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The globalization of U.S. business investment

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Author Info
Mark A. Wynne
Erasmus K. Kersting

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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.

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Article provided by Federal Reserve Bank of Dallas in its journal Staff Papers.

Volume (Year): (2008)
Issue (Month): Feb ()
Pages:
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Handle: RePEc:fip:feddst:y:2008:i:feb:n:3

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Keywords: Investments; Foreign - United States;

References listed on IDEAS
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    Other versions:
  4. Alan S. Blinder, 2007. "How Many U.S. Jobs Might Be Offshorable?," Working Papers 60, Princeton University, Department of Economics, Center for Economic Policy Studies.. [Downloadable!]
  5. Anderson, Richard G & Thursby, Jerry G, 1986. "Confidence Intervals for Elasticity Estimators in Translog Models," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 647-56, November. [Downloadable!] (restricted)
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  7. Ann E. Harrison & Margaret S. McMillan, 2006. "Outsourcing Jobs? Multinationals and US Employment," NBER Working Papers 12372, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. C. Fritz Foley & Jay C. Hartzell & Sheridan Titman & Garry Twite, 2006. "Why do firms hold so much cash? A tax-based explanation," NBER Working Papers 12649, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Robert E. Lipsey & Fredrik Sjoholm, 2003. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis With Panel Data," NBER Working Papers 9417, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Bee Yan Aw & Sukkyun Chung & Mark J. Roberts, 1998. "Productivity and the Decision to Export: Micro Evidence from Taiwan and South Korea," NBER Working Papers 6558, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Almeida, Rita, 2007. "The labor market effects of foreign owned firms," Journal of International Economics, Elsevier, vol. 72(1), pages 75-96, May. [Downloadable!] (restricted)
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  13. Matthew J. Slaughter, 1995. "Multinational Corporations, Outsourcing, and American Wage Divergence," NBER Working Papers 5253, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Kristiina Huttunen, 2007. "The Effect of Foreign Acquisition on Employment and Wages: Evidence from Finnish Establishments," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 497-509, 05. [Downloadable!] (restricted)
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