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U.S. Energy Security and Regional Business
Alan M. Rugman
L. Leslie Waters Chair and Director
Indiana University’s Center for International Business Education and Research
Draft: May 12, 2004

Abstract

There is now robust empirical evidence that the great majority of international business is conducted within the regional blocks of North America, Asia, and the EU. Approximately 60% of world trade is intra-regional, and the world’s 500 largest firms average over 70% of their sales in their home region. In terms of energy the picture is also regional. Indeed, the United States relies on oil produced in all of the Persian Gulf for only 12% of its entire oil consumption. The United States obtains nearly 60% of its oil from NAFTA. Clearly the United States can develop a strategy of energy self-sufficiency if it wishes. If it does so, responsibility for the Middle East would need to shift to other G8 members who have a greater long-term energy dependency on Middle Eastern oil.

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Introduction

In Spring 2003 the war in Iraq illustrated the military power of the U.S. hegemony, and the inability of the G8 and the United Nations to reach a consensus on the matter. The G8 fractured with only the U.K. supporting the United States in Iraq to any significant military extent. Italy was a strong ally and Japan offered some qualified support. In contrast, France and Germany were strongly opposed to the U.S. action while Canada did not offer its usual support for U.S. foreign policy. Russia was also opposed to the U.S. led war in Iraq, so the G8 divided with four members being strongly opposed and the other four in support of the military option to varying degrees.

Since the initial Iraq war concluded in April 2003, these divisions have remained with France, Germany, and Russia unable to reach an agreement with the United States over the restructuring of Iraq, and with the United Nations also still out of the picture. The new Canadian Prime minister has signaled somewhat closer ties to the United States, but no military support has been forthcoming. Other countries involved in the “coalition of the willing” have been withdrawing, principally Spain in April 2004. Does the fissure over Iraq spell the end of the G8? In this paper the issue is examined for an economic viewpoint with particular emphasis on U.S. energy security and the nature of regional business activity.

The result of the breakdown of the traditional G8 spirit of co-operation and mutual support on security issues and terrorism (due to the Iraq war) will likely be to reinforce regional economic integration policies at the expense of multilateral institutions, such as the United Nations and the W.T.O. The United States already exports 37% of its goods and services to its NAFTA partners, and its trade with Canada alone exceeds U.S. exports to all 15 member states of the EU. In terms of energy, the United States already obtains the vast majority of its oil and gas from the Americas, and this regional self-sufficiency is likely to increase as security concerns remain.

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The Logic of North American Energy Self-Sufficiency

The main theme of this paper is that the United States has no long-term economic interest in the Middle East. It has very little trade or foreign direct investment (FDI) in the region, and it does not need to import oil. Indeed, in 2002, the entire Persian Gulf area supplied less than 12% of the oil consumed in the United States (largely because nearly 60% of its oil is supplied regionally, either within the United States or by Canada and Mexico). In terms of other energy sources the United States is already self-sufficient. Net imports of electricity are insignificant at 0.62%. Net imports of natural gas are 95% from its NAFTA partners, Canada and Mexico. Coal supplies are entirely internal.

The economic logic of energy security implies that the United States can be fully self-sufficient in energy production and consumption, provided it increases its trade in oil with its primary NAFTA partner, Canada. With much needed new (but costly) investments in the Athabaska Tar Sands, Canada could entirely replace the Persian Gulf as a supplier of oil for the United States. This could be achieved within a few years. There are unlimited supplies of oil from Alberta’s Tar Sands, provided the technology to process the shale is developed and installed. In all other areas of energy production and consumption, the United States is already self-sufficient, or virtually so with its NAFTA partners. In this regard, energy is no different from other sectors—both manufacturing and services, all of which operate on a regional basis, rather than globally, Rugman (2000).

The political logic of energy security should build on this underlying economic logic of regional economic activity. The United States has no long run strategic political interest in the Middle East. It is not in Iraq for the oil. If any countries need oil from Iraq and the rest of the Persian Gulf, it is Japan and members of the EU. These are the countries which need on economic grounds to be concerned with Middle East politics and oil supplies. The United States needs to focus on NAFTA and the realities of regional business integration.

