Multinationals: The “Who Is Us” Debate
In a 1993 meeting with fellow cabinet members, U.S. Trade Representative Mickey Kantor reportedly asked "Who are my clients American companies or American workers?" The question actually had nothing to do with traditional labor-management conflicts and everything to do with the complex issue of determining corporate nationality in an increasingly globalized economy. What lay behind Ambassador Kantor's question was the concern that American corporations have become so multinational or "globalized" in terms of where they manufacture and conduct research that they are no longer truly American. Some of America's leading electronics companies firms like IBM, Texas Instruments, Hewlett-Packard, and Motorola employ hundreds of software engineers in Bangalore, India. Is what is good for these companies good for America or good for India? Questions have also arisen about just how foreign are the foreign-owned U.S. subsidiaries that are becoming larger and larger contributors to the U.S. economy. A plant in Kentucky produces Toyota Camrys. A plant in Tennessee churns out Nissan Altimas. Are not these subsidiaries, for all intents and purposes, American companies? This globalization trend is more than just a topic of debate among business economists. It carries significant public policy implications. Should U.S. trade, technology, and tax policies favor U.S. firms over foreign-owned U.S. subsidiaries? How should foreign investment in the United States be treated? Should the U.S. government be in the business of helping U.S. firms invest overseas? And should foreign companies be allowed to participate in U.S. taxpayer-funded technology programs? These questions are enormously complex. Nonetheless, a review of the relevant economic data and a thorough analysis of the public policy implications produce the following conclusions. First, U.S. multinational corporations remain significantly more "national" than "multi" and are major engines of growth for the U.S. economy. Second, many foreign-owned U.S. subsidiaries are playing an increasingly important role in our economy; their presence should be welcomed. But financial, legal, cultural, and management-accountability realities will differentiate many foreign-owned U.S. subsidiaries from U.S. companies for the foreseeable future.