate            16        12         4         84
Services                 51        41        10         49
Other industries         40        38         2         60

(1.) Equals sales to unaffiliated persons plus inventory change; also equals gross product plus purchases from outside the MNC.

(2.) Equals total output less gross product. Includes purchases from minority-owned foreign affiliates, which could not be excluded because the necessary data are unavailable.

MNC Multinational company

MOFA Majority. owned foreign affiliate

The share of MNC Output that was accounted for by U.S.-parent gross product edged down from 28 percent to 26 percent. The share accounted for by MOFA gross product edged up from 8 percent to 9 percent.

U.S.-MNC-associated trade in goods

In 1997, U.S.-MNC-associated trade--U.S. trade involving U.S. parents, their foreign affiliates, or both--accounted for 63 percent of all U.S. exports of goods and for 40 percent of all U.S. imports of goods (table 4 and chart 2).(6) U.S. MNC'S accounted for a larger share of exports than of imports, partly reflecting the intrafirm sourcing patterns of MNC'S; parents tend to be a much more important source of supply to their affiliates than the affiliates are to their parents.

[CHART 2 OMITTED]

Table 4.--U.S. Trade in Goods Associated with Nonbank U.S. MNC's, 1989, 1996, and 1997

[Millions of dollars, unless otherwise noted]

 Line                                     1989      1996       1997
     1       MNC-associated
               U.S. exports,
               total                   236,371   405,721    433,971
     2   Intra-MNC trade                89,539   161,751    183,062
           Shipped by U.S. parents
             to their MOFA's            86,050   161,359    181,115
           Shipped by U.S. parents
             to their other
             foreign affiliates          3,489       392      1,947

     5   MNC trade with others         146,832   243,970    250,916
     6     Shipped by U.S. parents
             to foreigners
             other than their
             own affiliates            133,813   211,692    218,227
             Of which:
     7        Shipped by U.S.
                parents to their
                foreign rent groups     10,413    22,627     20,720

     8     Shipped to foreign
             affiliates by U.S.
             persons other than
             their own parents          13,019    32,278     32,689
     9       To MOFA's                  11,437    26,601     27,426
    10       To other foreign
                affiliates               1,582     5,677      5,263
    11         MNC-associated
                  U.S. imports,
                  total                201,182   326,200    349,921
    12   Intra-MNC trade                77,307   137,160    147,405
    13     Shipped by MOFA's to
             their U.S. parents         71,283   133,388    145,434
    14     Shipped by other foreign
             affiliates to their
             U.S. parents                6,024     3,772      1,971

    15   MNC trade with others         123,875   189,040    202,521
    16     Shipped to U.S. parents
             by foreigners
             other than their
             own affiliates            103,788   161,427    171,230
             Of which:
    17         Shipped to U.S.
                  parents by their
                  foreign
                  parent groups         32,398    61,893     63,974
    18     Shipped by foreign
             affiliates to U.S.
             persons other than         20,087    27,613     31,291
             their own parents
    19       By MOFA's                  13,015    18,939     21,335
    20       By other
               foreign affiliates        7,072     8,674      9,956

         Addenda:

   21   All U.S. exports of goods      363,836   625,075    689,182
    22     U.S.-UNC-associated U.S.
             exports as a
             percentage
             of total (line
             1/line 21) * 100               65        65         63
    23     Intra-U.S.-MNC exports
             as a percentage
             of total (line
             2/line 21) * 100               25        26         27
    24   All U.S. imports of goods     473,647   795,289    870,671
    25     U.S.-MNC-associated
             U.S. imports as a
             percentage of total
             (line 11/line
             24) * 100                      42        41         40
    26     Intra-U.S.-MNC imports
             as a percentage
             of total (line
             12/line 24) * 100              16        17         17
    27   U.S. exports of goods
           by U.S. parent
           companies that are
           also U.S. affiliates of
           foreign companies             n.a.     60,341     56,953
    28   U.S. imports of goods
           by U.S. parent
           companies that are also
           U.S. affiliates of
           foreign companies             n.a.     86,920     91,345

MNC Multinational company

MOFA Majority-owned foreign affiliate

n.a. Not available.

Of the $434 billion in U.S.-MNC-associated exports in 1997, 42 percent represented trade between U.S. parents and their foreign affiliates --intra-MNC trade--and 58 percent represented U.S.-MNC trade with others. Data on trade by broad product category from the most recent benchmark survey of U.S. direct investment abroad, covering 1994, indicate that most of the intra-MNC exports consist of machinery (57 percent of total intra-MNC exports in 1994), chemicals (13 percent), and road vehicles and parts (12 percent).(7) Of the $9-51 billion in MNC trade with others, 87 percent represented exports shipped by U.S. parents to foreigners other than their foreign affiliates, and 13 percent represented exports shipped to foreign affiliates by U.S. persons other than their U.S. parents. Data from the 1994 benchmark survey indicate that U.S. parents' exports to foreigners other than their foreign affiliates consist mainly of machinery (27 percent in 1994), "other" transportation equipment, mainly aircraft (14 percent), and chemicals (12 percent) and that exports shipped to foreign affiliates by U.S. persons other than U.S. parents consist mainly of machinery (53 percent).

Of the $350 billion in U.S.-MNC-associated imports of goods in 1996, 42 percent represented intra-U.S.-MNC trade, and 58 percent represented U.S.-MNC trade with others. Data from the 1994 benchmark survey indicate that most of the intra-MNC imports consist of road vehicles and parts (38 percent in 1994) and machinery (37 percent). Of the $203 billion in MNC trade with others, 85 percent represented imports shipped to U.S. parents by foreigners other than their foreign affiliates, and 16 percent represented imports shipped by foreign affiliates to U.S. persons other than their U.S. parents. Data from the 1994 benchmark survey indicate that U.S. parents' imports from foreigners other than their foreign affiliates consist mainly of machinery (35 percent in 1994), petroleum and coal products (15 percent) and "other" manufactures (15 percent) and that U.S. imports shipped by foreign affiliates to unaffiliated U.S. persons consist mainly of petroleum (27 percent), other manufactures (19 percent), and machinery (18 percent).

U.S. Parents' Operations

This section examines the following selected aspects of the domestic (U.S.-parent) operations of U.S. MNC'S: The change in U.S.-parent gross product by industry and by source of change in 1996-97; the U.S.-parent share of private GDP in 1989 and 1997; and the origin of U.S.-parent output in 1989 and 1997.

Changes in gross product

The gross product of all U.S. parents increased 6.1 percent in 1997, to $1,570 billion, compared with an average annual increase of 5.1 percent in 1989-96 (table 5).

Table 5.--Gross Product of Nonbank U.S. Parents by Major Industry for 1989, 1996, 3nd 1997

                                            Millions of dollars
                                       1989        1996        1997

All industries                    1,044,884   1,480,638   1,570,490

Petroleum                            93,128     125,380     125,214
Manufacturing                       586,568     764,725     765,122
  Food and kindred products          60,310      77,290      69,852
  Chemicals and allied products      97,119     127,284     126,931
  Primary and fabricated metals      37,556      38,420      41,926
  Industrial
    machinery and equipment          70,887      95,342      92,094
  Electronic and                     56,139      87,732      94,413
    other electric equipment
  Transportation equipment          121,141     168,884     167,277
  Other manufacturing               143,417     169,773     172,630

Wholesale trade                      22,587      41,753      51,621

Finance (except depository
  institutions), insurance,
  and real estate                    50,535      71,797      81,872

Services                             57,090     116,126     130,070

Other industries                    234,975     360,857     416,591

                                    Million    Percent change
                                      of       at annual rates
                                    dollars
                                    Change,    1989-      1996-
                                    1996-97     96         97

All industries                      89,852     5.1        6.1

Petroleum                             -166     4.3       -0.1
Manufacturing                          397     3.8        0.1
  Food and kindred products         -7,438     3.6       -9.6
  Chemicals and allied products       -353     3.9       -0.3
  Primary and fabricated metals      3,506     0.3        9.1
  Industrial
    machinery and equipment         -3,248     4.3       -3.4
  Electronic and                     6,681     6.5        7.6
    other electric equipment
  Transportation equipment          -1,607     4.8       -1.0
  Other manufacturing                2,857     2.4        1.7

Wholesale trade                      9,868     9.1       23.6

Finance (except depository
  institutions), insurance,
  and real estate                   10,075     5.1       14.0

Services                            13,944    10.6       12.0

Other industries                    55,734     6.3       15.4

By industry.--In 1997, U.S.-parent gross product increased most rapidly in wholesale trade (23.6 percent), in "other" industries (15.4 percent), in finance (except depository institutions), insurance, and real estate (14. o percent), and in services (12.0 percent).(8) U.S.-parent gross product decreased in manufacturing industries; the decreases were particularly sharp in food and in industrial machinery.

The increase in wholesale trade primarily reflected increased sales to meet strong demand. This increase and the decrease in manufacturing also reflected the reclassification of some U.S. parent companies from manufacturing to wholesale trade.(9) The increase in "other" industries was concentrated in electric, gas, and sanitary services and in retail trade, mainly reflecting the entry of U.S. companies that acquired or established their first foreign affiliate in 1997. The increase in finance (except depository institutions), insurance, and real estate primarily reflected increased revenues as a result of favorable financial market conditions. The increase in services mainly reflected the entry of new parent companies, but it also reflected increased sales to meet strong demand for new products, such as enhanced computer software.

By source of change.--In 1997, the gross product of U.S. parents increased $89.9 billion; $53.4 billion of this increase was attributable to changes in the operations of U.S. companies that were parents in both 1996 and 1997 (table 6). Even so, the $22.3 billion that was attributable to the entry of new parent companies was much stronger in 1997 than in 1995 or 1996 and largely reflected the entry of new parents in electric, gas, and sanitary services and in retail trade.

Table 6.--Sources of Change in Gross Product for Nonbank U.S. Parents, 1996-97

                                                Millions of
Line                                                dollars

    1   1996 level                                1,480,638

    2   Total change                                 89,852
    3     New parents(1)                             22,253
    4     Changes in operations(2)                   53,442
    5     Parents departing the universe(3)          -4,905
    6     Other changes(4)                           19,062

    7   1997 level                                1,570,490

(1.) Parents that established or acquired their first foreign affiliate in 1997.

(2.) Consists of changes in existing operations and changes resulting from parents acquiring, establishing, selling, or liquidating parts of their consolidated operations. BEA generally requires survey respondents to fully consolidate their parent operations.

(3.) Parents that sold or liquidated their last foreign affiliate in 1997.

(4.) Equals the change in the gross product of parents not accounted for in lines 3-5. It includes changes resulting from the addition to the survey universe of parents that were required to report in earlier years but did not.

U.S.-parent shares of private GDP

The gross product of U.S. parents accounted for 26 percent of the gross product of all private U.S. businesses in 1997, the same as in 1989 and in 1996 (table 7).(10) The U.S.-parent share was highest in manufacturing, partly reflecting the firm-specific advantages (such as superior production or marketing techniques) of U.S. manufacturers that allow them to overcome the additional costs entailed in producing in foreign markets.

Table 7.--Gross Product of Nonbank U.S. Parents and Gross Product of All Nonbank U.S. Private Businesses by Major Industry for 1989, 1996, and 1997

                                 Millions of dollars
                                1989                   1996

                         Gross            Gross        Gross
                      product of   product of all   product of
                          U.S.     private U.S.         U.S.
                        parents    businesses(1)      parents

    All Industries    1,044,884    4,056,084         1,480,638

Manufacturing           671,911    1,074,173           870,152
Services                 57,524      952,060           118,123
All other industries    315,449    2,029,851           492,363

                                   Millions of dollars
                            1996                 1997
                           Gross          Gross          Gross
                       product of all   product of   product of all
                        private U.S.       U.S.       private U.S.
                         businesses     parents        businesses

    All Industries        5,767,382     1,570,490      6,123,014

Manufacturing            13,833,541       873,403      1,458,196
Services                  1,525,018       133,809      1,637,507
All other industries      2,858,990       563,278      3,027,311

                                 Percent
                         U.S.-parent share of
                         gross product of all
                          private U.S. businesses

                           1989   1996   1997

    All Industries          26     26     26

Manufacturing               63     63     60
Services                     6      8      8
All other industries        16     17     19

(1.) For improved comparability with U.S.-parent gross product, gross product of all private U.S. businesses was. adjusted to remove categories not applicable to nonbank U.S. parents--such as gross product or depository institutions, m addition, housing product of owner-occupied farm housing (part of farm product) and nonfarm housing product (part of real estate product) were removed because U.S. parents are not involved in these activities. Business transfer payments were also removed because few U.S. parents are in industries that receive most of the business transfer payments in the United State

NOTE.--In this table, petroleum is not shown as a separate major industry. Instead, in order to be consistent with the all-U.S. data on gross product originating by industry U.S. parent gross product in the various petroleum subindustries is distributed among the other major industries.

Thus, manufacturing includes petroleum and coal products; "all other industries" includes petroleum wholesale trade, gasoline service stations, petroleum tanker operations, pipelines and storage; and services includes oil and gas field services. A significant portion of U.S.-parent gross product in petroleum and coal products is accounted for by integrated petroleum companies that have, in addition to their manufacturing activities, significant petroleum extraction activities; because the extraction activities cannot be identified separately in the U.S.-parent data, and to improve comparability/between the estimates for U.S. parents and those for all U.S. businesses, they are included m manufacturing. For consistency, gross product estimates for the "oil and gas extraction without refining" industry are also included in manufacturing rather than n "all other industries," which includes mining.

The U.S.-parent share in services remained low. U.S. direct investment in some service industries may be inhibited by the structure of the industries in some host countries. For example, U.S. direct investment in health care services is constrained or precluded in countries where the government plays a prominent role in the delivery of health care. In addition, some service industries that are characterized by small-scale production (such as dry cleaners and hair stylists) may lack the firm-specific advantages that often provide the basis for direct investment in other industries.

Although the overall U.S.-parent share of the gross product of private U.S. businesses was stable from 1989 to 1997, there were offsetting changes among industries: The U.S.-parent share in manufacturing decreased from 63 percent to 60 percent; the share in services increased from 6 percent to 8 percent; and the share in all other industries combined increased from 16 percent to 19 percent.

The increase in services partly reflects the entry of new U.S. parent companies. These additions have been widespread across service industries, but they have been pronounced in computer and data processing services, motion pictures, and management and public relations services.

Origin of output

The output of U.S. parents consists of both the gross product that originates within the parents themselves and the gross product that originates elsewhere and is incorporated in the intermediate inputs purchased by parents from foreign affiliates and from unaffiliated suppliers.

In 1997, gross product originating in U.S. parents accounted for 32 percent of parent output, compared with 33 percent in 1989 (table 8, column 11). The industries with the highest shares were services, "other" industries (mainly communication and electric and gas utilities), and "other" manufacturing (mainly instruments and related products). The share in services is high partly because the production of services tends to be labor-intensive and is not as easily outsourced as the production of goods. The high share in communications and in electric and gas utilities partly reflects industry regulations that have historically granted exclusive production and distribution rights to a few large companies. The high share in instruments and related products may partly reflect the proprietary knowledge that is embodied in these products and that firms may protect by internalizing production.

[TABULAR DATA 8 NOT REPRODUCIBLE IN ASCII]

In manufacturing, the origin of U.S.-parent output shifted away from internal production, as the share of U.S.-parent output that was accounted for by their own gross product decreased from 38 percent to 34 percent; the shift was pronounced for parents in industrial machinery, particularly in computers and components, and in electric equipment, particularly in consumer electronics. In these industries, the movement to unaffiliated suppliers was partly in response to increased global competition; to improve their competitiveness, parents specialized in areas in which they had an advantage and relied on unaffiliated suppliers for other inputs or finished products.