Only in the short term does the Persian Gulf matter to the United States in economic terms. This is because OPEC, mainly concentrated in the Middle East oil producing countries, can effectively control the world supply of oil and thereby the world price of oil. This matters to U.S. consumers, as much as for other consumers. However, by developing self-sufficiency in energy production and consumption in North America, the United States could largely insulate itself from the world oil price, especially in terms of consumption. Ultimately, the manufacturing productivity of other countries could be helped by a permanent fall in the world price of oil if the United States is locked into investments to help develop more expensive Alberta oil production. But the short run price and production effects need to be distinguished from the long run North American self-sufficiency in consumption which is possible, albeit at a higher price than the predicted long-term oil prices.

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U.S. Oil Supply is Regional

The importance of NAFTA, and a potential FTAA, is relevant to the United States in terms of energy security. In contrast, in strictly economic terms Iraq and the rest of the Middle East are of minimal importance to the United States. Although the United States has free trade agreements with Israel and Jordan, total trade to these areas is under 1% of its trade. In contrast, the United States has 37% of its trade with its NAFTA partners.

In terms of consumption of oil, the United States has 58.7% of all its oil produced within NAFTA. It produces 41.1% of its own consumption internally and imports another 17.7% from its two NAFTA partners. Another 8.3% comes from Venezuela and Colombia, so 67% of all U.S. oil consumption is from the Americas. The United States does not need oil from Iraq. Indeed, it only consumed 11.5% of all of its oil from all the states in the Persian Gulf, i.e. Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the U.A.E. Even though this area has large oil reserves there are similarly large oil reserves in Canada (in the Athabaska Tar Sands), so this U.S. position of relative oil security is not likely to be threatened for many years. See Table 1.

In terms of imports of oil by the United States (remembering that it produces 41.1% of its consumption itself) the Persian Gulf supplies 19.8% of all U.S. imports. Yet this is lower than the NAFTA partners of the United States, as Canada alone supplies 17.1% and Mexico 13.5% of all U.S. oil imports (a total of 30.6% from these two NAFTA neighbors). In addition, Venezuela supplies 12.2% and Colombia 2.3%, so over 45% of all U.S. oil imports are from the Americas. These data are reported in Table 2.

Electricity—In one area of energy supply the United States is completely self-sufficient. This is in electricity, where less than 1% of consumption is imported. There is a high degree of interdependence with Canada, especially in the U.S. Northwest and Midwest, as was experienced in the energy blackout of August, 2003. However, the blackout was apparently due more to inadequate maintenance and control systems, rather than to a basic lack of power supplies. Quebec Bay and other parts of Canada’s hydroelectric systems are now integral parts of a North American electricity grid, and it is important to ensure continued co-operation in the management of bilateral electricity supplies.

Nuclear Power—Due to environmental concerns, the United States has not increased its development of nuclear power stations (unlike France, which is dependent on nuclear power for much of its energy supply). The United States relies on nuclear power for about 8% of its power. If necessary, this source of energy supply could be increased, and the risks of Middle East oil imports may, in the future, change the calculus of relative energy costs more in favor of nuclear power. In this paper, however, this possibility is ignored and only current sources of energy supply are considered.

Alternative Power—Again, it is possible for the United States to invest in an increase in energy conservation and the development of alternative power sources, such as solar energy. These trends could be extended to the development of alternative fuelled automobiles, which would be an important step forward in reducing oil imports as gasoline refining is a major use of imported oil. However, these developments are also likely to be long term, and they are also put on hold in this paper.

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The Business Reality of the Triad

The importance of economic-based regionalization and the triad, and the lack of globalization, is now being reflected in political alignments. Following the definitive change to U.S. political attitudes towards national security after the September 11, 2001, terrorist attacks, a new world political system is emerging. This is based on the triad reality of regionalization.

The United States already has economic security on a regional basis. This was affirmed by the NAFTA agreement of 1994, Rugman (1994). Now Canada and Mexico supply energy and other natural resources to the United States in exchange for the enhanced business access to the world’s single largest and richest market. The NAFTA does not provide the depth of economic integration of the EU, and it has none of its political and currency integration. Yet it ties together these three economies in a gigantic and highly successful free trade area to the mutual economic benefit of all three partners.

So successful is NAFTA that it is in the process of being expanded to the FTAA in 2005. This will lock in all 34 countries of the Americas into an extension of NAFTA. The U.S. economy will serve as the regional regime for growth and renewed prosperity for Latin America and the Caribbean, just as NAFTA has done for Mexico.

