Report Outline
Surge of Capital Flows From Abroad
Past U.S. Reliance on European Money
Outlook for World Investments in U.S.A.
Special Focus
Surge of Capital Flows From Abroad
Extent of Foreign Penetration in U.S. Business
Only a few years ago a flood tide of American investments abroad brought anguished cries from Europeans who feared their national economies would be engulfed in Yankee dollars and dominated by faraway home offices. These cries have since been muffled, if not entirely silenced, by grave new economic problems on both sides of the Atlantic—and by a reverse flow of investments from overseas into the United States. This flow has risen in recent years from a trickle to a sizable current.
Foreign investment in the United States takes two forms: private “portfolio” investment in corporate and government securities, and “direct” investment by foreign companies that set up or acquire American subsidiaries. Foreign portfolio investment amounts to considerably more than direct investment, but the latter poses problems because it involves foreign managerial control as well as ownership of American assets. Furthermore, the growth of direct foreign investment has shown a marked increase since 1967 and especially in 1973. The trend is apparently continuing strong this year.
Foreign-owned assets in the United States are still only about one-sixth of the amount that American corporations hold overseas. But since 1968 the rate of increase has surpassed that of U.S. direct investment overseas. A spate of purchases in the past year gave rise to comments in the press and in Congress as to the effects of foreign ownership and control of assets in the United States. |
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