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The globalization of U.S. business investment

Author

Listed:
  • Erasmus K. Kersting
  • Mark A. Wynne

Abstract

This paper documents some key facts about foreign direct investment flows by U.S. businesses overseas and foreign businesses in the United States. We show how the pattern of flows has evolved, examine the sources and destination of these flows, document associated employment and productivity gains, and show how investment-related sales compare with traditional exports. While the United States is a net debtor to the rest of the world, direct investment overseas by U.S. businesses exceeds direct investment in the U.S. by foreign businesses. Furthermore, U.S. businesses seem to earn more on their foreign investments than foreign firms earn on their U.S. investments. The globalization of business investment is a long-standing phenomenon, but it has accelerated in recent years and become a source of concern for some, as it is intimately related to the debate on offshore outsourcing. Yet contrary to what some think, the bulk of U.S. investment overseas is in other high-income countries. And foreign investment in the U.S. has been an important source of employment growth in recent years.

Suggested Citation

  • Erasmus K. Kersting & Mark A. Wynne, 2008. "The globalization of U.S. business investment," Staff Papers, Federal Reserve Bank of Dallas, issue Feb.
    • Handle: RePEc:fip:feddst:y:2008:i:feb:n:3
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Globalization of U.S. Business Investment (by Don Boudreaux)
      by Don Boudreaux in Cafe Hayek on 2008-05-01 19:23:57

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    Cited by:

    1. Edward Nissan & Miguel-Angel Galindo & Maria Teresa Méndez, 2010. "The future of services in a globalized economy," The Service Industries Journal, Taylor & Francis Journals, vol. 31(1), pages 59-78, February.

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