In petroleum, the origin of U.S.-parent output shifted slightly toward internal production. The share of U.S.-parent output that was accounted for by the parents' gross product edged up from 28 percent to 30 percent.

The share of U.S. parents' output that was accounted for by local (U.S.) content--U.S.-parent gross product and purchases from U.S. suppliers--was 93 percent in 1997, compared with 94 percent in 1989. The industries with the highest U.S. content were services (100 percent) and food and kindred products (98 percent).(11) The high share in services partly reflects the tendency towards internal production. The share in food and kindred products is high partly because the United States is a major agricultural producer, so most of the inputs are available locally at competitive prices.

In wholesale trade, the local-content share of the output of U.S. parents edged up from 85 percent to 87 parent. (In this industry, local content consists primarily of purchases from domestic sources.) In manufacturing, the share edged down from 93 percent to 91 percent. In petroleum, it edged down from 92 percent to 90 percent.

Foreign Affiliates' Operations

This section examines selected aspects of the foreign (foreign-affiliate) operations of U.S. MNC's. First, the 1996-97 change in employment by all affiliates is examined, and the patterns of newly acquired or established affiliates in 1997 are presented. The remainder of the section focuses on selected aspects of the operations of majority-owned foreign affiliates (MOFA's).

All affiliates

The broadest measures of the foreign operations of U.S. MNC's cover all affiliates, regardless of the degree of U.S. ownership. The discussion of all-affiliate operations uses data on employment because estimates of gross product are available only for MOFA's.

The total employment of nonbank foreign affiliates increased 6.3 percent to 8.0 million in 1997, compared with an average annual increase of 1.9 percent in 1989-96 (table 9). The unusually large increase reflected both new investments and the expansion of existing operations in industries--such as personnel supply services, computer component assembly, and telephone utilities--that typically employ many workers.

Table 9.--Employment by Nonbank Foreign Affiliates, by Major Area and Industry of Affiliate, 1989, 1996, and 1997

                                             Thousands of employees
                                                1989      1996

      All areas, all Industries                6,622.1   7,544.1

              By major area

Canada                                           955.2     920.5
Europe                                         2,699.1   3,167.0
Latin America and Other Western Hemisphere     1,307.9   1,529.2
Africa                                           116.8     121.6
Middle East                                       92.0      77.8
Asia and Pacific                               1,422.0   1,715.1
International(1)                                  29.1      12.9

            By major industry

Petroleum                                        285.2     232.9
Manufacturing                                  4,191.1   4,392.6
  Food and kindred products                      483.5     563.6
  Chemicals and allied products                  580.4     614.1
  Primary and fabricated metals                  222.9     245.1
  Industrial machinery and equipment             557.4     542.9
  Electronic and other electric equipment        659.7     713.5
  Transportation equipment                       823.2     705.4
  Other manufacturing                            863.9   1,008.0
Wholesale trade                                  533.2     558.1
Finance (except depository institutions),
  insurance, and real estate                     165.7     193.0
Services                                         481.5     837.7
Other industries                                 965.3   1,329.7

                                             Thousands of employees
                                                         Change,
                                                1997     1996-97

      All areas, all Industries                8,018.0     473.9

              By major area

Canada                                           941.9      21.4
Europe                                         3,333.9     166.9
Latin America and Other Western Hemisphere     1,629.2     100.0
Africa                                           186.6      65.0
Middle East                                       77.4      -0.4
Asia and Pacific                               1,835.8     120.7
International(1)                                  13.2       0.3

            By major industry

Petroleum                                        226.1      -6.8
Manufacturing                                  4,592.9     200.3
  Food and kindred products                      598.0      34.4
  Chemicals and allied products                  622.4       8.3
  Primary and fabricated metals                  244.7      -0.4
  Industrial machinery and equipment             634.1      91.2
  Electronic and other electric equipment        774.5      61.0
  Transportation equipment                       724.2      18.8
  Other manufacturing                            995.0     -13.0
Wholesale trade                                  588.0      29.9
Finance (except depository institutions),
  insurance, and real estate                     218.8      25.8
Services                                         988.9     151.2
Other industries                               1,403.3      73.6

                                               Percent change, at
                                                 annual rates
                                               1989-96   1996-97

      All areas, all Industries                    1.9       6.3

              By major area

Canada                                            -0.5       2.3
Europe                                             2.3       5.3
Latin America and Other Western Hemisphere         2.3       6.5
Africa                                             0.6      53.5
Middle East                                       -2.4      -0.5
Asia and Pacific                                   2.7       7.0
International(1)                                 -11.0       2.3

            By major industry

Petroleum                                         -2.9      -2.9
Manufacturing                                      0.7       4.6
  Food and kindred products                        2.2       6.1
  Chemicals and allied products                    0.8       1.4
  Primary and fabricated metals                    1.4      -0.2
  Industrial machinery and equipment              -0.4      16.8
  Electronic and other electric equipment          1.1       8.5
  Transportation equipment                        -2.2       2.7
  Other manufacturing                              2.2      -1.3
Wholesale trade                                    0.7       5.4
Finance (except depository institutions),
  insurance, and real estate                       2.2      13.4
Services                                           8.2      18.0
Other industries                                   4.7       5.5

(1.) consists of affiliates that have operations spanning more than one country arc that are engaged in petroleum shipping, other water transportation, or offshore oil and gas drilling.

The increase was widespread by geographic area. By industry, most of the increase was accounted for by affiliates in manufacturing and in services.

Newly acquired or established affiliates.--In 1997, 489 new affiliates were acquired or established by U.S. MNC's, up significantly from 294 in 1995 and 413 in 1996 (table 10). These affiliates had a combined employment of 228,000, up from 138,000 in 1995 and 150,000 in 1996. The rapid increase in new investments in 1995-97 partly reflected the new investment opportunities and the improved business climates created by economic and legal changes, such as the privatization of electric utilities in the United Kingdom and Australia, the liberalization of foreign direct investment policies, the end of hyperinflation in Brazil and Argentina, and the reinstatement of the U.S. foreign tax credit on investment in South Africa.

Table 10.--Newly Acquired or Established Nonbank Foreign Affiliates by Major Area and Industry of Affiliate 1997

                                     Number of newly acquired and
                                        established affiliates
                                    Total   Acquired   Established

      All areas, all industries       489        241           248

          By major area

Canada                                 28         18            10
Europe                                265        145           120
Latin America and Other Western
  Hemisphere                           99         36            63
Africa                                  8          4             4
Middle East                             2          2             0
Asia and Pacific                       87         36            51
International(1)                        0          0             0

Addenda(2):
  High-wage country sample            284        151           133
  Low-wage country sample             115         59            56
  Non-sample countries                 90         31            59

        By major industry

Petroleum                              20         10            10
Manufacturing                         173        120            53
  Food and kindred products            10          4             6
  Chemicals and allied products        33         22            11
  Primary and fabricated metals        32         27             5
  Industrial machinery and
    equipment                          31         25             6
  Electronic and other electric
    equipment                          14          5             9
  Transportation equipment             14          8             6
  Other manufacturing                  39         29            10
Wholesale trade                        55         32            23
Finance (except depository insti-
  tutions), insurance, and real
  estate                              126         30            96
Services                               51         14            37
Other industries                       64         35            29

                                     Millions of dollars
                                    Total assets   Sales

      All areas, all industries          129,189   41,129

          By major area

Canada                                     4,389    1,361
Europe                                    84,115   28,115
Latin America and Other Western
  Hemisphere                              18,113    3,892
Africa                                     5,626    4,097
Middle East                                   79       71
Asia and Pacific                          16,867    3,593
International(1)                               0        0

Addenda(2):
  High-wage country sample                93,889   29,974
  Low-wage country sample                 25,639    9,933
  Non-sample countries                     9,661     1222

        By major industry

Petroleum                                  7,076      656
Manufacturing                             18,892   12,171
  Food and kindred products                2,589    1,800
  Chemicals and allied products            3,698    1,530
  Primary and fabricated metals            2,088      953
  Industrial machinery and
    equipment                              3,777    2,367
  Electronic and other electric
    equipment                                485      633
  Transportation equipment                 2,438    2,016
  Other manufacturing                      3,818    2,872
Wholesale trade                            3,640    4,798
Finance (except depository insti-
  tutions), insurance, and real
  estate                                  45,588    2,966
Services                                   5,050    2,226
Other industries                          48,943   18,312

                                       Thousands
                                     of employees

      All areas, all industries            227.7

          By major area

Canada                                      13.4
Europe                                     115.8
Latin America and Other Western
  Hemisphere                                16.2
Africa                                      54.0
Middle East                                  0.6
Asia and Pacific                            27.8
International(1)                             0.0

Addenda(2):
  High-wage country sample                 127.8
  Low-wage country sample                   89.0
  Non-sample countries                      10.9

        By major industry

Petroleum                                    2.0
Manufacturing                               92.7
  Food and kindred products                 11.1
  Chemicals and allied products             15.3
  Primary and fabricated metals             10.8
  Industrial machinery and
    equipment                               16.4
  Electronic and other electric
    equipment                                5.8
  Transportation equipment                  11.5
  Other manufacturing                       21.7
Wholesale trade                              6.1
Finance (except depository insti-
  tutions), insurance, and real
  estate                                     6.7
Services                                    20.6
Other industries                            99.7

(1.) See footnote 1 to table 9.

(2.) The distinction between "high-wage" countries and "low-wage" countries is based on estimates of average hourly wages of production workers of majority-owned foreign affiliates (MOFA's) in manufacturing the estimates were derived from data collected in the 1994 benchmark survey of U.S. direct investment abroad. To ensure the significance of the data underlying this distinction, the analysis is restricted to host countries in which employment by manufacturing MOFA's totaled at least 10,000 employees in 1994.

NOTE.--The data in this table cover only newly acquired or established foreign affiliates. They exclude data for consolidated unites of existing foreign affiliates that were acquired or established during the year.

In 1997, new affiliates continued to be primarily located in high-wage countries. These affiliates accounted for 71 percent of all new affiliates and for 59 percent of their employment. This large share suggests that U.S. direct investment abroad tends to be attracted more by access to large and prosperous markets than by access to low-wage labor. The United Kingdom, Germany, and France were among the high-wage countries that attracted significant amounts of new investment in 1997.

Low-wage countries have nevertheless been attracting a rising proportion of the new investments. Their share of new investments rose steadily from 18 percent in 1989 to 30 percent in 1996 before slipping to 29 percent in 1997. South Africa, Brazil, and China were among the low-wage countries that attracted relatively large amounts of new investment in 1997.

Manufacturing continued to be the primary industry for new investments. In 1997, it accounted for 35 percent of all new affiliates and for 41 percent of their employment. "Other industries" also accounted for some large new investments; for example, some U.S. providers of electric power and telecommunications services acquired foreign affiliates as a result of host-country privatizations.

Majority-owned foreign affiliates

In 1997, majority-owned foreign affiliates (MOFA's) accounted for 90 percent of all foreign affiliates. The MOFA share of the employment of all affiliates was 81 percent, up from 77 percent in 1989 (table 1). These high percentages are consistent with the "internalization" theory of the origins of MNC's, which suggests that MNC's tend to have firm-specific advantages that must be preserved by strict control of operations.(12)

In all but 20 host countries, more than three-fourths of all affiliates are majority owned. Saudi Arabia, at 43 percent, and Israel, at 56 percent, are among the countries that had a relatively low percentage of MOFA's in 1997. In some countries, laws constrain, or have constrained, the level of foreign ownership of domestic businesses or have assessed lower taxes on, or provided other benefits to, businesses that have majority local ownership.

In India, the percentage of MOFA's was relatively low, at 58 percent, in 1997, but it was up substantially from 22 percent in 1989. The rapid rise in the MOFA share partly reflected the Indian Government's New Industrial Policy, adopted in 1991, which significantly liberalized the country's foreign direct investment policy. One change raised the maximum permitted foreign ownership of newly acquired or established Indian businesses to 51 percent in most sectors. Despite these changes, the share of the Indian economy accounted for by production by MOFA's remained relatively low in 1997. (For details, see the section "MOFA share of host-country GDP.")

Changes in gross product.--The gross product of MOFA's increased 4.2 percent in 1997, to $519.3 billion, compared with an average annual increase of 6.5 percent in 1989-96 (table 11). The slowdown was primarily accounted for by affiliates in Europe and in Asia and Pacific, and it mainly reflected a substantial decline in the U.S.-dollar price of foreign currencies. In contrast, MOFA gross product in Latin America and Other Western Hemisphere, Canada, and Africa grew faster in 1997 than in 1989-96. The increase in Latin America and Other Western Hemisphere was strong enough to overcome the dampening effect of the significant appreciation of the U.S. dollar against the two primary currencies in the region--the Brazilian real and the Mexican peso; the increase was widespread across industries, reflecting robust economic conditions in the host countries and the addition of newly acquired or established MOFA's. In Canada, the increase was concentrated in transportation equipment manufacturing and largely reflected increased production to meet strong demand in the United States. In Africa, the increase was concentrated in manufacturing and mainly reflected newly established affiliates in South Africa. In Eastern Europe, affiliate operations continued to grow rapidly, but they remained quite small; MOFA gross product in this area increased 26.7 percent, to $3.9 billion, but the level was only 1 percent as large as that in Western Europe.

Table 11.--Gross Product of Nonbank Majority-Owned Foreign Affiliates, by Major Area and Industry of Affiliate, 1989, 1996, and 1997

                                             Millions of dollars
                                              1989      1996

      All areas, all Industries              319,994   498,310

              By major area

Canada                                        52,114    53,783
Europe                                       179,758   291,732

Latin America and Other Western Hemisphere    29,601    51,965
Africa                                         5,299     8,248
Middle East                                    4,891     4,552
Asia and Pacific                              46,875    86,188
International(1)                               1,457     1,862

            By major industry

Petroleum                                     77,195   109,870
Manufacturing                                172,008   250,351
  Food and kindred products                   13,643    24,437
  Chemicals and allied products               32,059    50,478
  Primary and fabricated metals                7,823    11,002
  Industrial machinery and equipment          30,430    37,023
  Electronic and other electric equipment     12,646    23,345
  Transportation equipment                    33,764    37,809
  Other manufacturing                         41,843    66,257
Wholesale trade                               37,947    54,472
Finance (except depository institutions),
  insurance and real estate                    3,439    17,161
Services                                      14,612    37,840
Other industries                              14,793    28,617

                                             Millions of dollars
                                                       Change,
                                              1997     1996-97

      All areas, all Industries              519,306    20,996

              By major area

Canada                                        57,554     3,771
Europe                                       297,604     5,872

Latin America and Other Western Hemisphere    60,579     8,614
Africa                                         8,875       627
Middle East                                    4,322      -230
Asia and Pacific                              88,943     2,775
International(1)                               1,429      -433

            By major industry

Petroleum                                    110,818       948
Manufacturing                                256,442     6,091
  Food and kindred products                   25,579     1,142
  Chemicals and allied products               52,987     2,509
  Primary and fabricated metals               11,549       547
  Industrial machinery and equipment          37,318       295
  Electronic and other electric equipment     26,183     2,838
  Transportation equipment                    43,471     5,662
  Other manufacturing                         59,355    -6,902
Wholesale trade                               56,446     1,974
Finance (except depository institutions),
  insurance and real estate                   21,441     4,280
Services                                      44,292     6,452
Other industries                              29,866     1,249

                                              Percent change at
                                                 annul rates
                                              1989-96   1996-97

      All areas, all Industries                   6.5      4.2

              By major area

Canada                                            0.5      7.0
Europe                                            7.2      2.0

Latin America and Other Western Hemisphere        8.4     16.6
Africa                                            6.5      7.6
Middle East                                      -1.0     -5.1
Asia and Pacific                                  9.1      3.2
International(1)                                  3.6    -23.3

            By major industry

Petroleum                                         5.2      0.9
Manufacturing                                     5.5      2.4
  Food and kindred products                       8.7      4.7
  Chemicals and allied products                   6.7      5.0
  Primary and fabricated metals                   5.4      5.0
  Industrial machinery and equipment              2.8      0.8
  Electronic and other electric equipment         9.2     12.2
  Transportation equipment                        1.6     15.0
  Other manufacturing                             6.8    -10.4
Wholesale trade                                   5.3      3.6
Finance (except depository institutions),
  insurance and real estate                      25.8     24.9
Services                                         14.6     17.1
Other industries                                  9.9      4.4

(1.) See footnote 1 to table 9.

