THE EXPORT PERFORMANCE OF U.S. AND SWEDISH MULTINATIONALS

Abstract

While the U.S. and Sweden both lost more than 20 percent of their shares of world and developed countries’ exports of manufactures between the mid‐1960s and mid‐1980s, the export shares of their multinational firms stayed fairly stable or even increased. The multinationals raised the proportion of their worldwide exports that they supplied from their overseas affiliates. These developments suggest that the declines in the trade shares of the US. and Sweden were not due mainly to deterioration in the innovativeness or inventiveness of American and Swedish firms, their management ability or their technological capabilities, but rather to economic developments in the firms’ home countries.The finding that firms have done better as exporters than their home countries is strengthened when we look at different industry groups. In both the U.S. and Sweden, and in all industry groups, with one exception, the multinationals’ export shares increased relative to those of their home countries. The margins were often wide, and were mostly larger for Swedish firms than for U.S. firms.Part of the explanation for the growth of each country's exports and those of its multinationals is the initial composition of exports, or the comparative advantages of the countries and their firms. These were skewed, in the mid‐1960s, to industries that were to enjoy rapid growth in the next decade or so. Despite these initial comparative advantages, the exports of both countries fell far behind world export growth.The comparative advantages of both countries’ multinationals were even more biased toward fast‐growth industries than those of the countries. That fact partly accounted for the better export performance of the multinationals relative to their home countries, but the multinationals outperformed their countries within each industry as well as for manufacturing as a whole.