Foreign direct investment in the United States

Author(s)

Bibliographic Information

Foreign direct investment in the United States

Edward M. Graham, Paul R. Krugman

Institute for International Economics, 1989

Available at  / 37 libraries

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Note

Bibliography: p. 149-152

Includes index

Description and Table of Contents

Description

The share of the US economy controlled by foreign firms has tripled since the mid-1970s. The authors find that foreign firms appear to invest in the United States mainly to exploit their individual advantages in management and technology - the same reasons why American firms invest abroad - rather than because the United States is now running large deficits and has become a large debtor nation. Foreign-owned firms do not pay lower wages or shift good jobs and research and development away from the United States. Foreign-owned firms and especially Japanese firms do, however, have a marked tendency to import more of their production inputs. The authors warn that the President's new legislative authority to screen FDI on national security grounds could easily be abused, but endorse using this authority to ensure access to critical technologies or production processes including a requirement on some foreign firms to invest in the United States. They propose new international rules to minimize governmental interference and harmonize policies toward multinational firms.

Table of Contents

  • Part 1 Extent and trends: what is FDI?
  • the rise of FDI - alternative measures
  • the mechanics of FDI
  • the role of Japan
  • banking
  • real estate
  • FDI in other countries
  • conclusions. Part 2 Sources of growth: the theory of FDI
  • evidence on FDI in the United States
  • the role of financial markets
  • taxation
  • protection
  • three case histories
  • the outlook for FDI
  • conclusions. Part 3 Economic impact: the gains from FDI
  • the potential costs of FDI
  • characteristics of FDI in the United States
  • the "Fire Sale" issue
  • conclusions. Part 4 Political effects: strategic effects of foreign ownership
  • political influence of foreign-owned firms
  • how much does it matter?
  • international rules of the game. Part 5 National security implications: FDI and national security in time of war of national emergency
  • FDI by friendly powers
  • some unresolved issues. Part 6 Current US policy: federal policy
  • state and local policies
  • comparisons with other nations
  • conclusions. Part 7 Policy alternatives: increasing disclosure requirements
  • screening
  • reciprocity
  • performance requirements
  • an agenda for US policy on FDI
  • conclusions. Appendices: US government data of foreign direct investment
  • industrial-organization explanations of foreign direct investments.

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