FOREIGN DIRECT INVESTMENT IN THE UNITED STATES

MARY CECILIA BURKE, Fordham University

Abstract

Foreign direct investment (FDI) in the United States has accelerated in recent years becoming increasingly significant in the entire U.S. economy. A theory of the FDI phenomena developed for this study suggests FDI is a function of the world economy, the investor, and the transmission mechanism linking them. The investor operates in the world economy responding to economic pressures according to his own response characteristics. The pressures include technical, financial, physical, market, government and social factors and may be positive or negative. The theory assumes the investor responds to the resultant of all pressures. For FDI to occur, such pressures must be sensed by an investor with necessary characteristics. These characteristics include enterprise, resources, managerial competence and technical expertise. The transmission mechanisms are the media through which the investor senses these economic pressures and include financial institutions, news media, governments, technical societies, universities and labor institutions. They facilitate, filter or distort the economic pressures and thus affect the investor's FDI response.^ The study's methods involved a sample of foreign investors. Interviews with key company executives and other company data provided the data base. The study proceeded in three stages. First, the activities of foreign investors in general and the characteristics of the macroeconomic background were analyzed to discern common characteristics and to obtain a basis for selecting a sample of investors. Second, the statements and activities of the surveyed investors were examined and analyzed to ascertain the reasons for their investments. Third, the specific reasons disclosed in the preceding stages were examined to determine their applicability to FDI in the United States.^ From the results of the study, the basic cause of the recent increase in FDI in the United States was found to be due to the emergence in Germany and Japan of investors with the resources and ability to respond to investment opportunities. As the number of such investors stabilizes, FDI will tend to stabilize unless new factors in the economy or investors of the world should arise. FDI can be controlled to some degree by appropriate adjustments in the U.S. economy and in the transmission mechanism. ^

Subject Area

Economics

Recommended Citation

BURKE, MARY CECILIA, "FOREIGN DIRECT INVESTMENT IN THE UNITED STATES" (1983). ETD Collection for Fordham University. AAI8506312.
http://fordham.bepress.com/dissertations/AAI8506312

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