By industry, affiliates in services and manufacturing accounted for most of the increase in MOFA gross product.

In 1997, $14.3 billion of the $21.0 billion increase in MOFA gross product was attributable to changes in existing operations (table 12). The entry of new MOFA's contributed $7.0 billion, up significantly from 1996.

Table 12.--Sources of Change in Gross Product for Nonbank Majority-Owned Foreign Affiliates, 1996--97

Line                                           Millions of
                                                 dollars

   1   1996 level                                  498,310

   2     Total change                               20,996
   3       New MOFA's                                6,988
   4         Acquired by U.S. parents                4,666
   5         Established by U.S. parents             2,322
   6       Changes in existing operations(1)        14,325
   7       Sales or liquidations of MOFA's         -11,054
   8       Other changes(2)                         10,737

   9   1997 level                                  519,306

(1.) Also includes changes resulting from MOFA's acquiring, establishing, soiling, or liquidating parts of their consolidated operations. BEA permits survey respondents to consolidate affiliate operations that are in the same country if the affiliates are also in the same industry or are integral parts of a single business operation.

(2.) Equals the change in the gross product of MOFA's not accounted for in lines 3-7. It includes changes resulting from the addition to the survey universe of MOFA's that were exempt from reporting in earlier years and MOFA's that were required to report in earlier years but did not.

MOFA Majority-owned foreign affiliate

MOFA share of host-country GDP.--In 1997, the gross product of MOFA's accounted for 7 percent or more of the gross domestic product (GDP) of four of the host countries shown in table 13: Ireland (17 percent), Singapore (9 percent), Canada (9 percent), and the United Kingdom (7 percent).

Table 13.--Gross Product of MOFA's as a Percentage of GDP of Selected Host Countries, 1989, 1996, and 1997

                       1989   1996   1997

Ireland                12.4   13.5  16.5
Singapore               8.0   10.6   9.4
Canada                  9.5    8.9   9.2
United Kingdom          6.2    7.1   6.8
Honduras                5.6    6.3   6.4
Costa Rica              4.0    6.3   5.7
Belgium                 5.6    5.1   5.5
Netherlands             5.8    4.4   5.5
Malaysia                4.6    4.6   5.0
Australia               4.9    4.4   4.8

New Zealand             2.3    4.1   4.8
Hong Kong               5.0    4.2   4.4
Norway                  4.6    4.1   4.1
Chile                   2.7    3.6   3.7
Switzerland             2.9    2.8   3.3
Colombia                2.9    3.1   3.2
Venezuela               1.7    3.0   3.2
Mexico                  2.4    3.1   3.0
Brazil                  (1)    2.7   2.9
Germany(2)              3.0    2.6   2.7

France                  2.3    2.5   2.7
Portugal                2.2    2.7   2.6
Philippines             2.4    2.6   2.6
Indonesia               4.2    2.5   2.5
United Arab Emirates    4.3    2.9   2.3
Thailand                2.5    1.9   2.2
Peru                    (1)    1.6   2.2
Argentina               (1)    2.1   2.1
Sweden                  1.2    2.0   2.0
Italy                   1.9    1.8   1.9

Spain                   1.9    1.6   1.8
Finland                  .9    1.6   1.8
Guatemala               1.9    1.5   1.7
Denmark                 1.2    1.4   1.5
South Africa             .8    1.0   1.4
Egypt                   1.1    1.4   1.2
Ecuador                 2.8    1.4   1.2
Greece                  1.2    1.1   1.1
Turkey                   .4    1.0   1.1
Israel                   .8    1.1   1.0

Japan                    .5    0.6   0.6
Korea, Republic of       .3    0.5   0.5
China                   (*)    0.2   0.3
India                    .1    0.1   0.2

(*) Less than 0.05 percent

(1.) A share could not be calculated for this country for 1989, because dollar-denominated estimate of host-country GDP was incompatible with dollar-denominated estimate of MOFA gross product. Because the economy of the host country was experiencing hyperinflation in 1989, most MOFA operating there translated their financial statements from host-county currency to dollars daily, following U.S. generally accepted accounting principles. These daily translations, which are used to derive the dollar-denominated estimate of MOFA gross product, are not comparable the annual average exchange rate that is used to derive the dollar-denominated estimate of host-country GDP.

(2.) On October 3, 1990, the former German Democratic Republic became of the Federal Republic of Germany (FRG). Accordingly, the 1989 data shown in this table pertain to the FRG before unification and the post-1990 data pertain to the FRG after unification.

NOTE.--The countries are sorted in descending order of their 1997 values. Where two countries have the same 1997 value in the table, they were sorted using unrounded values. Host country GDP data for all countries except Hong Kong are from the International Monetary Fund, International Financial Statistics, April 1999Edition (Washington, DC: International Monetary Fund, 1999). Data for Hong Kong are from the Web site for the Census and Statistics Department of the Hong Kong Special Administrative Region.

GDP Gross domestic product

MOFA Majority-owned foreign affiliate

The relatively high MOFA shares of host-country GDP in these countries can be traced to some of the following factors: A common language with the United States, marketing and commercial legal systems similar to those in the United States, geographic proximity to the United States, the availability of a skilled work force, political stability, and low corporate tax rates.

The MOFA share of host-country GDP was less than I percent in four of the host countries shown in table 13: India, China, the Republic of Korea, and Japan. The low shares in most of these countries partly reflect past or present barriers to investment, including limits on foreign ownership.

Origin of output.--The output of MOFA's consists of both the gross product that originates in the MOFA's themselves and the gross product that originates elsewhere and that is incorporated in intermediate inputs purchased by MOFA's from U.S. parents, other foreign affiliates, or from unaffiliated suppliers.

In 1997, gross product originating in MOFA's accounted for 26 percent of MOFA output, compared with 31 percent in 1989 (tables 14 and 15, column 12). The industries with the highest shares of MOFA gross product were "other" manufacturing (mainly tobacco products), services, and petroleum. The high MOFA share in tobacco products partly reflects the fact that these products have relatively few material components that could be outsourced. Like the U.S.-parent share, the MOFA share in services is high partly because the production of services tends to be labor-intensive and is not as easily Outsourced as the production of goods. The share in petroleum is high partly because the large fixed capital costs that must be incurred to reach a profitable scale of operation allows a small number of highly integrated companies to dominate production.

[TABULAR DATA 14-15 NOT REPRODUCIBLE IN ASCII]

The shift to unaffiliated suppliers from 1989 to 1997 was widespread across geographic areas. It was also widespread across industries, but it was most pronounced in manufacturing. MOFA's in some industries probably sought to decrease their reliance on internal production in order to meet rising global competition by specializing in areas in which they had an advantage and by relying on unaffiliated suppliers for other inputs and finished products.

The U.S. content of MOFA output was 11 percent in 1997, compared with 10 percent in 1989. The geographic areas with the highest U.S. content were Canada and Latin America and Other Western Hemisphere, particularly in Mexico. In Canada and Mexico, the high U.S. content mainly reflects these countries' proximity to, and strong economic ties with, the United States.

In Canada, the U.S. content of MOFA output increased from 22 percent in 1989 to 27 percent in 1997; this increase was widespread across manufacturing industries and may have been related to the initial implementation of the Canada-United States Free Trade Agreement in 1989 and the North American Free Trade Agreement in 1994. In Latin America and Other Western Hemisphere, the U.S. content of MOFA output rose from 13 percent to 16 percent, partly as a result of currency-related valuation changes.(13)

Real gross product of MOFA'S in manufacturing.--Changes in the current-dollar measures of MOFA operations can sometimes be difficult to interpret because they can be strongly influenced by changes in prices and exchange rates. (The effects of exchange-rate changes that are unrelated to the relative prices of goods and services in various countries can be especially problematic.) To overcome these limitations, BEA recently began producing estimates of real gross product for MOFA'S.(14) These new estimates provide more meaningful comparisons of gross product across countries because they are based on purchasing-power-parity exchange rates rather than on market exchange rates, and they provide more meaningful comparisons across time because they are in chained dollars.

The real gross product of MOFA'S in manufacturing grew more than twice as fast in 1997 (7.7 percent) as in 1989-96 (3.5 percent) (table 16).(15) The faster growth partly reflected the faster growth in industrial production in most host countries. The real gross product of manufacturing MOFA's in the 19 member countries of the Organisation for Economic Co-Operation and Development grew faster (6.5 percent) in 1997 than total industrial production partly because of the entry of new MOFA'S (chart 3). Industrial production in these countries grew 4.6 percent in 1997, compared with 1.1 percent in 1996.

[CHART 3 OMITTED]

Table 16.--Current-Dollar and Real Gross Product of Majority-Owned Foreign Affiliates in Manufacturing, by Country, 1989 and 1994-97

                              Billions of current dollars
                        1989     1994     1995     1996     1997

  All countries        172.0    205.2    238.9    250.4    256.4

19 OECD countries      141.4    159.3    185.0    189.8    189.9
  Australia              6.9      5.8      5.9      6.8      7.2
  Austria                0.7      1.3      1.2      1.5      1.4
  Belgium                5.0      6.8      8.3      7.5      7.5
  Canada                28.9     25.3     26.9     25.9     28.8
  Denmark                0.4      0.6      0.7      0.7      0.7
  Finland                0.1      0.3      0.4      0.7      0.9
  France                11.8     16.5     18.9     20.7     20.1
  Germany(1)            25.8     36.7     41.0     40.4     38.4
  Greece                 0.2      0.3      0.4      0.4      0.4
  Ireland                3.5      4.8      6.9      7.0      9.5
  Italy                  7.8      8.3      8.6      9.1      9.5
  Japan                  7.7     10.9     12.6     13.3     12.6
  Luxembourg             0.5      0.7      0.8      0.6      0.6
  Netherlands            7.8      7.2      9.0      8.8      9.5
  New Zealand            0.3      0.4      0.4      1.5      1.9
  Norway                 0.1      0.4      0.3      0.5      0.4
  Spain                  5.7      5.5      6.4      6.1      6.4
  Sweden                 1.0      0.8      2.7      2.4      2.1
  United Kingdom        27.4     26.7     33.6     35.7     32.0
All other countries     30.6     45.9     53.9     60.5     66.6

                           Billions of chained (1993) dollars
                        1989     1994     1995     1996     1997

  All countries        160.1    171.4    185.7    197.1    212.3

19 OECD countries      126.1    125.8    131.9    136.9    145.8
  Australia              6.5      5.2      5.1      5.5      6.1
  Austria                0.6      0.9      0.7      1.0      1.0
  Belgium                4.7      5.3      5.4      5.2      5.9
  Canada               274.0     25.0     25.3     23.9     26.6
  Denmark                0.3      0.3      0.4      0.4      0.4
  Finland                0.0      0.2      0.3      0.5      0.6
  France                 9.5     11.6     11.6     13.4     14.6
  Germany(1)            23.3     26.2     25.3     26.0     28.3
  Greece                 0.3      0.3      0.3      0.4      0.4
  Ireland                3.4      4.2      5.6      5.7      8.3
  Italy                  6.7      7.2      7.0      6.9      7.8
  Japan                  5.0      5.4      5.7      7.1      7.4
  Luxembourg             0.4      0.5      0.5      0.5      0.5
  Netherlands            6.5      5.5      5.9     60.0      7.2
  New Zealand            0.3      4.0      0.4      1.3      1.7
  Norway                 0.1      2.0      0.2      0.3      0.3
  Spain                 50.0      4.7      4.8      4.6      5.5
  Sweden                 0.7      0.6      1.7      1.4      1.4
  United Kingdom        25.8     22.4     25.8     27.3     23.2
All other countries     33.9     45.6     53.9     60.0     66.1
Residual                -0.3     -0.4     -0.3      0.0     -0.7

                           Billions
                          of current          Percent
                           dollars       change, at annual
                           Change,            rates
                            1996-       1989-      1996-
                             97          96         97

  All countries              6.1        6.5        2.4
19 OECD countries            0.0        5.0        0.0
  Australia                  0.4       -0.1        5.9
  Austria                   -0.2       14.2      -12.0
  Belgium                    0.0        7.1        0.4
  Canada                     2.8       -1.8       10.9
  Denmark                    0.0       12.1        1.1
  Finland                    0.1       48.7       15.5
  France                    -0.6        9.9       -3.0
  Germany(1)                -2.0        7.7       -5.0
  Greece                     0.0       12.1        0.5
  Ireland                    2.5       12.3       35.7
  Italy                      0.3        2.7        3.6
  Japan                     -0.7        9.6       -5.3
  Luxembourg                 0.0        3.9        0.0
  Netherlands                0.8        2.2        7.1
  New Zealand                0.4       30.3       28.4
  Norway                     0.0       25.2        0.0
  Spain                      0.3        1.1        4.6
  Sweden                    -0.3       15.2      -11.7
  United Kingdom            -3.7        4.5      -10.2
All other countries          6.1       12.0       10.0

                           Billion of
                         chained (1993)          Percent
                            dollars         change, at annual
                            Change,               rates
                             1996-          1989-      1996-
                              97             96         97

  All countries             15.1            3.5        7.7
19 OECD countries            9.0            1.4        6.5
  Australia                  0.6           -2.9       11.3
  Austria                    0.0            9.3       11.1
  Belgium                    0.8            1.6       14.5
  Canada                     2.7           -2.3       11.1
  Denmark                    0.0            5.9        8.9
  Finland                    0.1           47.4       30.4
  France                     1.2            5.9        9.2
  Germany(1)                 2.2            1.9        8.5
  Greece                     0.0            4.3        5.6
  Ireland                    2.6            8.7       46.0
  Italy                      0.9            0.5       12.9
  Japan                      0.3            6.1        3.6
  Luxembourg                 0.0            0.7        9.0
  Netherlands                1.2           -1.4       19.2
  New Zealand                0.4           26.1       33.6
  Norway                     0.0           21.3        0.8
  Spain                      0.9           -1.2       18.8
  Sweden                     0.0           11.4        0.0
  United Kingdom            -4.2            1.0      -15.2
All other countries          6.0           10.0       10.0
Residual                     ...            ...        ...

(*) Less than $50 million or 0.5 percent,

(1.) See footnote 2 to table 13.

NOTE.--Chained (1993) dollar series were derived by extrapolating the base-year (1993) PPP-exchange-rate-based current-dollar value of the corresponding series by a Fisher quantity index. Because the formula for the Fisher quantity indexes uses weights or more than one period, the corresponding chained-dollar estimates are usually not additive. The residual line is the difference between the total line and the sum of the most detailed lines.