The economic data on NAFTA show ever increasing interdependence in trade and FDI. Exhibit 1 shows that intra-regional trade has increased from 33.6% to 56% between 1997 and 2002. Today the United States has 22.6% of its exports going to Canada and 14.1% to Mexico, for a total of 36.7%. In 2002 it had only 21.3% going to all 15 member states of the then EU. The U.S. is a regional player in terms of trade. In addition, at firm level, the 169 U.S. firms in the list of the world’s largest 500 firms have an average of 77.3% of all their sales within NAFTA, Rugman (2004). Of course, Canada and Mexico are more than pulling the weight on intra-regional trade. Canada has 87% of its exports to the United States; Mexico has 88.7%.

Exhibit 1 also demonstrates that Europe and Asia are also highly regionalized. Intra-regional trade in the EU is over 60%. In Asia, even without a formal trade agreement across the region, the intra-regional trade is 50% in 2002, up from 35% in 1980. Exhibit 1 shows a very recent reduction in Asia’s intra regional trade which is largely due to Chinese extra-regional exports. Regionalism is the dominant economic force. As a direct corollary to this trend, there is even less trade between the triad blocks. Elsewhere I have shown that the blocks are closing and becoming more inward looking and less global, Rugman (2000) (2004). This economic reality is now being reflected in politics.

My analysis of the G8’s lack of consensus for both the Iraq war of 2003 and the subsequent rebuilding of Iraq is that the trans-Atlantic political relationships now reflect the broken economic one. Only the U.K. actually has any significant economic interest in North America. This is now through FDI (not trade where the U.K. now has a majority of its trade with its EU partners). As shown earlier, Rugman and Kudina (2002), the U.K. has about 40% of its outward stock of FDI in North America, giving a strong business linkage. This is matched by a similar large inward stock. In contrast, Germany and France have most of their FDI within the EU, not across the Atlantic.

Basically the EU now represents, as a block, an economic alternative to North America. The 119 large European-based MNEs have an average of 62.8% of their sales within Europe, Rugman (2005). European business does not really need America, just as America does not need Europe. There is no global business, only regional business.

All of this economic analysis also works for Asia. This region is becoming more interdependent, and it has almost identical intra-regional growth in trade to match its triad partners. Again, most of the sales of Asian-based MNEs are within the region, see Exhibit 1. This trend is increasing. The 75 large Asian MNEs have an average of 74.3% of their sales within Asia, Rugman (2004).

The world picture is one of expanding regionalism. The EU has admitted 10 new members on May 1, 2004. The NAFTA will extend from three nations to 34 in the FTAA, by 2005. Asia, China, Japan, and South Korea will develop stronger ties with the ASEAN countries. Any business within the triad needs to become affiliated to a triad region to grow and succeed.

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The Empirical Reality of Regional, Not Global, Activity

Today, much economic activity (both in manufacturing and services) is location bound, taking place in clusters in the principal regions of the broad “triad” of the EU, North America, and Asia. The choice of entry mode and choice of location are complementary strategic management decisions of profound importance to multinational enterprises.

A key theoretical insight from MNE scholars, such as Dunning (2001), Enright (2000), and Rugman and Verbeke (2004), is that in most regional clusters of value-added activities in the triad, the MNEs are embedded as leading participants. The most lucid and extreme articulation of this viewpoint is that of Rugman and D’Cruz (2000) who argue that MNEs act as “flagship firms” to lead, direct, co-ordinate, and manage strategically the value-added activities of partner firms in a business network, including key suppliers, key customers, and the non-business infrastructure. While Dunning (2001) refers to flagships as leaders only of vertical clusters (as in autos), Rugman and D’Cruz (2000) also include horizontal clusters (as in textiles, financial services, etc.).

Rugman and Verbeke (2004) found that the average intra-regional sales of the world’s 500 MNEs is 71.9%. Of the 380 firms studied, over 80% (320) derive most of their sales in their home region of the triad. This relative sales dominance in a specific regional market, rather than a very wide and evenly distributed spread of sales, reflects five underlying issues critical to the MNE’s functioning. First, it demonstrates the fallacy of so-called ‘global’ products. If most MNEs’ sales are unevenly distributed across the globe, and mostly concentrated in just one geographic market, this means that products are not really global in the sense of being equally attractive to consumers all around the world.

