Political Implications of Foreign Investment in the United States

In 1973, an unprecedented inflow of foreign investment into the United States caught American policy-makers and the general public totally unprepared for the experience. In that year alone, foreign direct investment (FDI) increased by $3.42 billion, more than a three-fold increase over the previous year, representing a 23 per cent rise in the aggregate foreign direct investment in the United States. In addition to direct investment, portfolio equity investment amounted to $24.8 billion, for a total long-term equity investment in 1973 of $43 billion. The total for 1974, the beginning of the recent global recession, showed similar growth. FDI for 1974 grew by $3.46 billion to a grand total of $21.7 billion, an annual rate of 19%. These government figures have been the subject of dispute. They do not include real estate investments, since these traditionally have been considered a local activity and any regulation thereof, such as title registration, has been at the local level. If rumors about large alien real estate purchases are confirmed, this omission must be considered of major significance. Furthermore, the information is gathered on a sampling process based on a benchmark study taken in 1959. Private estimates have been much higher than the official figures. Without accurate information gathering programs, policy-makers do not have some of the most basic information, such as aggregate long-term FDI in the United States