For a summary of the methodology used to derive the chained-dollar estimates and for the 1982-88 and 1990-93 estimates, see "Real Gross Product of U.S. Companies' Majority-Owned Foreign Affiliates in Manufacturing," SURVEY OF CURRENT BUSINESS 77 (April 1997): 8-17.

OECD Organisation for Economic Co-Operation and Development

The $15.1 billion increase in the real gross product of MOFA's in manufacturing in 1997 was concentrated in Canada (up $2.7 billion), Ireland (up $2.6 billion), and Germany (up $2.2 billion). In Canada and Germany, the increases primarily reflected rising production of motor vehicles to meet strong demand; in Germany, the acquisition of new affiliates that manufacture automobile components also contributed. In Ireland, the increase primarily reflected the rising production of new, higher value pharmaceuticals to meet strong demand, mainly in other European countries.

The real gross product of manufacturing MOFA's in the United Kingdom decreased sharply ($4.2 billion), partly because of the sale of a few large MOFA'S.

Tables 17 through 21 follow.

[TABULAR DATA 17.1-17.2, 18, 19.1-19.2 NOT REPRODUCIBLE IN ASCII]

Table 20.1.--Employment of Majority-Owned Nonbank Foreign Affiliates, Country by Industry of Affiliate, 1996

[Thousands of employees]

                                                 Manufacturing
                     All     Petro-                  Food
                    indus-   leum      Total         and
                    tries                            kindred
                                                     products

  All countries    6,076.8   174.7    3,666.1         378.2

Canada               832.3    18.0      363.5          32.0

Europe             2,794.4    50.9    1,683.5         154.3

 Austria              25.4     0.5       14.8           2.0
 Belgium             103.0     1.9       63.5           8.5
 Denmark              23.7     0.2        9.2             H
 Finland              12.0     0.4        5.6           0.1
 France              408.1     4.6      242.2          12.3

 Germany             556.4     4.6      400.7          21.5
 Greece               11.5     0.4        6.3           3.3
 Ireland              56.7     0.3       49.0           2.2
 Italy               173.4     3.2      120.4           8.5
 Luxembourg            8.7     0.1        6.9           0.0
 Netherlands         149.3     3.9       78.8           9.9

 Norway               32.5     5.7        6.2           2.2
 Portugal             28.9     0.4       18.9           4.7
 Spain               134.4     0.7       89.6          14.2
 Sweden               49.3     0.4       29.9             H
 Switzerland          48.8     1.5       16.9           1.4
 Turkey               20.4     0.6       12.2           2.8
 United Kingdom      826.4    19.2      416.0          35.8
 Other               125.7     2.2       96.5          19.4

Latin America
   and Other
   Western
   Hemisphere      1,159.0    35.3      839.7         124.0

 South America       533.1    29.0      363.3          72.2
  Argentina           76.1     6.4       45.8          16.0
  Brazil             287.4     3.9      236.4          32.1
  Chile               37.1       G       12.8           2.0
  Colombia            42.7     3.4       20.9           4.9
  Ecuador             10.8     1.3        3.8           2.0
  Peru                12.8     1.3        3.2           1.2
  Venezuela           58.9    11.0       37.0          12.4
  Other                7.4       F        3.3           1.7

 Central America     584.1     3.4      456.9          50.8
  Costa Rica          25.7     0.1       11.5           2.1
  Guatemala           10.1     0.4        5.1           1.8
  Honduras            23.2     0.1        8.9           5.5
  Mexico             501.5     0.9      424.1          40.7
  Panama              16.9     0.8        2.5           0.3
  Other                6.7     1.0        4.9           0.4

 Other Western
   Hemisphere         41.9     2.9       19.4           1.0
  Bahamas              1.7     0.1        0.4           0.0
  Barbados             3.2     0.2        0.2           0.0
  Bermuda              3.0     0.4        0.1           0.0
  Dominican
   Republic           19.0     0.1       13.2           0.8
  Jamaica              4.9     0.2        2.8           0.0
  Netherlands
   Antilles            0.2     (*)        (*)           (*)
  Trinidad and
   Tobago              3.0     0.7        0.4           0.0
  United Kingdom
   Islands,
   Caribbean           4.8     0.1        1.8           0.0
  Other                2.2     1.1        0.5           0.1

Africa                86.5    17.0       44.1           7.1

 Egypt                 9.0     1.4        4.1           0.3
 Nigeria               7.8     6.0        1.6           0.1
 South Africa         33.3       G       20.5           3.5
 Other                36.4       I       17.9           3.2

Middle East           42.9     6.5       13.6           2.3

 Israel               27.0     0.0       12.5             G
 Saudi Arabia          7.4     1.2        0.4           0.2
 United Arab
  Emirates             4.2     2.0        0.4           0.0
 Other                 4.3     3.3        0.4             A

Asia and
  Pacific          1,149.7    38.6      721.8          58.4

 Australia           222.2     4.7      100.3          19.5
 China               101.4     0.6       86.4           2.9
 Hong Kong            81.7     1.0       37.2           0.5
 India                24.2     0.1       18.9           3.2
 Indonesia            50.5    14.1       20.6           1.0
 Japan               167.2     2.0       86.6           3.9
 Korea,
   Republic of        32.2     0.1       17.9           1.1
 Malaysia            113.3     3.3       98.9           1.1
 New Zealand          38.8       G       19.5             H
 Philippines          62.4     1.2       50.7          10.1
 Singapore           102.3     2.9       77.4           0.4
 Taiwan               59.9     0.1       33.7           1.8
 Thailand             83.4     4.4       68.3           8.4
 Other                12.1       H        5.4             G

International(1)      11.9     8.5        ...           ...

Addenda:

 Eastern
  Europe(2)          118.3     2.1       91.1          19.4
 European
  Union (15)(3)    2,567.1    40.8    1,551.7         128.5
 OPEC(4)             130.9    35.9       60.0          13.7

                             Manufacturing
                                Primary   Indus-    Elec-
                                and       trial     tronic
                                fabri-    machi-     and
                   Chemicals    cated     nery       other
                     and        metals     and      electric
                    allied                equip-    equip-
                   products                ment       ment

  All countries      537.3       206.9     498.9     645.4

Canada                41.2        31.3      27.7      27.1

Europe               267.2       116.9     264.2     265.5

 Austria               1.3         0.3       1.6       1.3
 Belgium              17.0         2.8       6.7       3.7
 Denmark               1.0         0.5       0.5       1.1
 Finland               1.2         0.9       0.3       0.5
 France               41.2        34.2      51.4      20.9

 Germany              43.1        22.9      61.0      57.4
 Greece                1.8         0.3       (*)       0.1
 Ireland               6.9         1.4       7.4      13.8
 Italy                24.1         8.2      25.1      15.0
 Luxembourg            0.0         0.6       0.1       0.3
 Netherlands          15.4         7.7       9.1      11.4

 Norway                0.6         0.7       1.2       0.4
 Portugal              2.4         0.1       0.6       8.7
 Spain                14.5         4.3       3.4       9.2
 Sweden               14.9         0.1       3.5       1.4
 Switzerland           2.9         0.5       2.4       3.5
 Turkey                1.5         0.3       0.0         H
 United Kingdom       62.2        25.3      86.7      36.0
 Other                15.1         5.8       3.1         J

Latin America
   and Other
   Western
   Hemisphere        122.4        32.7      43.9     181.9

 South America        72.1        20.8      25.4      29.9
  Argentina           10.6         1.6       0.2       1.3
  Brazil              40.9        12.7      24.3      24.8
  Chile                3.4         3.3       (*)       0.4
  Colombia             6.0         1.1       0.1       0.8
  Ecuador              0.9         0.3       0.0       0.0
  Peru                 0.9         0.3       0.0       0.0
  Venezuela            8.8         1.5       0.8       2.6
  Other                0.5         0.0       (*)       0.0

 Central America      47.8        11.8      18.3     151.9
  Costa Rica           1.3         0.8       0.0         H
  Guatemala            1.6         0.6       0.0       0.0
  Honduras             0.3         0.1       0.0       0.0
  Mexico              43.3         9.8      18.3     147.6
  Panama               1.0         0.1       0.0       0.0
  Other                0.2         0.5       0.0         G

 Other Western
   Hemisphere          2.6         0.1       0.2       0.1
  Bahamas              0.2         0.0       0.0       0.0
  Barbados             0.0         0.0       0.0       0.0
  Bermuda              0.0         0.0       0.0       0.1
  Dominican
   Republic            0.6         0.0       0.0       0.0
  Jamaica              1.1         0.0       0.0       0.0
  Netherlands
   Antilles            0.0         0.0       0.0       0.0
  Trinidad and
   Tobago              0.3         0.1       (*)       0.0
  United Kingdom
   Islands,
   Caribbean           (*)         0.0       0.2       (*)
  Other                0.4         0.0       0.0       0.0

Africa                12.4         4.2       2.4       1.6

 Egypt                 2.3         0.6       0.4       0.5
 Nigeria               1.4         0.0       0.0       0.0
 South Africa          5.9         1.6       1.9       1.1
 Other                 2.8         2.0       0.1       (*)

Middle East            1.2         0.4       0.5       7.7

 Israel                0.9         0.2       0.4       7.7
 Saudi Arabia          0.3         (*)       0.0       0.0
 United Arab
  Emirates             0.0         0.2       (*)       0.0
 Other                 0.1         0.0       0.1       0.0

Asia and
  Pacific             92.9        21.4     160.1     221.5

 Australia            16.2         7.0      11.3       2.8
 China                14.2           H      10.5      42.3
 Hong Kong             2.5         1.7       1.7      14.5
 India                 4.1           A       7.1       0.7
 Indonesia             5.0           A       1.2       3.5
 Japan                22.1         2.4      26.9      16.2
 Korea,
   Republic of         2.4           G         G       4.9
 Malaysia              2.1         1.8      20.7      56.0
 New Zealand           1.0         0.2       0.2       0.2
 Philippines           7.4         0.1       0.6      25.8
 Singapore             2.5         1.2      42.7      23.6
 Taiwan                5.5         0.8       2.2      14.8
 Thailand              4.4         1.1         K      16.1
 Other                 3.4           A       (*)       0.3

International(1)       ...         ...       ...       ...

Addenda:

 Eastern
  Europe(2)           11.2         5.7       3.1      17.3
 European
  Union (15)(3)      247.0       109.5     257.5     180.9
 OPEC(4)              15.6         2.1       1.9       6.1

                                                        Finance
                   Trans-      Other                    (except
                   porta-      manu-                  depository
                   tion        factu-    Wholesale      institu-
                   equip-      ring       trade        tions),
                    ment                              insurance,
                                                       and real
                                                        estate

  All countries     577.5       821.9      524.7         172.7

Canada              103.8       100.4       75.7          25.8

Europe              290.6       385.0      278.4          85.4

 Austria              5.3         2.9        6.2           0.6
 Belgium             10.3        14.5       14.4           2.0
 Denmark              0.6           H        8.5           0.7
 Finland              0.2         2.3        3.2           0.1
 France              18.1        64.1       44.3           4.0

 Germany            125.8        69.1       32.1           6.6
 Greece               0.0         0.7        2.8           0.3
 Ireland              0.5        16.8        2.1           1.5
 Italy               13.8        25.7       20.2           2.2
 Luxembourg           0.0         5.9        0.3           0.1
 Netherlands          7.5        17.8       23.6           7.1

 Norway               0.2         0.8        4.2           0.2
 Portugal             1.4         1.1        5.6           0.2
 Spain               30.6        13.4       17.8           2.1
 Sweden               0.5           I        9.8           1.4
 Switzerland          0.0         6.1       13.9           1.4
 Turkey               0.8           H        4.3           0.1
 United Kingdom      65.3       104.7       55.0          54.2
 Other                9.7           K       10.0           0.7

Latin America
   and Other
   Western
   Hemisphere       148.9       185.8       41.1          18.3

 South America       55.5        87.5       25.1          13.1
  Argentina           7.9         8.3        3.8           2.1
  Brazil             41.3        60.4        8.7           2.6
  Chile                 F           H        3.8           6.1
  Colombia              G           I        2.7           0.8
  Ecuador             0.0         0.7        0.8           0.3
  Peru                0.0         0.8        1.4           0.0
  Venezuela           3.7         7.2        3.4           1.2
  Other               1.1         1.1        0.4           (*)

 Central America     93.4        82.9       14.5           3.9
  Costa Rica          0.0           H        0.6           0.0
  Guatemala           0.0         1.1        0.4           0.2
  Honduras            0.0         3.0        0.2           0.2
  Mexico             93.4        71.0       11.8           3.1
  Panama              0.0         1.1        1.1           0.3
  Other               0.0           G        0.4           0.1

 Other Western
   Hemisphere         0.0        15.4        1.6           1.3
  Bahamas             0.0         0.1        0.1           0.1
  Barbados            0.0         0.2        0.1           (*)
  Bermuda             0.0         0.0        0.5           0.6
  Dominican
   Republic           0.0        11.8        0.3           0.1
  Jamaica             0.0         1.7        0.2           0.1
  Netherlands
   Antilles           0.0         0.0        0.1           (*)
  Trinidad and
   Tobago             0.0         (*)        0.2           0.2
  United Kingdom
   Islands,
   Caribbean          0.0         1.6        0.1           0.3
  Other               0.0         (*)        (*)           (*)

Africa                1.2        15.0        9.2           0.9

 Egypt                0.0         0.1        1.0           0.0
 Nigeria              0.0         0.0        0.2           0.0
 South Africa         1.2         5.2        5.8           0.3
 Other                0.0         9.7        2.2           0.7

Middle East             0         1.4        2.4           0.4

 Israel               0.0           G        1.6           (*)
 Saudi Arabia         0.0         0.0        0.1           0.1
 United Arab
  Emirates            0.0         0.2        0.6           0.1
 Other                0.0           A        0.1           0.2

Asia and
  Pacific            33.0       134.3      118.0          42.0

 Australia           20.9        22.6       17.2           6.4
 China                  G           J        5.6           0.6
 Hong Kong            0.6        15.7       16.7           5.9
 India                  G           G        3.9           0.4
 Indonesia              F           I        1.7           0.9
 Japan                0.9        14.1       33.4          13.7
 Korea,
   Republic of          F           H        7.3           0.9
 Malaysia             0.0        17.2        4.2           1.7
 New Zealand          (*)           J        3.3           0.9
 Philippines          0.0         6.7        3.9             G
 Singapore            2.8         4.1        8.5           2.2
 Taiwan                 H           I        5.1           4.7
 Thailand             0.0           I        5.0             G
 Other                (*)         0.0        2.4           0.2

International(1)      ...         ...        ..            ..

