A Method for Improved International and Intertemporal Comparisions of U.S. Multinational Companies' Overseas Gross Product in Manufacturing

Interest in the effects of globalized production on national economies has been heightened in recent years by the rapid growth in direct investment. Research in this area is, however, often limited by the scarcity of relevant data. Even when relevant data exist, comparison of the data across countries and across time is subject to serious measurement error related to different price and exchange-rate conditions. This paper, by Raymond J. Mataloni Jr., presents a method developed by the United States Bureau of Economic Analysis for removing the valuation effects on measures of the foreign production (or gross product) of US multinational companies. The method adjusts the conventional current-dollar market-exchange-rate-based measure, using host-country deflators and purchasing-power-parity exchange rates. Key words: Multinational companies, gross product, purchasing-power-parity exchange rates, globalization, international comparisons