PUBLICATIONS & REPORTS

PUBLICATIONS & REPORTS

Comparisons of Foreign Multinationals and Local Firms in Asian Manufacturing Over Time

Author Eric D. Ramstetter
Date of Publication 1998. 11
No. 1998-18
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Contents Introduction

This paper first shows that shares of foreign multinational corporations (MNCs) in the manufacturing sectors of five Asian host economies (Hong Kong, Indonesia, Malaysia, Singapore, and Taiwan) were generally large in terms of exports, small in terms of employment, and moderate in terms of production. Correspondingly, the average product of labor and export propensities were often significantly higher in foreign MNCs than in local firms. In addition, foreign MNCs tended to be relatively large and to have relatively high average capital productivity, capital intensity, skilled-labor intensity, R&D intensity, profit rates, and import propensities, but relatively low shares of labor compensation in value added, and these differences were also statistically significant in many cases. Differences between wholly- or heavily-foreign plants and foreign plants with lower foreign ownership shares were also significant in many cases and generally in the same direction as the differences between MNCs and local plants noted above. Differences among MNCs by foreign source were generally small and insignificant in Hong Kong. In Singapore, European and U.S. firms tended to be larger and characterized by relatively high average labor productivity, capital intensity, profitability, and export propensities, but relatively low shares of labor compensation in value added compared to Japanese and Other Asian firms.