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Foreign Investment and Trade Policy in the US

Recent Investments

The presented article opens with a review of recent investments at the time of its writing. The authors state that the position of the United States as the largest investor and recipient of foreign direct investment is unique and only second to the European Union as a whole. Trump’s policy on foreign investment was not yet formulated which the authors also point out. Data such as the rise of the United States direct investment abroad in 2015 to $349 billion and the fact that it comprised 87% of reinvested earnings is shown in graphs in tables.

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Intrafirm Trade

Intrafirm trade is shown as a significant element of the United States trade policy. It involves trade between parent companies with their foreign affiliates, as well as the trade between foreign companies and their parent companies. The total trade of the United States in 2014 is shown as $1.6 trillion in exports and $2.3 trillion in imports. Multinational companies that are often involved in intrafirm trade made up 31% of all United States exports and 35% of all imports.

Foreign Investments by Industry and Country

The article also presents a large table that breaks down the foreign investments by country in industry. The various foreign economies invest in almost 90% of all industries in the United States. The value of an investment in 2015 was approximately 1.2 trillion dollars. Manufacturing was the most popular choice for foreign investors with the majority of countries investing in it. These investments produced a boost in labor productivity in the country.

Acquisitions and Establishments

The next section was dedicated to acquisitions and establishments. As the name suggests, it separates all foreign direct investments by the actions of the company with one group focusing on acquiring existing firms, while another is focused on establishing them. In 2015, 791 domestic companies were acquired by foreign investors who make up 96% of all foreign direct investments in the country. The remaining investments were spent on new establishments. However, the authors point out that 99% of jobs that were created through foreign direct investments are tied to the newly established firms.

Foreign Investment and National Security

The issue of national security and how foreign direct investment affect it is explored in the following section. The authors state that the main controlling agency for foreign direct investment in the country is called the Committee on Foreign Investment in the United States. Their role is to analyze investments and signal if they are threatening national security, are controlled by a foreign government, and if they could affect any critical infrastructure of the country. The manufacturing sector is recorded as the most being affected by foreign direct investments. The committee is concerned about the increase of government-controlled firms on the world market.

Economic Performance

This section begins with a breakdown of data on the number of companies and affiliates inside and outside the country. More than 26 million workers are stated as being employed by United States parent companies in 2015 while 13.8 million were employed by foreign affiliates. The efficiency of the United States affiliates of domestic firms is shown to be higher than foreign competitors. However, foreign firms are outperforming United States firms in the manufacturing sector through the use of their affiliates.


In the conclusions section, the authors reflect the world trade market. They examine the various changes in regions of Africa and Latin America. The last section states that the issue of job security is affecting foreign direct investment in the country.

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StudyCorgi. (2021, February 1). Foreign Investment and Trade Policy in the US.

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