Within Japanese multinational firms, parent exports from Japan to a foreign region are positively related to production in that region by affiliates of that parent, given the parent's home production in Japan and the region's size and income level. This relationship is similar to that found for Swedish and U.S. multinationals in parallel studies. A Japanese parent's worldwide exports tend to be larger, relative to its output, the larger the firm's overseas production. In this respect also, Japanese firms resembled U.S. multinationals. A Japanese parent's employment, given the level of its production, tends to be higher, the greater the production abroad by the firm's foreign affiliates. Japanese firms' behavior in this respect is similar to that of Swedish firms, but contrasts with that of U.S. firms. U.S. firms appear to reduce employment at home, relative to production, by allocating labor-intensive parts of their production to affiliates in developing countries. Swedish firms seem to allocate the more capitalintensive parts of their production to their foreign affiliates, mostly in high-wage countries. We conclude that in Japanese firms, supervisory and ancillary employment at home to service foreign operations outweighs any allocation of labor-intensive production to developing countries.

This paper examines the relationship between trade propensities and foreign ownership shares in Indonesian manufacturing in 1992 and 1994. Foreign plants had relatively high trade propensities, and plants with high foreign ownership shares had the highest export propensities. Differences in import propensities among foreign ownership groups were relatively small. It might be argued that trade propensities determine foreign ownership shares in Indonesia, which historically waives foreign ownership restrictions for firms that export much of their output. However, this paper argues that causation runs from foreign ownership shares to trade propensities, because multinational firms have strong incentives to restrict access by uncontrolled affiliates to their international marketing networks, and because the relationship persists even when the effects of policy distortions are accounted for. Correspondingly, ownership restrictions that discriminate among foreign ownership groups are likely to reduce the exports of foreign multinational affiliates, but to have a much weaker effect on imports.

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 labour 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-labour intensity, R&D intensity, profit rates and import propensities, but relatively low shares of labour 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 US firms tended to be larger and characterized by relatively high average labour productivity, capital intensity, profitability and export propensities, but relatively low shares of labour compensation in value added compared to Japanese and other Asian firms.

dispute this view, asserting that internalization is the key necessary condition for a firm to become a MNC. However, all agree that MNCs tend to possess intangible assets in relatively large amounts as evidenced by relatively high technology and advertising intensity compared to non-MNCs. 2 See, for example, Caves 2007 (ch. 3, 7, 9) and Dunning (1993, ch. 7-9, 11). 3 See Stretton and Orchard (1994) for a survey of the theoretical literature on this topic. See Jefferson (1998) for an application of the theory to issues raised by China's SOEs.