Addenda:

 Eastern
  Europe(2)           9.7        24.6        9.8           0.7
 European
  Union (15)(3)     279.9       348.4      246.0          82.9
 OPEC(4)              4.3        16.3        6.1           2.2

                                Other
                   Services   industries

  All countries     712.4       826.2

Canada               86.1       263.2

Europe              430.5       265.9

 Austria              2.2         1.1
 Belgium             16.3         4.9
 Denmark              4.0         1.1
 Finland              0.6         2.2
 France              91.3        21.8

 Germany             49.1        63.3
 Greece               1.3         0.3
 Ireland              2.8         1.1
 Italy               16.8        10.9
 Luxembourg           0.5         0.7
 Netherlands         27.6         8.2

 Norway              15.4         0.9
 Portugal             3.0         0.8
 Spain                8.8        15.3
 Sweden               4.1         3.7
 Switzerland         12.1         3.0
 Turkey               2.2         0.9
 United Kingdom     167.8       114.2
 Other                4.8        11.4

Latin America
   and Other
   Western
   Hemisphere        83.9       140.9

 South America       40.0        62.7
  Argentina          10.6         7.5
  Brazil             15.8        20.2
  Chile               4.2          I
  Colombia            4.7        10.3
  Ecuador             1.0         3.7
  Peru                0.5         6.3
  Venezuela           3.1         3.2
  Other               0.2           H

 Central America     34.7        70.7
  Costa Rica          0.1        13.4
  Guatemala             G           H
  Honduras            0.0        13.8
  Mexico             33.0        28.6
  Panama                A           J
  Other               (*)         0.2

 Other Western
   Hemisphere         9.2         7.4
  Bahamas             0.3         0.7
  Barbados            2.8         0.0
  Bermuda             1.4           0
  Dominican
   Republic           0.5         4.7
  Jamaica             0.5         1.1
  Netherlands
   Antilles           0.0           0
  Trinidad and
   Tobago             0.6         0.9
  United Kingdom
   Islands,
   Caribbean          2.6           0
  Other               0.6         (*)

Africa                6.3         9.1

 Egypt                2.3         0.2
 Nigeria              0.0         0.1
 South Africa         2.3           G
 Other                1.6           I

Middle East          17.9         2.1

 Israel              12.9           0
 Saudi Arabia         4.3         1.3
 United Arab
  Emirates            0.6         0.4
 Other                0.1         0.4

Asia and
  Pacific            87.7       141.7

 Australia           36.0        57.7
 China                1.5         6.7
 Hong Kong            7.1        13.0
 India                0.4         0.4
 Indonesia            0.2        13.0
 Japan               23.6         7.9
 Korea,
   Republic of          G           H
 Malaysia             1.9         1.3
 New Zealand            H           I
 Philippines          0.5           H
 Singapore            5.4         5.9
 Taiwan                 H           J
 Thailand             1.0           H
 Other                  F           A

International(1)      ..          3.4

Addenda:

 Eastern
  Europe(2)           3.6        11.1
 European
  Union (15)(3)     396.0       249.7
 OPEC(4)              8.2        18.5

(*) Fewer than 50 employees.

(D) Suppressed to avoid disclosure of data of individual companies.

(1.) See footnote 1 to table 9.

(2.) "Eastern Europe" comprises Albania, Armenia, Azerbaijan Belarus Bulgaria, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Latvia, Lithuania, Moldova, Poland, Romania, Russia, Slovakia, Tajikstan, Turkmenistan, Ukraine, and Uzbekistan.

(3.) The European Union (15) comprises Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the United Kingdom.

(4.) OPEC is the Organization of Petroleum Exporting countries. Its members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Prior to 1995, Gabon was also a member.

NOTE.--Size ranges are given in employment cells that are suppressed. The size ranges are A-1 to 499; F-500 to 999; G-1,000 to 2,499; H-2,500 to 4,999; I-5,000 to 9,999; J-10,000 to 24,999; K-25,000 to 49,999; I-50,000 to 99,999; M-100,000 or more.

Table 20.2.--Employment of Majority-Owned Nonbank Foreign Affiliates, Country by Industry of Affiliate, 1997

[Thousands of employees]

                                                Manufacturing
                     All     Petro-    Total      Food and
                    indus-   leum                  kindred
                    tries                         products

  All countries    6,525.4   180.6    3,880.2       376.6

Canada               858.3    18.6      374.7        38.3

Europe             2,988.6    49.2    1,743.7       147.7

 Austria              27.5     0.6       15.3         1.9
 Belgium             102.2     1.8       61.5         6.2
 Denmark              25.8     0.3       10.2         2.3
 Finland              12.8     0.4        6.3         0.1
 France              438.6     4.1      256.6        13.3

 Germany             579.0     4.7      413.4        15.7
 Greece               11.7     0.5        6.6         3.2
 Ireland              64.8     0.3       55.1         2.2
 Italy               187.6     3.2      124.8         8.3
 Luxembourg            8.4     0.1        6.6         0.0
 Netherlands         158.3     3.9       79.5         9.6

 Norway               38.1     5.8        6.5         1.9
 Portugal             31.5     0.4       21.1         5.2
 Spain               143.0     0.7       95.2        14.0
 Sweden               45.4     0.4       23.5         2.5
 Switzerland          47.9     1.1       16.1         1.2
 Turkey               21.8     0.6       12.9         2.9
 United Kingdom      897.0    17.8      421.8        35.7
 Other               147.1     2.7      110.8        21.7

Latin America
   and Other
   Western
   Hemisphere      1,229.1    38.7      877.6       128.9

 South America       570.2    31.6      369.9        72.5
  Argentina           81.1     6.0       45.9        12.2
  Brazil             300.9     4.2      237.6        35.5
  Chile               40.3      G        13.9         2.0
  Colombia            44.3     4.6       20.6         5.5
  Ecuador             11.0     1.1        3.9         2.0
  Peru                15.2     1.3        4.0         1.7
  Venezuela           69.3    12.3       40.8        12.0
  Other                8.2       F        3.2         1.6

 Central America     613.1     4.0      487.7        54.9
  Costa Rica          25.7     0.1       11.9         2.2
  Guatemala           11.2     0.4        5.4         1.8
  Honduras            24.3     0.1       10.2         6.2
  Mexico             530.7     1.5      453.9        44.0
  Panama              15.0     0.9        2.3         0.3
  Other                6.1     1.0        4.0         0.4

 Other Western
   Hemisphere         45.8     3.1       20.1         1.5
  Bahamas              1.5     0.1        0.4         0.0
  Barbados             3.3     0.2        0.2         0.0
  Bermuda              7.6     0.2        0.2         0.0
  Dominican
   Republic           18.6     0.2       12.8         0.8
  Jamaica              4.8     0.2        2.8         0.1
  Netherlands
   Antilles            0.3     (*)        0.1         (*)
  Trinidad and
   Tobago              3.3     1.1        0.6         0.4
  United Kingdom
   Islands,
   Caribbean           4.3     0.1        2.7         0.0
  Other                2.2     1.1        0.5         0.2

Africa               108.6    17.9       61.7           H

 Egypt                11.9     1.5        5.3         0.3
 Nigeria               8.3     6.5        1.5         0.1
 South Africa         50.0       G       35.6         0.7
 Other                38.4       I       19.3           H

Middle East           42.9     6.8       14.9           G

 Israel               28.5     0.0       14.0           G
 Saudi Arabia          6.5     1.6        0.3         0.0
 United Arab
  Emirates             3.7     1.6        0.3         0.0
 Other                 4.3     3.5        0.4         0.2

Asia and
 Pacific           1,285.7    40.8      807.5        54.8

 Australia           227.8     5.3       97.1        18.6
 China               135.8     1.2      112.5         4.0
 Hong Kong           111.1     0.9       60.9         0.2
 India                38.4     0.3       29.9         2.9
 Indonesia            51.3    12.7       21.0         1.2
 Japan               178.3       H       85.7         3.6
 Korea,
   Republic of        31.8       A       16.7         1.1
 Malaysia            132.3     3.3      118.7         0.8
 New Zealand          35.1       G       18.7           H
 Philippines          57.5     1.3       44.7         8.0
 Singapore           110.5     2.9       78.7         0.3
 Taiwan               62.6     0.1       35.3         1.5
 Thailand             97.9     4.4       81.0         8.2
 Other                15.4     3.1        6.5           G

International(1)      12.1     8.8        ...         ...

Addenda:

 Eastern
  Europe(2)          139.9     2.6      105.6        21.7
 European
  Union (15)(3)    2,733.8    39.0    1,597.4       119.9
 OPEC(4)             141.3    36.6       63.9        13.3

                              Manufacturing
                                 Primary    Indus-     Elec-
                                  and       trial      tronic
                                  fabri-    machi-     and
                                  cated     nery       other
                                  metals    and        elec-
                   Chemicals                equip-     tric
                   and allied               ment       equip-
                   products                            ment

  All countries     5.50.5        204.8    563.1       718.9

Canada                38.7         29.2     36.2        27.7

Europe               271.9        119.4    278.2       226.1

 Austria               1.1          0.2      1.7         1.9
 Belgium              18.8          2.6      6.2         3.8
 Denmark               1.0          0.5      1.4         1.6
 Finland               1.2          0.9      0.4         0.8
 France               46.1         35.3     50.8        21.6

 Germany              41.9         26.5     65.2        66.3
 Greece                1.7          0.3      (*)         0.1
 Ireland               8.0          1.2     11.0        14.8
 Italy                24.1          6.5     28.0        16.2
 Luxembourg            0.0          0.6      0.2         0.0
 Netherlands          14.6          5.8     11.4        10.4

 Norway                1.0          0.1      2.0         0.4
 Portugal              2.4          0.1      0.6         9.9
 Spain                16.1          4.3      3.8         9.3
 Sweden                7.1          0.1      4.7         1.6
 Switzerland           2.6          0.3      2.7         2.8
 Turkey                1.8          0.4      0.0         2.9
 United Kingdom       64.9         28.1     85.4        40.8
 Other                17.3          5.6      2.8        21.0

Latin America
   and Other
   Western
   Hemisphere        127.9         33.2     46.3       192.6

 South America        76.2         20.5     24.3        28.2
  Argentina           11.7          1.7      0.5         0.5
  Brazil              43.3         12.3     22.6        23.9
  Chile                3.7          3.4      0.4         0.4
  Colombia             6.6          1.1      0.1         0.8
  Ecuador              1.0          0.3      0.0         0.0
  Peru                 1.2          0.3      0.0         0.0
  Venezuela            8.2          1.6      0.8         2.6
  Other                0.4          0.0      (*)         0.0

 Central America      48.5         12.5     21.8       164.3
  Costa Rica           1.2          0.8      0.0           H
  Guatemala            1.8          0.6      0.0         0.0
  Honduras             0.2          0.1      0.0         0.0
  Mexico              43.9         10.4     21.8       159.3
  Panama               0.8          0.1      0.0         0.0
  Other                0.5          0.5      0.0           G

 Other Western
   Hemisphere          3.2          0.2      0.2         0.2
  Bahamas              0.2          0.0      0.0         0.0
  Barbados             0.0          0.0      0.0         0.0
  Bermuda              0.0          0.0      0.0         0.2
  Dominican
   Republic            0.8          0.0      0.0         0.0
  Jamaica              0.9          0.0      0.0         0.0
  Netherlands
   Antilles            0.0          0.0      0.0         0.0
  Trinidad and
   Tobago              (*)          0.1      (*)         0.0
  United Kingdom
   Islands,
   Caribbean             G          0.1      0.2         (*)
  Other                  A          0.0      0.0         0.0

Africa                12.4         4.0       3.5        3.0

 Egypt                 2.3          0.7      1.5         0.5
 Nigeria               1.4         0.0       0.0         0.0
 South Africa          5.7          1.4      1.8         2.5
 Other                 3.0          2.0      0.1         (*)

Middle East            1.4          0.3      1.2         8.4

 Israel                1.1          0.2      1.1         8.4
 Saudi Arabia          0.3          (*)      0.0         0.0
 United Arab
  Emirates             0.0          (*)      (*)         0.0
 Other                 0.1          0.0      0.1         0.0

Asia and
  Pacific             98.1         18.8    197.7       261.2

 Australia            16.3          3.1     12.0         2.8
 China                16.6          3.8     12.1        55.5
 Hong Kong             2.7            H      0.5        35.6
 India                 4.5            F     13.3         3.2
 Indonesia             5.5          0.2      1.2         3.4
 Japan                21.7          2.5     27.3        16.3
 Korea,
   Republic of         2.6          0.3      2.5         4.9
 Malaysia              2.6          0.4     32.7        64.7
 New Zealand           1.2          0.3      0.2         0.1
 Philippines           7.3          0.5      0.6        21.7
 Singapore             2.6          1.0     45.9        21.8
 Taiwan                6.0          0.8        H        15.8
 Thailand              4.3          0.9        K        15.0
 Other                 4.2          0.1      (*)         0.3

International(1)       ...          ...      ...         ...

Addenda:

 Eastern
  Europe(2)           13.7          5.6      2.8        20.1
 European
  Union (15)(3)      249.2        112.9    270.7       199.0
 OPEC(4)              15.4          1.8      1.9         6.0

                   Trans-     Other                   Finance
                   porta-     manu-                   (except
                   tion       factu-                 depository
                   equip-     ring     Wholesale     institu-
                   ment                  trade        tions),
                                                     insurance,
                                                      and real
                                                       estate

  All countries    609.9      856.4       556.0        199.4

Canada             104.5      108.0        77.0         27.4

Europe             304.2      396.3       293.8        102.2

 Austria             5.4        3.1         6.9          0.6
 Belgium            10.9       13.1        15.0          1.9
 Denmark             0.6        2.9         8.3            F
 Finland             0.3        2.7         3.5          0.1
 France             21.7       67.8        43.8          4.7

 Germany           130.3       67.6        35.6          6.9
 Greece              0.0        1.2         2.7          0.3
 Ireland             0.6       17.4         2.4          0.6
 Italy              14.6       27.2        20.8          2.0
 Luxembourg          0.0        5.8         0.4          0.1
 Netherlands         8.2       19.5        23.4         14.3

 Norway              0.2        0.9         4.2          0.2
 Portugal            1.0        1.8         5.2            A
 Spain              29.6       18.2        17.7          2.1
 Sweden              0.4        7.1        12.2          1.3
 Switzerland         0.2        6.4        14.2          1.4
 Turkey              0.4        4.4         5.0          0.1
 United Kingdom     65.3      101.6        57.6         63.6
 Other              14.7       27.7        14.8          1.1

Latin America
   and Other
   Western
   Hemisphere      163.4      185.3        51.5         22.4

 South America      66.3       81.8        32.3         15.0
  Argentina         10.5        8.7         4.2          2.6
  Brazil            45.5       54.6        14.6          4.0
  Chile                F          H         3.2          6.1
  Colombia             G          H         3.1          0.9
  Ecuador            0.0        0.6         0.9          0.3
  Peru               0.0        0.9         1.9          (*)
  Venezuela          7.5        8.1         3.7          0.9
  Other              0.0        1.0         0.6          (*)

 Central America    97.1       88.8        14.6          4.0
  Costa Rica         0.0          H         0.6          0.0
  Guatemala          0.0        1.1           A          0.2
  Honduras           0.0        3.7         0.2          0.2
  Mexico            97.1       77.5        11.9          3.2
  Panama             0.0        1.1           G          0.3
  Other              0.0          G         0.4          0.1

 Other Western
   Hemisphere        0.0       14.8         4.7          3.4
  Bahamas            0.0        0.1         0.1          (*)
  Barbados           0.0        0.2         0.1          (*)
  Bermuda            0.0        0.0           H          2.7
  Dominican
   Republic          0.0       11.1         0.3          0.1
  Jamaica            0.0        1.7         0.2          0.1
  Netherlands
   Antilles          0.0        0.1         0.1          (*)
  Trinidad and
   Tobago            0.0        (*)           A          0.2
  United Kingdom
   Islands,
   Caribbean         0.0          G         0.3          0.2
  Other              0.0          A         (*)          (*)

Africa               1.4          K         7.1         1.0

 Egypt               0.0        0.1         1.0          0.0
 Nigeria             0.0        0.0         0.2          0.0
 South Africa        0.0       22.0         3.2          0.3
 Other               0.0          J         2.7          0.7

Middle East           0           G         1.2          0.4

 Israel              0.0          G         0.5          (*)
 Saudi Arabia        0.0        0.0         0.1          0.1
 United Arab
  Emirates           0.0        0.2         0.6          0.2
 Other               0.0        0.1         0.1          0.2

Asia and
 Pacific            36.3      140.6       125.3         46.0

 Australia          20.7       23.4        18.6          6.4
 China               4.9       15.6         7.8          0.6
 Hong Kong           0.5          J        17.7          6.9
 India                 G        4.0         4.3          1.2
 Indonesia             F          I         1.8          0.9
 Japan               0.9       13.4        30.3         14.9
 Korea,
   Republic of       0.6        4.7         6.1          0.8
 Malaysia            0.0       17.4         3.8          1.9
 New Zealand         (*)          J         3.1          0.9
 Philippines         0.0        6.6         4.6            G
 Singapore           3.1        4.1        13.6          2.4
 Taiwan                H          I         5.4          5.1
 Thailand              A          I         4.9          1.9
 Other               0.2          A         3.5            A

International(1)     ...        ...         ...          ...