Second, the lack of global market success reflects the limits to the non-location bound nature of the MNEs’ knowledge base, i.e., its firm specific advantages (FSAs). Firms may have sophisticated and proprietary technological knowledge, brand names etc., but there appear to be severe limits to the joint international transferability of this knowledge and its acceptance by customers across regions, irrespective of whether this knowledge is embodied in final products and then exported, transferred as an intermediate product through licensing, or used in foreign affiliates through FDI.

Third, the perceived lack of market performance across regions also points to a relative inability to access and deploy the required location-bound FSAs, which would lead to benefits of regional and national responsiveness.

Fourth, if the MNE’s market position is very different in the various regions of the world this indicates the need for very different competitive strategies: a leadership role in one market requires very different patterns of decisions and actions than the role of a (perhaps ambitious) junior player in another market. This should obviously be reflected in the deployment of specific combinations of non-location-bound and location-bound FSAs in each region. Unfortunately, in spite of much ‘think global, act local’ rhetoric in both the academic and popular business press, there appears to be little empirical evidence that this approach has permitted host-region market penetration levels similar to the ones obtained in the home region.

Fifth, the four elements above have important implications for MNE governance. It might be incorrect to attribute the present relative lack of overseas market success of many firms to an inappropriate governance structure. The presence of multiple environmental circumstances may also be critical here (powerful foreign rivals in other triad regions; government shelter of domestic industries; buyer preferences for local products; cultural and administrative differences as compared to the home region, etc.). However, the need for regional strategies does suggest the parallel introduction of a regional component in the MNEs’ governance structure to deal appropriately with the distinctive characteristics of each leg of the triad, and with the regions outside of it, much in line with Ohmae’s (1985) prescriptions. This perspective is developed further in the later sections of the paper.

This need for distinct regional strategies is an important observation as many well- known strategy and international business (IB) scholars keep developing normative models that advocate simple globalization strategies as a set of purposive decisions and actions instrumental to a broad and deep penetration of foreign markets, i.e., extreme geographical fragmentation of sales. Authors who have recently argued in favor of a global strategy and ignore the realities of regionalization include: Vijay Govindarajan and Anil K. Gupta (2001), J. P. Jeannet (2000), and George Yip (2002). Regionalization should be viewed as an expression of semi-globalization, Ghemawat (2003). It implies that international markets are characterized neither by extreme geographical distribution of sales, nor complete integration. Incomplete integration means that location specificity, in this case regional specificity, matters. Only in a context of incomplete integration is there scope for international MNE strategy that is conceptually distinct from conventional domestic strategy.

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The Meaning of Regional Strategies

The majority of the world’s largest 500 companies are MNEs; i.e., they produce and/or distribute products and/or services across national borders. Yet, very few MNEs are ‘global’ firms, with the ability to sell the same products and services around the world. The challenge of selling standardized products and services across borders, as originally advocated by Levitt (1983), has been dealt with appropriately in most of the mainstream IB literature. It is now widely recognized that benefits of integration resulting from global scale economies can only be reaped if accompanied by strategies of national responsiveness, guided by both external pressures for local adaptation and internal pressures for requisite variation. What is unfortunately not correctly understood is that, irrespective of MNEs’ efforts to augment their alleged non-location-bound FSAs with a location-bound component, no balanced geographical dispersion of sales is achieved in most cases. Instead, the data indicate that most MNEs are regionally based in their home-triad market, of either North America, the EU, or Asia (principally Japan). An apparent paradox is that a very large MNE in terms of overall foreign sales volume can have a concentration of its international activities in its home-triad region and lack a truly global dimension. While it could be argued that there is more to globalization than sales dispersion, for example, foreign assets and foreign employment have sometimes been used together with foreign sales to compose a ‘transnationality index’, it should be recognized that only sales dispersion constitutes a true performance measure at the output level.

If MNEs have exhausted their growth potential in the home-triad region and then decide to venture into other regions, they may face a liability of regional foreignness, including several additional risks that were absent in the host region and may be of an economic, cultural, administrative, or geographic nature, in accordance with Ghemawat’s (2001) recent observation that distance still matters. Given the size of each triad region, most of the advantages of standardization can often be achieved within the home-triad region, and this process is enhanced if governments in this region pursue policies that promote internal coherence via social, cultural, and political harmonization (as in the EU) or even merely via economic integration (as in NAFTA and Asia).

