The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large scale economic cooperation and assistance led to new global marketing opportunities. Rising standards of living and broad-based consumer and industrial markets abroad created opportunities for American companies to expand exports and investment worldwide. During the 1950s, many US companies that had never before marketed outside the US began to export, and others made significant investments in marketing and production facilities overseas.
At the close of the 1960s, US multinational corporations (MNCs) were facing major challenges on two fronts: resistance to direct investment and increasing competition in export markets. Large investments by US businesses in Europe and Latin America heightened the concern of these countries about the growing domination of US multinationals.
In Europe apprehension manifested itself in strong demand to limit foreign investment. Concern there that Britain might become a satellite with manufacturing but to determination of policy led to specific guidelines for joint ventures between British and US companies. In the European Community, US multinationals were rebuffed in ways ranging from tight control proposed joint ventures and regulations covering US acquisitions of European firms to strong protectionism laws.
The U.S was facing a resurgence of competition from all over the world. The worldwide economic growth and rebuilding after World War II was beginning to surface in competition that challenges the supremacy of American industry. Competition arose on all fronts; Japan, Germany, most of the industrialized world, and many developing countries were competing for demand in their own countries and were looking for world markets as well. Countries once classified as less developed were reclassified as newly industrialized countries (NICs). NICs such as Brazil, Mexico, South Korea, Taiwan, Singapore and Hong Kong experienced rapid industrialization in selected industries and became aggressive world competitors in steel, shipbuilding consumer electronics automobiles, light air craft, shoes, textiles apparel and so forth. In addition to the NICs, developing countries such as Venezula, Chile, and Bangladesh established state owned enterprises (SOEs) that operated in other countries. One state owned Venezuelan company has a subsidiary in Puerto Rico that produces canvas, cosmetics, chairs, and zippers; there are also Chilean and Colombian companies in Puerto Rico, in the US state of Georgia a Venezuelan company engages in agribusiness and Bangladesh, the sixth largest exporter of garments to the United States also owns a mattress company in Georgia.
In short, economic power and potential became more evenly distributed among countries than was the case. Instead, the US position in world trade is now shared with other countries. For example, in 1950, the United States represented 39 per cent of world gross national product (GNP), but by 2000 it represented 23 per cent. In the meantime however, the global GNP was much larger as was the world’s manufacturing output – all countries shared in a much larger economic pie. This change was reflected in the fluctuations in growth of MNCs from other countries as well. In 1963 the United States had 67 of the world’s largest industrial corporations. By 1996, that number had dropped to a low of 24 while Japan moved from having 3 of the largest to 29 and South Korea from none to four. And following the great economic boom in the late 1990s in the United States, 42 of the largest companies were American only 20 Japanese and none Korean.
Another dimension of world economic power is the balance of merchandise trade, that reflected the changing role of the United States in world trade. Between 1888 and 1971, the US sold more to other countries than it bought from them; that is, United States had a favourable balance of trade. By 1971, however, the US had a trade deficit in merchandise, trade declined to $74 billion in 1991 but began increasing again and by 2005 had surpassed $650 billion.
The heightened competition for US businesses during the 1980s and early 1990s raised questions similar to those heard in Europe two decades earlier; how to maintain the competitive strength of American business, to avoid the domination of US markets by foreign multinationals and to forestall the buying of America. In the 1980s, the US saw its competitive position in capital goods such as computers and machinery eroded sharply. From 1983 to 1987 almost 70 per cent of the growth of the merchandise trade deficit was in capital goods and automobiles. At the time those were America’s high wage, high skill industries. US industry got a wake-up call and responded by restructuring its industries in essence getting lean and mean. By the late 1990s, the United States was once again holding its own in capital goods, particularly with trade surpluses in the high tech category.