Globalization: Myth or Reality?
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Despite the tremendous growth in international trade, the proportion of
firms that produce goods outside their home borders is not as great as often
perceived, according to the National Bureau of Economic Research. Mostly
it is a myth.
- Output by multinationals outside their home countries has grown slightly
since the 1970s, but amounted to only 7 percent of world output by 1990.
- Foreign operations owned by American firms contributed about 3 percent
of global economic output at their peak in 1977 -- but declined to 2 percent
by 1993.
- The U.S., Japan, Sweden and Germany account for more than 50 percent
of all international investment.
- The share of international production has increased for the latter
three since the 1970s, but decreased for the U.S.
Relative to manufacturing, the service sector has grown more rapidly in
recent years. Given the fact that service companies are much less likely
than manufacturers to produce overseas, this has tempered the trend to move
abroad.
Source: Perspective, "Globalization or Globaloney," Investor's
Business Daily, August 16, 1996.
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