Conclusion

This book has been conerned with the interpretation of the meaning of direct investment and it has been established that direct investment, as it is defined today, was very much in its infancy before 1870, particularly with regard to European activity in America. Direct investment had begun to occur more often between 1870 and World War I, but it remained secondary to portfolio investment in terms of value, although direct investment, defined by the locus of decision-making, was of considerable importance. It has also been established that direct investment occurred where the market was imperfect and this was the situation that existed in the U.S.A. during the 1870–1914 period caused by, among other things, the frequent and very often high tariffs that successive American governments imposed on imported goods. In the majority of cases the tariffs were applied to protect and develop local infant industry. The possible motives that might have led European companies to invest in the U.S.A. were numerous but in the case histories discussed in Chapter 5 only three — the desire to avoid U.S. tariffs, the opportunity to exploit ‘patents’ and the need for local production to satisfy local demand — occurred regularly and the most frequent was the company’s desire to avoid tariffs.