Addenda:

 Eastern
  Europe(2)         14.7       27.0        14.5          1.0
 European
  Union (15)(3)    288.7      357.0       255.6         99.3
 OPEC(4)             8.2       17.3         6.4          2.1

                                  Other
                   Services    industries

  All countries       842.5        866.8

Canada                93.1         267.0

Europe                515.1        284.6

 Austria                2.8          1.4
 Belgium               16.9          5.1
 Denmark                5.4            G
 Finland                0.5          2.1
 France               104.4         25.0

 Germany               56.5         61.8
 Greece                 1.3          0.3
 Ireland                4.1          2.3
 Italy                 26.4         10.4
 Luxembourg             0.5          0.7
 Netherlands           28.5          8.7

 Norway                20.4          1.0
 Portugal               3.5            G
 Spain                 13.5         13.8
 Sweden                 4.3          3.8
 Switzerland           12.1          3.0
 Turkey                 2.2          0.9
 United Kingdom       205.3        131.0
 Other                  6.5         11.2

Latin America
   and Other
   Western
   Hemisphere          97.6        141.3

 South America         47.7         73.8
  Argentina            10.5         11.9
  Brazil               17.8         22.6
  Chile                 5.4            J
  Colombia              5.1         10.0
  Ecuador               1.0          3.9
  Peru                  0.5          7.4
  Venezuela             7.1          4.4
  Other                 0.3            H

 Central America       42.5         60.3
  Costa Rica            0.1         13.1
  Guatemala             1.5            H
  Honduras              0.0         13.7
  Mexico               40.9         19.2
  Panama                0.1            J
  Other                 (*)          0.5

 Other Western
   Hemisphere           7.4          7.2
  Bahamas               0.2          0.7
  Barbados              2.8            0
  Bermuda                 G            0
  Dominican
   Republic             0.5          4.7
  Jamaica                 A            G
  Netherlands
   Antilles             0.0            0
  Trinidad and
   Tobago                 F            F
  United Kingdom
   Islands,
   Caribbean            0.9          (*)
  Other                 0.6          (*)

Africa                 11.6          9.4

 Egypt                    H            A
 Nigeria                0.0          0.1
 South Africa           6.2            H
 Other                    G          6.4

Middle East            18.1          1.5

 Israel                13.9           0
 Saudi Arabia           3.3          1.1
 United Arab
  Emirates              0.7          0.3
 Other                  0.1          0.1

Asia and
 Pacific              106.4        159.6

 Australia             40.2         60.3
 China                  1.9         11.7
 Hong Kong              7.5         17.2
 India                  2.2          0.4
 Indonesia              0.4         14.5
 Japan                 31.5            J
 Korea,
   Republic of          3.2            H
 Malaysia               2.9          1.7
 New Zealand            4.6            I
 Philippines              A            H
 Singapore              5.8          7.2
 Taiwan                 3.6         13.0
 Thailand               1.1          4.7
 Other                    G            F

International(1)        ...          3.4

Addenda:

 Eastern
  Europe(2)             5.4         10.6
 European
  Union (15)(3)       474.0        268.6
 OPEC(4)               11.5         20.8

(*) Fewer than 50 employees.

(D) Suppressed to avoid disclosure of data of individual companies.

(1.) See footnote 1 to table 9.

(2.) See footnote 2 to table 20.1.

(3.) See footnote 3 to table 20.1.

(4.) See footnote 4 to table 20.1.

NOTE.--Size ranges are given in employment cells that are suppressed. The size ranges are A-1 to 499; F-500 to 999; G.-1,000 to 2,499; H-2,500 to 4,999; I-5,000 to 9.999; I-10,000 to 24.999; K-25,000 to 49,999; L-50,000 to 99,999; M-100,000 or more.

Table 21.1.--Gross Product of Majority-Owned Nonbank Foreign Affiliates, Country by Industry of Affiliate, 1996

[Millions of dollars]

                                                  Manufacturing
                     All      Petro-                 Food and
                    indus-    leum      Total        kindred
                    tries                            products

  All countries    498,310   109,870   250,351        24,437

Canada              53,783     9,020    25,933         2,294

Europe             281,732    65,165   149,872        13,994

 Austria             3,989     1,251     1,539           259
 Belgium            13,767     2,149     7,486           678
 Denmark             2,497       355       719           235
 Finland             2,014       592       736             6
 France             38,570     6,484    20,737         1,918

 Germany            61,097     9,631    40,386         2,906
 Greece              1,401       681       399           149
 Ireland             9,288       763     7,014           611
 Italy              21,259     7,494     9,130           798
 Luxembourg          1,181       184       649             0
 Netherlands        17,221     3,212     8,849         1,362

 Norway              6,527     4,850       462           135
 Portugal            2,949       768       760           208
 Spain               9,448       263     6,126           580
 Sweden              4,947       413     2,353           247
 Switzerland         8,193     1,104     3,230           233
 Turkey              1,781       344     1,049           161
 United Kingdom     82,224    24,750    35,696         3,187
 Other               3,379      -125     2,552           322

Latin America
   and Other
   Western
   Hemisphere       51,965     6,657    33,796         4,857

 South America      35,975     5,075    23,927         3,810

  Argentina          6,121     1,236     3,582           916
  Brazil            21,082     1,741    16,910         2,040
  Chile              2,478       358       734           164
  Colombia           2,217       895     1,064           238
  Ecuador              274       147        66            19
  Peru                 976       163       151            53
  Venezuela          2,144       586     1,186           226
  Other                683       148       234           154

 Central America    11,778       514     9,421         1,021

  Costa Rica           580        31       206            46
  Guatemala            233        97       116            33
  Honduras             256        20        93            74
  Mexico            10,125        98     8,862           854

  Panama               313        84        74             9
  Other                271       184        70             6

 Other Western
   Hemisphere        4,213     1,068       448            26

  Bahamas              161        48        25             0
  Barbados             755        29         5             2
  Bermuda            1,514        34         9             0
  Dominican
   Republic            629        34       197            15
  Jamaica              399        38       111             0
  Netherlands
   Antilles           -378        13         3             0
  Trinidad and
   Tobago              832       705        78             0
  United Kingdom
   Islands,
   Caribbean           127        31         6             0
  Other                174       148        14             6

Africa               8,248     6,032     1,114           167

 Egypt                 930       812        43           -24
 Nigeria             2,977     2,935        35            18
 South Africa        1,322       149       613            77
 Other               3,019     2,135       422            96

Middle East          4,552     2,759       780            90

 Israel              1,053       (*)       723            82
 Saudi Arabia          567        60        28             4
 United Arab
  Emirates           1,295     1,104        45             0
 Other               1,637     1,596       -16             3

Asia and
  Pacific           86,168    19,418    38,856         3,035

 Australia          17,335     4,787     6,806           941
 China               2,073       376     1,375            22
 Hong Kong           6,127       535     1,292            30
 India                 432        11       328            33
 Indonesia           5,665     4,179       315            22
 Japan              25,677     3,352    13,325         1,196
 Korea,
   Republic of       2,533       (*)     1,227            86
 Malaysia            4,553     1,797     2,204            19
 New Zealand         2,662       477     1,478           187
 Philippines         2,131       413     1,247           272
 Singapore           9,801     1,049     6,676            24
 Taiwan              2,846        25     1,415            89
 Thailand            3,506     1,764     1,078            91
 Other                 827       652        88            23

International(1)     1,862       821       ...           ...

Addenda:

 Eastern
  Europe(2)          3,059      -178     2,422           322
 European
  Union (15)(3)    271,852    58,991   142,579        13,144
 OPEC(4)            13,455     9,647     1,587           270

                                  Manufacturing
                                                    Elec-
                                          Indus-    tronic
                                          trial      and
                               Primary    machi-     other
                   Chemicals      and      nery      elec-
                     and         fabri-     and      tric
                    allied       cated    equip-    equip-
                   products     metals     ment      ment

  All countries     50,478     11,002      37,023    23,345

Canada               3,933      1,910       2,407     1,707

Europe              31,883      6,588      21,663    11,298

 Austria               123         16          83       122
 Belgium             3,197        188         513       313
 Denmark               115         27          23        42
 Finland               175         88          23       127
 France              5,233      2,121       4,456     1,424

 Germany             5,134      1,420       6,634     2,741
 Greece                191         13           2         9
 Ireland             2,948         80         313     1,280
 Italy               2,288        356       1,994     1,082
 Luxembourg              0         42           7        19
 Netherlands         2,400        376         673       742

 Norway                 49         59         118        26
 Portugal              162        (*)          29       252
 Spain               1,384        261         325       536
 Sweden              1,393          5         239        73
 Switzerland           841         65         228       346
 Turkey                112         40           0        67
 United Kingdom      5,789      1,310       5,975     1,876
 Other                 348        120          30       220

Latin America
   and Other
   Western
   Hemisphere        7,033      1,494       1,671     1,944

 South America       4,844      1,246       1,066       502

  Argentina            943         91          11        36
  Brazil             2,954        873       1,031       408
  Chile                177        178         (*)        11
  Colombia             352         41          -1        13
  Ecuador               28          4           0       (*)
  Peru                  43          9           0         0
  Venezuela            321         51          23        34
  Other                 27          0           1         0

 Central America     1,990        255         717     1,321

  Costa Rica            37         14           0        40
  Guatemala             28          7           0         0
  Honduras               3          2           0         0
  Mexico             1,893        221         717     1,268
  Panama                23          4           0         0
  Other                  5          7           0        13

 Other Western
   Hemisphere          199         -7        -111       121

  Bahamas               21          0           0         0
  Barbados               0          0           0         1
  Bermuda                0          0           0         9
  Dominican
   Republic             20          0           0         0
  Jamaica               70          0           0         0
  Netherlands
   Antilles              0          0           0         0
  Trinidad and
   Tobago               82         -7           1         0
  United Kingdom
   Islands,
   Caribbean             1          0        -112       110
  Other                  6          0           0         0

Africa                 389        131          68        19

 Egypt                  51          9           1         7
 Nigeria                17          0           0         0
 South Africa          244         63          64        11
 Other                  77         59           3         2

Middle East             25         36          38       523

 Israel                 28         15          32       523
 Saudi Arabia           24          1           0         0
 United Arab
  Emirates               1         21           1         0
 Other                 -28          0           5         0

Asia and
  Pacific            7,216        842      11,175     7,854

 Australia           1,813        230         515       173
 China                 389         79         176       604
 Hong Kong             171         79          20       640
 India                 120          7          69         4
 Indonesia             142         11          26        26
 Japan               2,888        215       4,930     2,111
 Korea,
   Republic of         162         20         209       321
 Malaysia               77         23         365     1,344
 New Zealand            63          7          10        20
 Philippines           452          9           6       341
 Singapore             305         73       4,434     1,533
 Taiwan                389         20          63       526
 Thailand              192         66         352       202
 Other                  53          2          -1        10

International(1)       ...        ...         ...       ...

Addenda:

 Eastern
  Europe(2)            264        112          30       198
 European
  Union (15)(3)     30,533      6,304      21,286    10,639
 OPEC(4)               479         84          52        60

                                                       Finance
                      Trans-                           (except
                      porta-                          depository
                      tion       Other    Wholesale    institu-
                      equip-     manu-     trade       tions),
                       ment      factu-                insurance,
                                 ring                  and real
                                                        estate

  All countries        37,809    66,257    54,472      17,161

Canada                  7,315     6,367     4,552       3,454

Europe                 28,433    44,012    34,535       6,372

 Austria                  700       236       835          58
 Belgium                  853     1,743     2,152         301
 Denmark                   68       209     1,109          37
 Finland                   31       285       536           2
 France                 1,098     4,487     4,954         592

 Germany                8,513    13,039     3,588       1,291
 Greece                     0        35       173          64
 Ireland                   36     1,748     1,065         276
 Italy                    820     1,791     2,591         338
 Luxembourg                 0       582       170         119
 Netherlands              202     3,092     3,668      -1,700

 Norway                    11        64       707          35
 Portugal                  70        39     1,052          36
 Spain                  2,187       853     1,680         197
 Sweden                    34       364     1,336         214
 Switzerland                0     1,516     2,063         428
 Turkey                    57       612       310          11
 United Kingdom         5,481    12,078     5,930       3,996
 Other                    273     1,238       615          75

Latin America
   and Other
   Western
   Hemisphere           8,195     8,602     3,192       1,156
 South America          5,641     6,817     1,607         486
  Argentina               204     1,382       357         146
  Brazil                4,970     4,635       648         143
  Chile                    67       136       196         172
  Colombia                162       259       111           7
  Ecuador                   0        14        24           7
  Peru                      0        47       103          -3
  Venezuela               238       293       129          10
  Other                     0        52        41           5

 Central America        2,554     1,564       866          37
  Costa Rica                0        69       297         (*)
  Guatemala                 0        49        11           6
  Honduras                  0        14         2           4
  Mexico                2,554     1,356       442          37
  Panama                    0        37       101         -11
  Other                     0        39        12           2

 Other Western
   Hemisphere               0       220       719         632
  Bahamas                   0         4        34           9
  Barbados                  0         2       117         470
  Bermuda                   0         0       324         946
  Dominican
   Republic                 0       162        14           1
  Jamaica                   0        41       168           5
  Netherlands
   Antilles                 0        12      -389          -4
  Trinidad and
   Tobago                   0         2         8          15
  United Kingdom
   Islands,
   Caribbean                0         7        40        -410
  Other                     0         2         2         -14

Africa                     36       303       468         126

 Egypt                      0        -1        57           0
 Nigeria                    0         0         5          -2
 South Africa              36       117       350          67
 Other                      0       187        56          60

Middle East                 0        68       225          97

 Israel                     0        48       153           3
 Saudi Arabia               0         0        23           7
 United Arab
  Emirates                  0        22        44          39
 Other                      0         3         5          48

Asia and
  Pacific               1,830     6,904    11,499       5,957

 Australia              1,396     1,738     1,433         662
 China                      4       101       161          53
 Hong Kong                 17       335     1,845       1,067
 India                     -6       101        67           6
 Indonesia                 12        77        43          35
 Japan                     76     1,909     4,043       2,578
 Korea,
   Republic of             51       380       998          60
 Malaysia                   0       377       279         203
 New Zealand               -8     1,199       320          21
 Philippines                0       167       186         157
 Singapore                142       164     1,121         420
 Taiwan                   145       182       624         428
 Thailand                   0       175       315         260
 Other                    (*)         0        63           6

International(1)          ...       ...       ...         ...