A related point is that inter-block business is likely to be restricted relative to intra-regional sales by government imposed barriers to entry. For example, the EU and the United States are likely to fight trade wars and be responsive to domestic business lobbies seeking shelter in the form of subsidies and/or protection. Cultural and political differences among members of a single-triad region may remain, but these will mostly be less significant than across triad regions, Rugman (2000). The end result is the persistence of MNEs that will continue to earn 80% or more of their income in their home-triad region. There will only be a limited number of purely ‘global’ MNEs in the top 500.

For 365 of the 380 firms included in our study, data were available that permitted a further decomposition of their foreign sales. It should be noted that many of the remaining 135 large 500 companies are actually operating solely in their home region, with no sales elsewhere, and for others there are insufficient data. As reported earlier, of the 365 with data, the vast majority (320) are home-region based, having few sales in the other two regions of the triad. A limited set (25) is ‘bi-regional’, which we define as having at least 20% of sales in two legs of the triad, or (11) ‘host-region based’, defined as having over 50% of sales in a foreign region. Only nine MNEs are truly ‘global’, with at least 20% of their sales in all three regions of the triad, see Table 3.

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The definitions adopted earlier in the paper are as follows:

a) Home-region oriented: 320 firms have at least 50% of their sales in their home region of the triad. The threshold of 50% was chosen as we assume that a region representing more than 50% of total sales will systematically both shape and constrain most important decisions and actions taken by the MNE. It also implies a concentration of the MNE’s customer-end related FSAs in that region. The concept of customer-end FSA is explained in the next section.

b) Bi-regional: 25 MNEs are bi-regional, defined as firms with at least 20% of their sales in each of two regions, but less than 50% in any one region. This set includes 25 firms with sales ranging between 20% and 50% in the home region and 20% or over in a second region. The threshold of 20% was chosen because we assume that having two regional markets each representing at least one fifth of a ‘$10 + billion’ firm’s sales reflects impressive market success resulting from extensive ‘customer-end’ FSAs in those two markets. The question could then be raised whether a particular absolute volume of sales, irrespective of the 20% threshold percentage, would make a firm bi-regional. In our framework, an absolute sales volume is, in itself, insufficient. We view the status of a region from a micro-level, corporate strategy perspective; here, this status is fully dependent on the relative sales achieved vis-’-vis market performance in other regions.

c) Host-region oriented: 11 firms have more than 50% of their sales in a triad market other than the home region.

d) Global: only nine of the MNEs included are global, defined as having sales of 20% or more in each of the three regions of the triad but less than 50% in any one region of the triad. The 20% figure is less than the one-third required for an equal triad distribution, and so is biased downwards in favor of finding global MNEs. Conceptually, it implies the successful deployment of customer-end FSAs in three distinct markets. The North American and European region of the broad triad are of approximate equal size, as measured by GDP. Asia is smaller than either as measured by GDP but is nearly equal in terms of purchasing power parity (PPP). In other words, weighing the broad triad by GDP or PPP will not generate more global firms.

Within each of the groups above, the home triad region sales weighted averages are as follows:

a) Home-region oriented (320 firms): 80.3%
b) Bi-regional (25 firms): 42%
c) Host-region oriented (11 firms): 30.9%
d) Global (9 firms): 38.3%

In Table 4, these firm-level data are applied in a G8 context. As can be seen from the last column, all of the G8 member countries are home to large 500 firms that have the vast majority of the sales in their home region. The 169 U.S. firms and the 16 Canadian firms average 77.2% of their sales in North America. The five Italian firms average 83.4% in Europe, while the large German, French, and British firms average 68.1%; 64.8 and 64.5% respectively. The 66 large firms for Japan average 74.7% in the Asian region.

These data reinforce the basic economic point on the strength of intra-regional business activity. These large firms are often “flagship” firms at the hubs of clusters of other suppliers and key distributors, i.e. they represent the geographic locus of regional business activity, Rugman and D’Cruz (2000). No data can be found to support growing inter-block trade. A U.S. energy policy that is regional will be consistent with these basic economic data.

