In 2003 US business invested $153 billion in foreign countries. This is about 27% of the world wide total foreign direct (FDI) investment of $560 billion and the second largest total on record. Sounds pretty positive.
Until you look at the other side of the picture. Historically FDI in the US has been about 20% of the world wide total and was $314 billion just four years ago. In 2003 FDI in the US was $29.8 billion, 5.3% of the total. Why has then been such dramatic slippage:
One explanation looks to the re-emergence of large budget deficits after the tax bills of 2001 and 2003. These can diminish confidence in America’s longer-term growth prospects, and simultaneously give foreign investors the choice to put money into government securities with a guaranteed return, as opposed to tangible businesses whose future can never be entirely certain. Security concerns and intensive media coverage of recent business scandals may also affect perceptions.But the US doesn’t really need the jobs that this investment might have created, right?
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