Addenda:

 Eastern
  Europe(2)               273     1,223       567          82
 European
  Union (15)(3)        20,092    40,582    30,839       5,822
 OPEC(4)                  250       392       244          98

                                  Other
                     Services    industries

  All countries       37,840       28,617

Canada                 3,200        7,624

Europe                25,342       10,447

 Austria                 221           85
 Belgium               1,476          202
 Denmark                 210           67
 Finland                  51           97
 France                4,555        1,248

 Germany               3,973        2,229
 Greece                   66           19
 Ireland                  68           82
 Italy                 1,268          439
 Luxembourg               46           12
 Netherlands           2,633          559

 Norway                  372          100
 Portugal                183          150
 Spain                   610          571
 Sweden                  432          198
 Switzerland           1,186          181
 Turkey                   57            9
 United Kingdom        7,795        4,056
 Other                   119          143

Latin America
   and Other
   Western
   Hemisphere          3,145        4,020

 South America         1,797        3,083
  Argentina              339          463
  Brazil               1,190          449
  Chile                   63          956
  Colombia               101          240
  Ecuador                  6           25
  Peru                    13          549
  Venezuela               61          172
  Other                   25          230

 Central America         477          462
  Costa Rica               1           45
  Guatemala                4           -2
  Honduras               (*)          137
  Mexico                 462          223
  Panama                   9           56
  Other                    2            2

 Other Western
   Hemisphere            871          475
  Bahamas                 16           29
  Barbados               134            0
  Bermuda                201            0
  Dominican
   Republic                7          376
  Jamaica                 28           50
  Netherlands
   Antilles              (*)
  Trinidad and
   Tobago                  6           19
  United Kingdom
   Islands,
   Caribbean             461            0
  Other                   23            1

Africa                   154          354


 Egypt                    29          -10
 Nigeria                   0            3
 South Africa             96           47
 Other                    29          315

Middle East              474          217

 Israel                  174            0
 Saudi Arabia            270          179
 United Arab
  Emirates                39           25
 Other                    -9           13

Asia and
  Pacific              5,525        4,914

 Australia             1,948        1,699
 China                    55           52
 Hong Kong               411          977
 India                     8           12
 Indonesia                20        1,073
 Japan                 1,949          430
 Korea,
   Republic of           164           84
 Malaysia                 34           35
 New Zealand             238          127
 Philippines              18          110
 Singapore               402          133
 Taiwan                  227          127
 Thailand                 43           45
 Other                     9            9

International(1)         ...        1,041

Addenda:

 Eastern
  Europe(2)               31          136
 European
  Union (15)(3)       23,607       10,014
 OPEC(4)                 383        1,496

(*) Less than $500,000.

(D) Suppressed to avoid disclosure of data of individual companies.

(1.) See footnote 1 to table 9.

(2.) See footnote 2 to table 20.1.

(3.) See footnote 3 to table 20.1.

(4.) See footnote 4 to table 20.1.

Table 21.2. Gross Product of Majority-Owned Nonbank Foreign Affiliates, Country by Industry of Affiliate, 1997

[Millions of dollars]

                                                 Manufacturing
                     All      Petro-               Food and
                   indus-     leum      Total      kindred
                    tries                          products

  All countries    519,306   110,818   256,442       25,579

Canada              57,554     8,828    28,764        2,431

Europe             297,604    66,236   147,471       14,259

 Austria             3,948     1,249     1,354          222
 Belgium            13,350     1,895     7,517          793
 Denmark             2,505       332       727          169
 Finland             2,138       587       850            6
 France             37,024     5,901    20,121        1,859

 Germany            58,879     8,037    38,358        2,280
 Greece              1,318       603       401          150
 Ireland            12,075       809     9,515          980
 Italy              21,741     7,309     9,459          843
 Luxembourg          1,049       172       620            0
 Netherlands        19,782     3,316     9,476        1,231

 Norway              6,266     4,781       443          122
 Portugal            2,619       814       774          218
 Spain               9,690       213     6,405          642
 Sweden              4,630       308     2,077          232
 Switzerland         8,449       757     2,941          161
 Turkey              2,033       304     1,270          200
 United Kingdom     87,916    28,827    32,044        3,759
 Other               4,191        24     3,120          391

Latin America
   and Other
   Western
   Hemisphere       60,579     6,663    38,347        5,465

 South America      40,783     4,930    25,993        4,027
  Argentina          6,762     1,274     3,782          724
  Brazil            23,590     1,393    18,283        2,384
  Chile              2,823       382       805          160
  Colombia           2,509       795     1,156          267
  Ecuador              238        92        72           24
  Peru               1,402       235       187           67
  Venezuela          2,812       635     1,526          305
  Other                647       123       183           96

 Central America    13,559       683    11,060        1,404
  Costa Rica           553        12       234           47
  Guatemala            299       124       123           41
  Honduras             304        31       129          101
  Mexico            12,009       181    10,424        1,201
  Panama               102       127        83            8
  Other                293       207        67            7

 Other Western
   Hemisphere        6,236     1,050     1,294           33
  Bahamas              177        58        28            0
  Barbados             811        65         6            2
  Bermuda            2,322        38        18            0
  Dominican
   Republic            749        49       231           16
  Jamaica              379        47       114            2
  Netherlands
   Antilles           -110        24         3            0
  Trinidad and
   Tobago              622       577        -6            2
  United Kingdom
   Islands,
   Caribbean         1,066        34       883            0
  Other                220       179        17            8

Africa               8,875     6,109     1,529          120

 Egypt                 921       757        73          -43
 Nigeria             2,972     2,922        30           14
 South Africa        1,758       178       941           37
 Other               3,224     2,252       484          112

Middle East          4,322     2,790       719           96

 Israel                956       (*)       656           93
 Saudi Arabia          403        90        25            0
 United Arab
  Emirates           1,160       961        29            0
 Other               1,802     1,738         9            3

Asia and
 Pacific            88,943    19,039    39,613        3,209

 Australia          18,933     4,849     7,208        1,020
 China               3,099       481     2,068          128
 Hong Kong           7,133       600     1,409           29
 India                 671        49       493           48
 Indonesia           5,378     3,813       363           23
 Japan              25,038     3,499    12,621        1,138
 Korea,
   Republic of       2,273         7       953          104
 Malaysia            4,912     1,425     2,988           18
 New Zealand         3,119       471     1,898          225
 Philippines         2,104       423     1,183          270
 Singapore           9,087       964     5,745           19
 Taiwan              2,921        28     1,584           81
 Thailand            3,437     1,821     1,015           71
 Other                 838       609        84           35

International(1)     1,429     1,153       ...          ...

Addenda:

 Eastern
  Europe(2)          3,877       -34     3,007          391
 European
  Union (15)(3)    276,665    60,371   139,697       13,386
 OPEC(4)            13,825     9,482     1,974          342

                                 Manufacturing
                                           Elec-
                               Indus-     tronic
                                trial      and
                               Primary    machi-     other
                   Chemicals      and      nery      elec-
                      and       fabri-      and      tric
                    allied       cated    equip-    equip-
                   products     metals     ment       ment

  All countries     52,987      11,549     37,318    26,183

Canada               3,762       2,045      2,814     1,796

Europe              32,980       6,769     21,652    12,474

 Austria                99          15        128       123
 Belgium             3,361         170        547       263
 Denmark                95          29         65       108
 Finland               183          73         25       238
 France              5,178       1,936      3,989     1,377

 Germany             4,744       1,691      6,077     2,782
 Greece                180          11          2         9
 Ireland             4,248          77        564     1,866
 Italy               2,457         367      2,163     1,025
 Luxembourg              0          41         10       (*)
 Netherlands         1,996         360        806     1,062

 Norway                 55          12        162        20
 Portugal              184         (*)         26       246
 Spain               1,510         301        336       508
 Sweden              1,016           5        276        71
 Switzerland           841          43        257       186
 Turkey                153          35          0        56
 United Kingdom      6,272       1,477      6,187     2,149
 Other                 409         125         34       384

Latin America
   and Other
   Western
   Hemisphere        8,808       1,770      2,022     2,909

 South America       5,444       1,437      1,213     1,177
  Argentina          1,027         101         15        13
  Brazil             3,626         992      1,166     1,092
  Chile                192         216          9         9
  Colombia             401          61         -1        18
  Ecuador               28           4          0       (*)
  Peru                  61          15          0         0
  Venezuela            386          48         23        45
  Other                 22           0          1         0

 Central America     2,350         296        937     1,644
  Costa Rica            45          18          0        67
  Guatemala             36           7          0         0
  Honduras               4           2          0         0
  Mexico             2,229         256        937     1,567
  Panama                25           9          0         0
  Other                 12           3          0        10

 Other Western
   Hemisphere        1,014          36       -128        88
  Bahamas               24           0          0         0
  Barbados               0           0          0         2
  Bermuda                0           0          0        18
  Dominican
   Republic             24           0          0         0
  Jamaica               74           0          0         0
  Netherlands
   Antilles              0           0          0         0
  Trinidad and
   Tobago                1         -13          1         0
  United Kingdom
   Islands,
   Caribbean           883          50       -129        69
  Other                  7           0          0         0

Africa                 377         160         66        78

 Egypt                  78           9         18         7
 Nigeria                16           0          0         0
 South Africa          203          61         45        70
 Other                  79          90          3         2

Middle East             62          33         39       414

 Israel                 39          27         33       414
 Saudi Arabia           24         (*)          0         0
 United Arab
  Emirates               1           6          1         0
 Other                  -2           0          5         0

Asia and
  Pacific            6,999         773     10,724     8,511

 Australia           1,773         184        517       173
 China                 405          66        364       809
 Hong Kong             189          80         15       729
 India                 116          11        159         8
 Indonesia             136           9         18        74
 Japan               2,799         223      4,682     2,081
 Korea,
   Republic of         161          13        176       153
 Malaysia               87           6        696     1,722
 New Zealand            87          16         10        30
 Philippines           397          24          6       362
 Singapore             186          79      3,590     1,559
 Taiwan                434          22        117       590
 Thailand              188          38        375       211
 Other                  42           2         -1        10

International(1)       ...         ...        ...       ...

Addenda:

 Eastern
  Europe(2)            334         125         34       361
 European
  Union (15)(3)     31,523       6,553     21,199    11,627
 OPEC(4)               564          63         44       118

                                                     Finance
                                                     (except
                   Trans-                           depository
                   porta-              Wholesale    institu-
                    tion      Other       trade      tions),
                   equip-     manu-                 insurance
                    ment     factu-                  and real
                              ring                    estate

  All countries    43,471    59,355      56,446      21,441

Canada              9,389     6,527       4,992       4,088

Europe             22,786    36,550      35,424       8,006

 Austria              573       193         898          49
 Belgium              816     1,566       2,127         238
 Denmark               62       201       1,019          65
 Finland               38       289         580           4
 France             1,375     4,406       4,148         498

 Germany            9,050    11,733       3,714       1,069
 Greece                 0        49         163          67
 Ireland               38     1,742       1,376         191
 Italy                819     1,784       2,963         141
 Luxembourg             0       569         150          57
 Netherlands          862     3,158       3,633          70

 Norway                14        58         675        -223
 Portugal              39        61         626          29
 Spain              1,995     1,112       1,707         213
 Sweden                38       440       1,450         115
 Switzerland           22     1,431       3,029         293
 Turkey                60       766         373           9
 United Kingdom     6,658     5,542       6,186       4,989
 Other                329     1,448         606         131

Latin America
   and Other
   Western
   Hemisphere       9,237     8,136       4,840       2,183

 South America      6,523     6,171       2,982         587
  Argentina           404     1,497         468         170
  Brazil            5,469     3,854       1,773         159
  Chile                65       154         219         173
  Colombia            180       230         164          23
  Ecuador               0        15          22          10
  Peru                  0        43         101          14
  Venezuela           404       315         185          33
  Other                 0        63          52           5

 Central America    2,714     1,715         903        -272
  Costa Rica            0        57         203         (*)
  Guatemala             0        39          17           7
  Honduras              0        23           2          -5
  Mexico            2,714     1,521         549          19
  Panama                0        40         119        -295
  Other                 0        35          13           2

 Other Western
   Hemisphere           0       250         955       1,868
  Bahamas               0         4          51          -8
  Barbados              0         2         123         497
  Bermuda               0         0         556       1,514
  Dominican
   Republic             0       191          23           1
  Jamaica               0        37         121           6
  Netherlands
   Antilles             1        14        -121          -8
  Trinidad and
   Tobago               0         2           9          10
  United Kingdom
   Islands,
   Caribbean            0        11          57         -29
  Other                 0         2           2          -2

Africa                 33       694         294         178

 Egypt                  0         5          62           0
 Nigeria                0         0           5          12
 South Africa          33       491         169          80
 Other                  0       199          58          86

Middle East             0        75         103          89

 Israel                 0        51          32           1
 Saudi Arabia           0         0          12           4
 United Arab
  Emirates              0        21          54          37
 Other                  0         3           5          47

Asia and
  Pacific           2,026     7,372      10,792       6,898

 Australia          1,510     2,032       1,559       1,176
 China                105       191         301          60
 Hong Kong             18       349       1,993       1,382
 India                -10       161          71           6
 Indonesia             30        72          50          50
 Japan                 65     1,633       3,404       2,393
 Korea,
   Republic of         23       323         810          76
 Malaysia               0       460         201         207
 New Zealand           -9     1,539         228          52
 Philippines            0       124         178         155
 Singapore            149       164       1,324         538
 Taiwan               155     1,861         437         441
 Thailand              -5       137         194         328
 Other                 -5         1          42          32

International(1)      ...       ...         ...         ...

Addenda:

 Eastern
  Europe(2)           329     1,433         558         109
 European
  Union (15)(3)    22,361    32,847      30,741       7,796
 OPEC(4)              434       409         306         140

                                   Other
                      Services   industries

  All countries       44,292       29,866

Canada                 3,842        7,039

Europe                29,175       11,292

 Austria                 266          133
 Belgium               1,381          192
 Denmark                 304           58
 Finland                  46           70
 France                5,014        1,342

 Germany               3,819        1,882
 Greece                   63           20
 Ireland                  82          102
 Italy                 1,380          489
 Luxembourg               38           12
 Netherlands           2,822          467

 Norway                  479          112
 Portugal                179          196
 Spain                   650          503
 Sweden                  413          267
 Switzerland           1,242          186
 Turkey                   63           13
 United Kingdom       10,813        5,058
 Other                   122          189

Latin America
   and Other
   Western
   Hemisphere          3,419        5,127

 South America         2,303        3,987
  Argentina              400          667
  Brazil               1,450          532
  Chile                  125        1,119
  Colombia               118          254
  Ecuador                  6           36
  Peru                    14          852
  Venezuela              161          274
  Other                   31          254

 Central America         580          605
  Costa Rica             (*)          103
  Guatemala                4           24
  Honduras               (*)          147
  Mexico                 562          274
  Panama                  12           56
  Other                    2            2

 Other Western
   Hemisphere            536          535
  Bahamas                 20           28
  Barbados               120            0
  Bermuda                201           -4
  Dominican
   Republic                7          438
  Jamaica                 31           61
  Netherlands
   Antilles              (*)
  Trinidad and
   Tobago                  8           25
  United Kingdom
   Islands,
   Caribbean             134          -14
  Other                   23            1

Africa                   403          363

 Egypt                    40          -11
 Nigeria                   0            3
 South Africa            337           53
 Other                    25          318

Middle East              549           73

 Israel                  268            0
 Saudi Arabia            241           31
 United Arab
  Emirates                42           37
 Other                    -2            4

Asia and
  Pacific              6,904        5,691

 Australia             2,155        1,985
 China                    77          112
 Hong Kong               573        1,176
 India                    33           20
 Indonesia                24        1,079
 Japan                 2,620          501
 Korea,
   Republic of           353           73
 Malaysia                 57           33
 New Zealand             265          205
 Philippines              22          142
 Singapore               396          120
 Taiwan                  269          161
 Thailand                 31           48
 Other                    28           43

International(1)         ...          276

Addenda:

 Eastern
  Europe(2)               63          174
 European
  Union (15)(3)       27,269       10,791
 OPEC(4)                 465        1,478

(*) Less than $500,000.

