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Foreign Direct Investment And Us International Trade
In the United States, foreign direct investment is the ownership or control, directly or indirectly, by one foreign person of 10 percent or more of the voting securities of an incorporated business enterprise in the US or an equivalent interest in an unincorporated business enterprise in the US. The foreign person can be an individual, branch, partnership, association or government. |
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After 2000, foreign direct investment in the US declined sharply when nearly $300 billion was invested in American businesses and real estate. In comparison just $100 billion was invested in 2004. Many states and local governments were trying to foreign direct investments to create additional jobs during that period when the US was facing serious problem of unemployment. The Congress also encouraged foreign direct investment in the US in an attempt to offset the so-called negative economic effects of American firms investing abroad.
On the whole, Britain is the largest foreign direct investor in the US followed by French, Dutch and Japanese.
During the early and mid 2000, US firms were involved in setting up shop abroad as in 2001 and 2002, US started experiencing an economic slowdown with falling stock market valuations, lower corporate profitability, slowdown in corporate restructuring and slowdown in privatization efforts in some areas. So, this would explain why foreign direct investment was low during that period but US international trade was doing okay.
Even today, foreign direct investment in the US is predominantly in the manufacturing sector, which accounts for approximately 35 percent of foreign direct investment in the nation; 18 percent of investment is in banking and finance sector while 16 percent is in the retail and wholesale trade sector. The information sector accounts for 14 percent of foreign direct investment while real estate and services account for just 3.8 percent and 3 percent respectively.
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Foreign Direct Investment And Us International Trade
International trade creates opportunities for workers all over the world and that is why it is quite difficult to figure out why many trade unions across the world view international trade as a threat to workers. 
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