According to Slaughter, U.S. parent companies account for nearly 25 percent of all private-sector output (measured in terms of GDP), or more than $2.5 trillion.
"U.S. multinational companies are, first and foremost, American companies," noted Slaughter. "These companies strengthen the American economy through a combination of their domestic activity and their international engagement, which together stimulate capital investment, research and development, and trade. These productivity-enhancing activities, in turn, lead to more job opportunities and to larger average paychecks for millions of American workers."
Slaughter contends that the central role U.S. multinational companies play in underpinning U.S. economic growth and jobs creation is even more important today as the United States addresses challenges presented by the current economic environment.
"Strong U.S. multinational companies that are able to compete effectively in foreign markets will be better positioned to help lead America out of recession," said Slaughter. "By preserving and enhancing the health, vitality and competitiveness of their worldwide operations, U.S. multinational companies can help stem job losses in the United States and, eventually, hire more American workers."
Additionally, the study found that U.S. multinationals maintain a large presence in America, both relative to the overall domestic economy and relative to the size of foreign affiliates. The worldwide operations of U.S. multinational companies are highly concentrated in America, not abroad in their foreign affiliates. Domestic parent companies accounted for nearly 70 percent of worldwide employment of U.S multinationals, that is, almost 22 million U.S. workers versus 9.5 million at affiliates. This translates into a ratio of nearly 2.3 U.S. employees for every one affiliate employee and represents about 19 percent of total private-sector payroll employment.
Slaughter argues that this global connection has allowed U.S. multinationals to tap into diverse international markets, which have experienced faster growth throughout the past generation than the United States. This foreign-affiliate activity, he believes, helps drive increased domestic employment, worker compensation and capital investments.
"Being globally engaged requires U.S. multinationals to establish operations abroad and expand and integrate these foreign activities with their U.S. parent activities," said Slaughter. "The idea that this international expansion tends to ‘hollow out’ domestic operations is incorrect. Rather, the success of American operations of these companies depends on success abroad and vice versa. Ultimately, it’s the linkage and right balance of domestic and international operations that increases productivity of these corporations and promotes a higher standard of living for all Americans."
Foreign affiliates are located primarily in high-income countries that in many ways have economic structures similar to the U.S., not in low-income countries. Affiliates in high-income countries accounted for 79 percent of total affiliate output.
