OECD Development Centre Working Papers

The OECD Development Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative policy solutions to emerging global issues and development challenges. This series of working papers is intended to disseminate the OECD Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language.

English, French

Conflict or Indifference

US Multinationals in a World of Regional Trading Blocs

Managers of US multinational corporations generally respond with a "big yawn" to warnings that the world trading system might evolve into a set of protectionist regional blocs.

Their lack of fear is justified, since both their past strategies and their more recent, supposedly global strategies have resulted principally in regional systems of production facilities. The gains from manufacturing and trading among more widely dispersed facilities seem lower than the costs of managing such a complex system. As a result, US multinationals' trade in manufactures stays mostly within the region of production, and would be little affected by the emergence of powerful trading blocs.

The strategies of most US multinationals would be threatened only if regional blocs restricted foreign investment. This seems unlikely, given the history of regional trade groups, and restrictions on new investment would probably harm Japanese competitors more than US multinationals, which have already established ...


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