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Conclusions

The political events of the Iraq war and its aftermath simply reflect the economic reality of the triad. The United States, as a superpower, does not need military, political, or economic support from the leading countries in Europe or Asia even from its G8 partners. It does not even need it from its NAFTA partners. What is the role of G8 members such as France, Germany, Italy, the U.K., Russia, and Japan after the Iraq war? The U.K-U.S relationship is strong, and it provides the U.K. with independent leverage across the enlarged EU and all of Europe. France has largely destroyed its ability to influence U.S. policy. It now ranks below Russia as a political U.S. ally. Germany ranks below Italy.

The United States is unlikely to look to the G8 for any military or political alliance in the near future. It does not need the G8 as much as the G8 needs the United States. Whether the G8 can be rebuilt in 2004 as the U.S. hosts the summit around the themes of security, prosperity, and freedom is an open question. In the long run, it is likely that the G8 will continue its slide into irrelevancy in the face of increasing regionalization pressures. Prosperity is already regional, and this paper shows that the United States can achieve energy self-sufficiency on a regional, rather than on a global basis.

Acknowledgement

Thanks to Ms. Cecilia Brain of Toronto for development of the tables and the underlying firm-level data base used in this paper.

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References

Dunning, J. 2001. Global Capitalism at Bay? London: Routledge.

Enright, M. 2000. ‘The Globalization of Competition and the Localization of Competitive Advantage: Policies Towards Regional Clustering’ in N. Hood and S. Young, (eds.) Globalization of Economic Activity and Economic Development, Macmillan, Basingstoke, UK, pp 303-331.

Ghemawat, P. 2003. ‘Semi-globalization and International Business Strategy’, Journal of International Business Studies 34(2): 138-152.

Ghemawat, P. 2001. ‘Distance Still Matters: The Hard Reality of Global Expansion’, Harvard Business Review 79 (8) (September): 137-47.

Govindarajan, V. and Gupta, A. 2001 The Quest for Global Dominance, San Francisco: Josey-Bass/Wiley.

Jeannet, J. 2000. Managing with a Global Mindset, London: Financial Times/Prentice Hall, Pearson.

Levitt, T. 1983. ‘The Globalization of Markets’, Harvard Business Review, (May-June): 92-102.

Ohmae, K. 1985. Triad Power: The Coming Shape of Global Competition, New York: The Free Press.

Rugman, Alan M. 1994. Foreign Investment and NAFTA. Columbia, S. C.: University of South Carolina Press.

Rugman, A. M. 2000. The End of Globalization, London: Random House and New York: Amacom-McGraw Hill.

Rugman, A. M. 2004. The Regional Multinationals, Cambridge: Cambridge University Press.

Rugman, A. and D’Cruz, J. 2000. Multinationals as Flagship Firms: Regional Business Networks. Oxford: Oxford University Press.

Rugman, Alan M. and Kudina, Alina (2002) ‘Britain, Europe and North America’ in M. Fratianni, P. Savona and J. Kirton (Eds.) Governing Global Finance. Aldershot: Ashgate, 185-195.

Rugman, A. and Verbeke, A. 2004. ‘A Perspective on Regional and Global Strategies of Multinational Enterprises’, Journal of International Business Studies 35 (1): 3-18.

Yip, G. 2002. Total Global Strategy II, Upper Saddle River, NJ: Prentice Hall

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Tables

Table 1: U.S. Consumption of Petroleum, by Country of Origin, 2002
thousand barrels per day

Source: U.S. Department of Energy, Annual Energy Review, 2002
(1)Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates.
P = Preliminary

Notes: The country of origin for refined petroleum products may not be the country of origin for the crude oil from which the refined products were produced.
Totals may not equal sum of components due to independent rounding.

*Supply from the United States=Production-Exports-Stock Change+Crude Oil Losses and Unaccounted for

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Table 2: U.S. Petroleum Imports, 2001
thousand barrels per day

Source: U.S. Department of Energy, Annual Energy Review, 2002
(1)Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates.
P = Preliminary

Notes: The country of origin for refined petroleum products may not be the country of origin for the crude oil from which the refined products were produced.
Totals may not equal sum of components due to independent rounding.

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Table 3: Classification of the Top 500 MNEs

Source: Rugman and Verbeke (2004).

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Table 4: The Regional Sales of Large Firms in the G8 Countries

Note: This is adapted from the data base used in Rugman and Verbeke (2004).

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Exhibit 1: Intra-regional Trade in the Triad, 1980-2002

Source: IMF, Direction of Trade Statistics Yearbook, 1983-2002

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