TY  - JOUR
AU  - Kravis,Irving B.
AU  - Lipsey,Robert E.
TI  - Production and Trade in Services by U.S. Multinational Firms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2615
PY  - 1988
Y2  - June 1988
UR  - http://www.nber.org/papers/w2615
L1  - http://www.nber.org/papers/w2615.pdf
N1  - Author contact info:
Irving Kravis
Department of Economics
University of Pennsylvania
3718 Locust Walk/CR
Phiadelphia, PA 19104

Robert E. Lipsey
NBER
365 Fifth Avenue, Suite 5318
New York, NY 10016-4309
Tel: 212/817-7961
Fax: 212/817-1597
E-Mail: N/A user is deceased
AB  - Direct investment in foreign countries by U.S. goods industries represents a response to differences in labor costs to a much greater extent than the more rapidly growing investment by service industries. The latter seem to be less able to allocate different types of production to different areas of the world, probably because services are less tradable than goods; they must more often be produced where they are consumed or consumed where they are produced. Therefore, while direct Investment abroad in goods industries represents an allocation of production that Increases the demand for high-skill labor and for R & D input in the U.S. and decreases the demand for low-skill labor, direct investment in service industries, while it increases a firm's share of foreign markets, is likely to have little effect on the firm's demand for labor in the U.S. or on the composition of its labor force.
ER  -