THE NEW COMPETITORS by Norman J. Glickman


How Foreign Investors Are Cha
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Some Americans are alarmed by the fact that foreign companies are buying up US assets at an increasing rate. Glickman (Urban Policy/the U. of Texas at Austin) and Woodward (Economics/the U. of South Carolina) closely examine this buy-up phenomenon and conclude that fears of a foreign takeover of our economy are largely overblown. During the last presidential campaign. Dukakis sought to fan the flames of economic nationalism by citing such statistics as "half of downtown Los Angeles has been bought by foreigners." In context, the authors argue, the situation is not nearly so frightening. Foreign direct investment in the US economy is $262 billion (US investment abroad totals $309 billion). Foreigners hold only .7% of American real estate and employ 3 million workers (1 in 30 workers in the US). The authors dispel two common misconceptions about foreign investment: first, that the Japanese and oil-rich Arabs are the leading foreigner investors (in truth, the British and Canadians are employing 41% of Americans who work for foreign firms); and second, that foreigners are expanding primarily by building new factories (in fact, they are acquiring already existing US firms). The current acquisition spree is driven by a devalued dollar that makes the price of American assets relatively cheap for foreign investors. The authors conclude that "although foreign investment is expanding quickly, foreigners still control but a small fraction of the American economy." Since foreign investment apparently isn't a significant problem, it is puzzling, then, that the authors offer the usual liberal catalog of interventionist recommendations to handle this nonproblem. For example, they call for a new agency to monitor foreign investment; for the investment of Federal funds in rebuilding the US infrastructure; and for prying open foreign markets by threatening to close ours; etc. A thorough and dispassionate analysis of the role of foreign direct-investment in the US economy--though the authors fail to justify their recommendations for extensive Federal intervention to oversee and regulate foreign investment.

Pub Date: April 10th, 1989
ISBN: 465-05005-0
Publisher: Basic
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