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Changing Patterns of International Investment in and by the United States

In: The United States in the World Economy

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  • Robert E. Lipsey
  • Mario Schimberni
  • Robert V. Lindsay

Abstract

The international investment account of the United States has gone through several cycles. Before World War I, the U.S. was a borrower most of the time and an international debtor. Between the two World Wars, it was first a lender and then a refuge for foreign capital. After World War 11, the U.S. became the world's major lender and creditor and in the last few years it has become the world's largest borrower, and, according to the official accounts, even a net debtor. U.S. direct investment abroad began while the U.S. was still an overall borrower and debtor. The technological leaders among U.S. manufacturing firms pioneered in this technique for exploiting their particular knowledge and skills by producing in other countries. The peak in the importance of foreign assets relative to the domestic assets of U.S. companies was probably reached during the early 1970s. While the flow of direct investment from the U.S. has slowed, there has recently been a large inflow of foreign direct investment into the U.S.. That inflow has roughly tripled the share of foreign-owned companies in the U.S. since 1950. While foreign-owned firms accounted for only about 3% per cent of total U.S. employment after all the recent growth in foreign direct investment in the U.S., the shares in manufacturing and wholesale trade were considerably higher. Foreign firms accounted for almost 40 per cent of chemical industry employment, but for less than 10 per cent in all the other industries. The foreign shares in service industries, aside from wholesale trade, increased, but remained below 3 per cent.

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This chapter was published in:

  • Martin Feldstein, 1988. "The United States in the World Economy," NBER Books, National Bureau of Economic Research, Inc, number feld88-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 6219.

    Handle: RePEc:nbr:nberch:6219

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    References

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    1. Robert E. Lipsey & Irving B. Kravis, 1985. "The Competitive Position of U.S. Manufacturing Firms," NBER Working Papers 1557, National Bureau of Economic Research, Inc.
    2. Baldwin, Robert E, 1979. "Determinants of Trade and Foreign Investment: Further Evidence," The Review of Economics and Statistics, MIT Press, vol. 61(1), pages 40-48, February.
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    Cited by:
    1. Campbell DC & Mcelrath RG, 1990. "The Employment effects of multinational enterprises in the United States and of American multinationals abroad," ILO Working Papers 289571, International Labour Organization.
    2. Irving B. Kravis & Robert E. Lipsey, 1992. "Technological Characteristics of Industries and the Competitiveness of the U.S. and its Multinational Firms," NBER Working Papers 2933, National Bureau of Economic Research, Inc.
    3. Joosung Jun, 1989. "What is the Marginal Source of Funds for Foreign Investment?," NBER Working Papers 3064, National Bureau of Economic Research, Inc.
    4. Jose Campa & Linda S. Goldberg, 1993. "Investment in Manufacturing, Exchange-Rates and External Exposure," NBER Working Papers 4378, National Bureau of Economic Research, Inc.
    5. Robert E. Lipsey, 1989. "The Internationalization of Production," NBER Working Papers 2923, National Bureau of Economic Research, Inc.
    6. Michael Devereux & Charles Engel, 2000. "The Optimal Choice of Exchange-Rate Regime: Price-Setting Rules and Internationalized Production," Working Papers 0022, University of Washington, Department of Economics.
    7. Eichengreen, Barry, 1987. "Till Debt Do Us Part: The US Capital Market and Foreign Lending, 1920-1955," CEPR Discussion Papers 212, C.E.P.R. Discussion Papers.
    8. Joosung Jun, 1990. "U.S. Tax Policy and Direct Investment Abroad," NBER Chapters, in: Taxation in the Global Economy, pages 55-78 National Bureau of Economic Research, Inc.
    9. Robert E. Lipsey, 1995. "Outward Direct Investment and the U.S. Economy," NBER Chapters, in: The Effects of Taxation on Multinational Corporations, pages 7-42 National Bureau of Economic Research, Inc.
    10. Joosung Jun, 1989. "U.S. Tax Policy and Direct Investment Abroad," NBER Working Papers 3049, National Bureau of Economic Research, Inc.
    11. James R. Markusen & Keith E. Maskus, 1999. "Multinational Firms: Reconciling Theory and Evidence," NBER Working Papers 7163, National Bureau of Economic Research, Inc.
    12. Linda S. Goldberg, 1990. "Nominal Exchange Rate Patterns: Correlationswith Entry, Exit, and Invesment in U.S. Industry," NBER Working Papers 3249, National Bureau of Economic Research, Inc.

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