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Foreign Direct Investment in the U.S.: Changes Over Three Decades

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  • Robert E. Lipsey

Abstract

U.S. direct investment inflows in the 1980s were almost half the world's total. Even this large inflow leaves foreign firms employing less than 5 per cent of the U.S. labor force, but twice that share in manufacturing. That increase is related to the internationalization of production by foreign firms more than to competitive weakness of U.S. firms. Foreign affiliates import more relative to their exports than U.S. firms but are moving closer to the behavior of U.S. firms. The trade balances of both are sensitive to exchange rates. The financing of foreign direct investment from retained earnings dropped almost to zero in the 1980s. One reason is the rapid growth of this investment and another is its low profitability.

Suggested Citation

  • Robert E. Lipsey, 1992. "Foreign Direct Investment in the U.S.: Changes Over Three Decades," NBER Working Papers 4124, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4124
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    References listed on IDEAS

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    1. James A. Orr, 1991. "The trade balance effects of foreign direct investment in U.S. manufacturing," Quarterly Review, Federal Reserve Bank of New York, vol. 16(Sum), pages 63-76.
    2. Blomstrom, Magnus & Lipsey, Robert E, 1989. "The Export Performance of U.S. and Swedish Multinationals," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 35(3), pages 245-264, September.
    3. Robert E. Lipsey & Mario Schimberni & Robert V. Lindsay, 1988. "Changing Patterns of International Investment in and by the United States," NBER Chapters, in: The United States in the World Economy, pages 475-558, National Bureau of Economic Research, Inc.
    4. Robert E. Lipsey, 1991. "Foreign Direct Investment in the U.S. and U.S. Trade," NBER Working Papers 3623, National Bureau of Economic Research, Inc.
    5. Kravis, Irving B & Lipsey, Robert E, 1992. "Sources of Competitiveness of the United States and of Its Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 193-201, May.
    6. Raymond W. Goldsmith & Robert E. Lipsey, 1963. "Studies in the National Balance Sheet of the United States, Volume 1," NBER Books, National Bureau of Economic Research, Inc, number gold63-1, September.
    7. Robert E. Lipsey, 1989. "The Internationalization of Production," NBER Working Papers 2923, National Bureau of Economic Research, Inc.
    8. Raymond W. Goldsmith & Robert E. Lipsey & Morris Mendelson, 1963. "Studies in the National Balance Sheet of the United States, Volume 2," NBER Books, National Bureau of Economic Research, Inc, number gold63-2, September.
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    Cited by:

    1. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-1094, December.
    2. Robert E. Baldwin & Fukunari Kimura, 1998. "Measuring U.S. International Goods and Services Transactions," NBER Chapters, in: Geography and Ownership as Bases for Economic Accounting, pages 9-48, National Bureau of Economic Research, Inc.

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