Olga Besedina, student
University of Washington
Tacoma city, USA

U.S. multinational companies are, first and foremost, American companies. They perform large shares of America’s productivity-enhancing activities – capital investment, research and development, and trade – that lead to jobs and high compensation. The central role of U.S. multinational companies in underpinning U.S. economic growth and job creation is even more important today as the United States seeks to address the challenges presented by the ongoing deep recession. Strong U.S. multinational companies that are able to compete effectively in foreign markets will be better positioned to help restore American economic growth.
The purpose of the study is to investigate the influence of multinational corporations on the U.S. economy.
The global engagement of U.S. multinationals has long supported American jobs and economic growth. These contributions are especially critical now, as the United States struggles to emerge from the world financial crisis and deep recession. From the start of the recession in late 2007 to early 2010, 8.4 million payroll jobs in the United States – or 6.1 percent – had been lost. These job losses were entirely in the private sector – 8.5 million private-sector payroll jobs had disappeared, a remarkable 7.4 percent of the late-2007 total.
The major policy challenge facing the United States today is not just to create jobs of any kind. Rather, it is to create high-paying private-sector jobs that can foster sustained long-term economic growth. It is U.S. multinational firms that tend to create precisely these high-paying jobs involving knowledge creation, capital investment and exporting. To climb out of the great recession to sustainable economic growth, the U.S. economy needs to create millions of the kinds of jobs that U.S. multinationals tend to create. Accordingly, U.S. economic policy on all fronts should be encouraging job growth in these important firms.
U.S. parent companies perform large shares of America’s productivity-enhancing activities that lead to high average compensation for American workers.
Output: Parent companies accounted for 24.3 percent of all private-sector output – nearly $2.6 trillion. Capital Investment: Parent companies purchased $482.5 billion in new property, plant and equipment – 29.4 percent of all private-sector capital investment.
Exports: Parent companies exported $515.4 billion in goods to the rest of the world. This constituted nearly half – 45.2 percent – of the U.S. total. Research and Development: To discover new products and processes, parent companies performed $200.4 billion of research and development.
All these productivity-enhancing activities contribute to larger-than-average paychecks for the millions of employees of U.S. multinationals.
Parent companies employed more than 22 million U.S. workers. This was 19.1 percent of total private-sector payroll employment. Total compensation at U.S. parent companies was more than $1.39 trillion – a per-worker average of $63,272. This average was $9,957, fully 18.7 percent above the rest of the private sector average of $53,315.
U.S. parents purchased a total of $6.03 trillion in intermediate inputs. Of this total, 88.9 percent – or $5.36 trillion – was bought from other companies in the United States. The worldwide operations of U.S. multinational companies are highly concentrated in America in their U.S. parents, not abroad in their foreign affiliates.
Employment: Parent companies account for 68.7 percent of worldwide employment of U.S. multinationals – 22 million parent workers versus 10 million at affiliates. This translates into a ratio of about 2.2 U.S. employees for every one affiliate employee.
Output: Parent companies account for 69.8 percent of worldwide output (in terms of value added) of U.S. multinationals – almost $2.6 trillion versus about $1.1 trillion.
Capital Investment: Parent companies undertake 74.1 percent of worldwide capital investment by U.S. multinationals – $482.5 billion versus just $169.1 billion. For every $1 in affiliate capital expenditures, parents invested $2.85 in the United States.
Research and Development: Parent companies perform 85.1 percent of worldwide research and development by U.S. multinationals – $200.4 billion versus just $35.0 billion, or $5.72 in parent knowledge discovery for every $1 by affiliates.
U.S. parent companies perform large shares of America’s productivity-enhancing activities that lead to high average compensation for American workers. 2007 data show the following:
Employment: Parent companies employed more than 22 million workers in the United States. This was 19.1 percent of total U.S. private-sector payroll employment.
Output: Parent companies accounted for 24.3 percent of all U.S. private-sector output (measured in terms of gross domestic product) – nearly $2.6 trillion.
Capital Investment: Parent companies purchased $482.5 billion in new property, plant and equipment – 29.4 percent of all U.S. private-sector capital investment. Exports: Parent companies exported $515.4 billion of goods to the rest of the world. This constituted nearly half – 45.2 percent – of the U.S. total.
Research and Development: To discover new products and processes, parent companies performed $200.4 billion of research and development. This was 74.4 percent of the total R&D performed by all U.S. companies.
All these productivity-enhancing activities contribute to larger-than-average paychecks for the millions of employees of U.S. multinationals.
Total compensation at U.S. parent companies was more than $1.39 trillion – a per-worker average of $63,272. This average was $9,957, fully 18.7 percent above the rest of the private sector average of $53,315.
The worldwide operations of U.S. multinational companies are highly concentrated in America in their U.S. parents, not abroad in their foreign affiliates. 2007 data show the following:
Employment: U.S. parents account for 68.7 percent of worldwide employment of U.S. multinationals – 22 million parent workers versus 10 million at affiliates. This translates into a ratio of about 2.2 U.S. employees for every one affiliate employee.
Output: U.S. parents account for 69.8 percent of worldwide output (in terms of value added) of U.S .multinationals – nearly $2.6 trillion versus about $1.1 trillion.
Capital Investment: U.S. parents undertake 74.1 percent of worldwide capital investment by U.S. multinationals – $482.5 billion versus just $169.1 billion. For every $1 in affiliate capital expenditures, parents invested $2.85 in the United States.
Research and Development: U.S. parents perform 85.1 percent of worldwide research and development by U.S. multinationals – $200.4 billion versus just $35.0 billion, or $5.72 in parent knowledge discovery for every $1 by affiliates.
Today, the global competitiveness of U.S. multinationals depends as much on profitability of foreign affiliates as it does profitability of parents.
In 2007, the net income of all foreign affiliates was $765.2 billion. Total U.S. parent net income that year was just $701.3 billion, which means that foreign affiliates accounted for more than half – 52.2 percent – of the worldwide net income of U.S. multinationals.
Indeed, U.S. multinationals across many industries have recently offset slowing U.S. sales and profits with stronger sales and profit growth outside America. Affiliate success abroad can help sustain key U.S. parent activities like paying workers, funding research and development, and financing capital investment – especially at times like today when the domestic U.S. economy continues to struggle.
So, this competitive success of foreign affiliates supports the global competitiveness of U.S. multinationals, all of which in turn rebounds to operations of these companies everywhere – including in the United States. Indeed, a company that is not globally competitive and profitable over the long term will not be able employ any workers – in the United States or abroad.