TY  - JOUR
AU  - Riker,David A.
AU  - Brainard,S. Lael
TI  - U.S. Multinationals and Competition from Low Wage Countries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5959
PY  - 1997
Y2  - March 1997
UR  - http://www.nber.org/papers/w5959
L1  - http://www.nber.org/papers/w5959.pdf
M2  - featured in NBER digest on 1997-09-01
AB  - It is often argued that the globalization of production places workers in industrialized countries in competition with their counterparts in low wage countries.  We examine a firm-level panel of foreign manufacturing affiliates owned by U.S. multinationals between 1983 and 1992 and find evidence to the contrary.  Affiliate activities in developing countries appear to be complementary to rather than substituting for affiliate activities in industrialized countries.  Workers do compete across affiliates, but the competition is between affiliates in countries with similar workforce skill levels.  The results suggest that multinationals with affiliates in countries at different stages of development decompose production across borders into complementary stages that differ by skill intensity. The implied complementarity of traded intermediate inputs has important implications for the empirical debate over trade, employment, and wages.
ER  -