(D) Suppressed to avoid disclosure of data of individual companies.

(1.) See footnote 1 to table 9.

(2.) See footnote 2 to table 20.1.

(3.) See footnote 3 to table 20.1.

(4.) See footnote 4 to table 20.1.

Key Terms

The following key terms are used to describe U.S. multinational companies (MNC'S) and their operations. For a comprehensive discussion of the terms and the concepts used, see Raymond J. Mataloni, Jr., "A Guide to BEA Statistics on U.S. Multinational Companies" SURVEY OF CURRENT BUSINESS 75 (March 1995): 38-55.

U.S. MNC'S

U.S. multinational company. The U.S. parent and its foreign affiliates.

U.S. parent. A person, resident in the United States, who owns or controls 10 percent or more of the voting securities, or the equivalent, of a foreign business enterprise. "Person" is broadly defined to include any individual, branch, partnership, associated group, association, estate, trust, corporation or other organization (whether organized or not under the laws of any State), or any government entity. If incorporated, the U.S. parent is the fully consolidated U.S. enterprise consisting of (1) the U.S. corporation whose voting securities are not owned more than 50 percent by another U.S. corporation and (2) proceeding down each ownership chain from that U.S. corporation, any U.S. corporation (including Foreign Sales Corporations located within the United States) whose voting securities are more than 50 percent owned by the U.S. corporation above it. A U.S. parent comprises the domestic operations of a U.S. MNC, covering operations in the 50 States, the District of Colombia, the Commonwealth of Puerto Rico, and all other U.S. areas.

U.S. direct investment abroad (USDIA). The ownership or control, directly or indirectly, by one U.S. resident of 10 percent or more of the voting securities of an incorporated foreign business enterprise or the equivalent interest in an unincorporated business enterprise.

Foreign affiliate. A foreign business enterprise in which there is U.S. direct investment, that is, in which a U.S. person owns or controls (directly or indirectly) 10 percent or more of the voting securities or the equivalent. Foreign affiliates comprise the foreign operations of a U.S. MNC over which the parent is presumed to have a degree of managerial influence.

Majority-owned foreign affiliate (MOFA). A foreign affiliate in which the combined ownership of all U.S. parents exceeds 50 percent. MOFA'S comprise the foreign operations of a U.S. MNC that are controlled by the parent or parents.

Operations of U.S. MNC'S

Gross product. The contribution to host-country gross domestic product, which is the goods and services produced by labor and property located in that country. Gross product, often referred to as "value added," can be measured as gross output (sales or receipts and other operating income plus inventory change) minus intermediate inputs (purchased goods and services). Alternatively, it can be measured as the sum of the costs incurred (except for intermediate inputs) and the profits earned in production. The gross product estimates presented here were prepared by summing cost and profit data collected in the annual and benchmark surveys of USDIA. For the derivation of the current-dollar estimates of gross product, see Raymond J. Mataloni, Jr., and Lee Goldberg, "Gross Product of U.S. Multinational Companies, 1977-91," SURVEY 74 (February 1994): 57.

Profit-type return. Profits from the production of goods and services in the current period. It is measured before income taxes, and it excludes nonoperating items (such as special charges and capital gains and losses) and income from equity investments.

Capital expenditures. Expenditures made to acquire, add to, or improve property, plant, and equipment (PP&E). PP&E includes land, timber, mineral and like-rights owned, structures, machinery, equipment, special tools, and other depreciable property; construction in progress; and tangible and intangible exploration and development costs. Changes in PP&E due to changes in entity--such as mergers, acquisitions, and divestitures--or to changes in accounting principles are excluded. Capital expenditures are measured on a gross basis; sales and other dispositions of fixed assets are not netted against them.

Employment. The number of full-time and part-time employees on the payroll at yearend. If a parent or affiliates' employment was unusually high or low because of temporary factors (for example, a strike) or large seasonal variations, the number that reflected normal operations or an average for the year was requested.

Origin of output. In this article, this term refers to the decomposition of a firm's output (sales plus inventory change) into the output that originates within the firm and the output that originates elsewhere and that is incorporated in the intermediate inputs purchased by the firm. The intermediate inputs can also be decomposed into those that are purchased locally and those that are purchased from abroad.

Source of change in gross product. In this article, this term refers to the decomposition of the year-to-year change in the gross product of U.S. parents and MOFA's into changes in operations, the addition of parents and MOFA's to the survey universe, the departure of parents and MOFA'S from the survey universe, and all other changes.

Data on U.S. Direct Investment Abroad

BEA collects two broad sets of data on U.S. direct investment abroad (USDIA): (1) Financial and operating data of U.S. parent companies and their foreign affiliates, and (2) balance of payments and direct investment position data.(1) This article presents the first set of data; the balance of payments and direct investment position data appear in the following articles in this issue of the SURVEY OF CURRENT BUSINESS: Russell B. Scholl, "The International Investment Position of the United States in 1998"; Douglas B. Weinberg, "U.S. International Transactions, First Quarter 1999"; and Rosaria Troia and Sylvia E. Bargas, "Direct Investment Positions for 1998: Country and Industry Detail."

BEA data on USDIX are classified by International Surveys Industry groups adapted from the Standard Industrial Classification (sic) Manual, 1987--the classification system used, until recently, as the standard for industry classification in Federal economic statistics. The sic system has been superceded by the 1997 North American Industrial Classification System (NAICS). BEA has developed new ISI codes that are based on the NAICS, and for USDIA, these new codes will be first used for the data collected in the 1999 benchmark survey.

Financial and operating data.--The data on the overall operations of U.S. parent companies and their foreign affiliates are collected in BEA'S annual and benchmark surveys of USDIA. The data cover balance sheets and income statements, employment and compensation of employees, research and development expenditures, sources of finance, and trade in goods. In addition, the gross product of U.S. parent companies and their majority-owned foreign affiliates is estimated from the data reported in these surveys.

Except in benchmark survey years, these data cover only nonbank U.S. multinational companies (MNC'S) because U.S. MNC'S in banking (1987 Standard Industrial Classifications 6011, 602, 602, 606, 6712, and 608) are exempt from reporting. All the financial and operating data are on a fiscal year basis. The data cover the entire operations of U.S. parent companies and their foreign affiliates, irrespective of the percentage of U.S.-parent ownership.

Balance of payments and direct investment position data.--These data, covering bank and nonbank U.S. MNC'S, are collected in the quarterly survey of USDIA. The data cover the cross-border transactions and positions between U.S. parents and their foreign affiliates, so these data focus on the parent's share, or interest, in the affiliate rather than on the affiliate's size or scale of operations. The major items included in the U.S. balance of payments are direct investment capital flows, direct investment income, royalties and license fees, and other services transactions between U.S. parents and their foreign affiliates.

(1.) For a comprehensive discussion of these two sets of data, see Raymond J. Mataloni, Jr., "A Guide to BEA Statistics on U.S. Multinational Companies" Survey 75 (March 1995): 38-55. This guide is available on BEA'S Web site; go to <www.bea.doc.gov> and click on International, Articles.

Data Availability

This article presents a summary of the preliminary estimates of the worldwide operations of U.S. multinational companies (MNC'S) from the 1997 Annual Survey of U.S. Direct Investment Abroad and the final estimates from the 1996 Annual Survey of U.S. Direct Investment Abroad. More detailed estimates, including the gross product estimates, will be available later this year on BEA'S Web site, on diskettes, and in printed publications; availability will be announced on the inside back cover of the SURVEY or CURRENT BUSINESS.

The most recent benchmark survey results, for 1994, are available on SEA'S Web site, on diskette, and in the publication U.S. Direct Investment Abroad: 1994 Benchmark Survey, Final Results.

Detailed estimates of U.S.-MNC operations for 1983-93 and 1995 and preliminary estimates for 1996 are available on SEA'S Web site (go to <www.bea.doc.gov>, and click on Catalog of Produas) and on diskettes.

For information on the diskette products, see the Catalog of Products, or call 1-800--704-0415 (outside the United States, call 202-606-9666) for a copy of the catalog.

For information on publications, see the Product Guide of the International Investment Division on the Web site, or write to the International Investment Division, SE--50, Bureau of Economic Analysis, Washington, DC 20230. Among the recent publications is a collection of SEA studies on international direct investment; see the inside back cover of the SURVEY.

Acknowledgments

The survey from which the estimates were derived was conducted under the supervision of James Y. Shin with contributions by Joan c. Adams, Barbara S. Clark, Margo R. Collier, Charles R. Gravitz, Jeanne Hicks, Barbara K. Hubbard, Christine J. Lee, Nefertari I. Lee, Marcia S. Miller, Juanita L. Mortimer, Pearl Rivers, Nancy F. Steffen, Rubena I. Thomas, and Dwayne Torney.

Computer programming for data estimation and the generation of data tables was provided by Arnold Gilbert with the assistance of Fritz Mayhew and Diane Young.

(1.) The year 1989 is used for comparison because it was a benchmark survey year for U.S. direct investment abroad and because before 1994, gross product estimates (which are the basis for much of the analysis in this article) were only available for U.S. parents in the years covered by benchmark surveys. In addition, in 1989, like in 1997, economic growth continued in the United States and in most major host countries.

This article presents highlights from the 1996 and 1997 annual surveys. More detailed estimates will be available later this year (see the box "Data Availability" on page 15).

(2.) The average real GDP growth rate for major host countries is a weighted average covering host countries that are members of the Organisation for Economic Co-Operation and Development; these countries hosted roughly 80 percent of MOFA gross product in 1997.

(3.) The preliminary 1996 estimates were published in Raymond J. Mataloni, Jr., "U.S. Multinational Companies: Operations in 1996" SURVEY OF CURRENT BUSINESS 78 (September 1998): 47-73.

(4.) In most of this section, the examination of the foreign operations of U.S. MNC'S uses the data for MOFA'S rather than data for all foreign affiliates, because parents and MOFA'S are conceptually under U.S. managerial control (other foreign affiliates may be under the control of foreign owners) and because the necessary data items for this analysis are collected only for MOFA'S.

Although MOFA'S and U.S. parents are under the control of one or more U.S. parents, in some cases the U.S. parent is, in turn, under the control of a foreign parent company; in 1997, U.S. parents that were ultimately controlled by foreign parents accounted for n percent of all U.S. parents and for 8 percent of their gross product.

(5.) In 1997, the weighted average U.S.-dollar price of the currencies of 23 major host countries (in terms of MOFA gross product) fell 7.8 percent. This decline lowered the dollar value of MOFA gross product by a similar amount when the data reported to BEA in dollars was translated from foreign currencies as was generally necessary.

The average rate of price inflation in these host countries was derived as a weighted average (in terms of MOFA gross product), using, in most cases, the GDP implicit price deflators for the countries.

(6.) MNC-associated trade accounts for an even larger share of U.S. trade in goods if U.S. businesses owned by foreign MNC'S are included. In 1996--the latest year for which data are available--U.S. affiliates of foreign MNC'S accounted for 22 percent of U.S. exports of goods and 32 percent of U.S. imports of goods. As noted in footnote 4, however, these U.S. affiliate shares overlap the U.S.-MNC shares because some U.S. parents belong to both groups. In 1997, trade by U.S. parents that were also U.S. affiliates of foreign companies accounted for 13 percent of MNC-associated exports and 26 percent of MNC-associated imports. (See the addenda to table 4.)

(7.) In the 1994 benchmark survey, exports and imports of U.S. parents and majority-owned foreign affiliates were desegregated into 12 product categories on the basis of the Standard International Trade Classification, Revision 2, United Nations Statistical Papers, ser. M, no. 34 (New York: United Nations, 1975).

(8.) "Other" industries consists of agriculture, forestry, and fishing; mining; construction; transportation; communication; electric, gas, and sanitary services; and retail trade.

(9.) Each U.S. parent is classified in the industry that accounts for the largest portion of its sales or, for holding companies, its total income. Many U.S. parents are involved in a variety of business activities; changes in the mix of these activities can cause a parent's industry classification to change, but reclassifications due to minor or temporary shifts in industry mix are avoided. A parent is reclassified by industry only if the change in the primary activity from the prior year is significant or if the change has occurred for 2 successive years.

The change of a parent company's industry from manufacturing to wholesale trade is related to the percentage of that parent's output originating within the parent itself. Parents classified in manufacturing are primarily engaged in the transformation of materials or substances into new products, and parents classified in wholesale trade are engaged in selling merchandise produced by others to businesses.

(10.) Generally, at the all-industries level, the estimates of U.S.-parent gross product are conceptually consistent with the estimates of gross product for all U.S. businesses in the national income and product accounts. However, for individual industries, inconsistencies may result from differences in the basis for the industrial distribution of the estimates. The industrial distributions of gross product for all U.S. businesses are based on data collected from establishments, which are classified by the principal product or service produced at each establishment, whereas the industrial distributions of U.S.-parent gross product are based on data collected from enterprises (companies), which are classified by the principal product or service produced by all of their establishments combined. Because the establishments of large companies usually are classified in several industries, the distributions of data by industry of establishment can differ significantly from those by industry of enterprise. In this article, U.S.-parent gross product as a share of the gross product for all private U.S. businesses is computed only at the highly aggregated level shown in table 7.

(11.) The local content of U.S.-parent output is overstated to the extent that domestic purchases include the services imported by the parents themselves and the imported goods and services that are embodied in parents' purchases from domestic suppliers. (These items were not reported separately and thus could not be identified and included in foreign content.)

(12.) According to this theory, these advantages, such as superior production or marketing techniques, are necessary so that MNC's can overcome the various barriers to investing abroad, such as foreign languages and unfamiliar business environments.

For a discussion of this theory, see Stephen H. Hymer, The International Operations of National Firms (Cambridge, MA: MIT Press, 1976). For a recent appraisal of the theory, see John H. Dunning and Alan M. Rugman, "The Influence of Hymer's Dissertation on the Theory of Foreign Direct Investment" in The Theory of Multinational Enterprises, vol. 1 (Cheltenham, United Kingdom: Edward Elgar Publishing, 1996).

(13.) The dollar-denominated measures of the operations of affiliates in the two largest economies in the area--Mexico and Brazil--were affected by changes in the host-countries' currencies. From 1989 to 1997, the Mexican peso lost over two-thirds of its value against the U.S. dollar, and Brazil introduced a new currency, the real. The effects of these changes cannot be precisely measured; however, a devaluation of host-country currency generally depresses the U.S.-dollar value of affiliate sales, but it has no direct effect on the dollar value of U.S. exports to affiliates, so that, all else equal, the U.S.-content share of affiliate output is raised.

The effect on U.S. content may be mitigated to the extent that, after a devaluation, MOFA'S substitute locally purchased goods for more expensive U.S. goods. However, it is unlikely that such substitution is significant, at least in the short run, because locally produced substitutes are not usually readily available.

(14.) For a summary of the methodology used to derive the real gross product estimates and for the 1982-88 and 1990-93 estimates, see Raymond 1. Mataloni, Jr., "Real Gross Product of U.S. Companies' Majority-Owned Foreign Affiliates in Manufacturing," SURVEY 77 (April 1997): 8-17.

(15.) The real gross product grew much faster (8 percent) than the current-dollar gross product (2 percent) in 1997. The slower growth in the current-dollar gross product reflected the dampening effect of the appreciation of the U.S. dollar. (See also footnote 5.)3