Globally engaged U.S. companies are fundamentally American companies. As a group, they have long performed large shares of America’s productivity-enhancing activities that create tens of millions of well-paying jobs. This group, like much in America, is richly diverse in size, employment, industry and customers.
• Multinational companies operating in the United States in 2010 employed 28.1 million Americans, performed $253.8 billion in research and development (r&D), invested $587.8 billion in capital, and bought from U.S. suppliers more than $8.0 trillion in goods and services.
• The worldwide operations of U.S.-headquartered multinational companies are highly concentrated in America in their U.S. parents, not abroad in their foreign affiliates: In 2010, U.S. parents accounted for 67.3 percent of their companies’ worldwide employment, 72.5 percent of capital investment, and 84.3 percent of R&D.
• Today about 26 percent of U.S.-based multinational companies have U.S. parent companies that are classified by the U.S. government as small or medium-sized businesses because they employ fewer than 500 people.
To remain dynamic and innovative, U.S. companies must engage with the world, and a primary motive for expanding abroad is to meet the rapid growth in global demand. With more than 95 percent of the world’s consumers living outside the United States, the success of American business increasingly hinges on venturing into the global marketplace for new customers.
• From 1991 through 2011, growth in U.S. gross domestic product (GDP) averaged about 2.4 percent. This growth was slower than what much of the world achieved over this generation: averages of 3.4 percent for the overall world, 5.0 percent for emerging and developing countries, 6.6 percent in India, and a remarkable 10.4 percent in China. The U.S. share of world GDP fell from 32.3 percent in 2001 to just 21.6 percent in 2011.
• Because foreign markets are growing faster than the U.S. market, for U.S.-based multinational companies output growth has been much faster abroad than at home. Over 1999–2009, value added across all their foreign affiliates grew at an annual average of 7.0 percent — versus an annual average of just 1.7 percent in their U.S. parents. average affiliate output growth was 8.4 percent in Brazil, 22.8 percent in China, 24.9 percent in Eastern Europe and 26.8 percent in India.
• More than 90 percent of what foreign affiliates of U.S.-based multinationals produced abroad in 2009 was sold abroad, rather than being imported back to America.
Another essential reason why U.S. companies venture abroad is to refine operations by creating and integrating into global supply networks. Their success in America increasingly hinges on expanding into the world for creative new ways to produce goods and services.
• The cumulative share of foreign value added in world exports rose by about 14 percentage points from 1970 to 2009, doubling from 13 percent to about 27 percent. The foreign content of U.S. exports tripled, rising from about 7 percent in 1970 to 22 percent in the late 2000s.
• From 1989 to 2009, the share of intermediate inputs in total sales rose for both the U.S. and foreign operations of U.S.-based multinationals: from 66.6 percent to 73.3 percent for U.S. parents and from 71.7 percent to 76.5 percent for foreign affiliates.
Global demand growth and global supply networks tend to create american jobs. Expansion abroad by U.S. multinational companies tends to complement their U.S. operations. Globally engaged U.S. companies also create jobs in america in other companies — including in their small-business suppliers.
• The U.S. parent enterprise of the typical U.S. multinational buys more than $3 billion in inputs (goods and services) from more than 6,000 American small businesses, which is more than 24 percent of its total input purchases.
• One study of all U.S. multinationals in manufacturing from 1982 to 2004 found that a 10 percent increase in foreign-affiliate employee compensation causes an average response of a 3.7 percent increase in that affiliate’s U.S. parent employee compensation.
• From 1999 through 2009, the percentage decline in U.S. manufacturing jobs was larger among those companies that were not part of a U.S.-based multinational company — 40.7 percent — than among the U.S. parents in U.S. manufacturing — 23.9 percent.
• From 1999 through 2009, U.S. parent employment in services rose by 1.26 million.