Multinational Corporations and Foreign Investment: Current Trends and Issues

Abstract

Surely multinational corporations (MNCs) symbolize the internationalization of America for the U.S. public. The United States is the world's leading home and host country for these global firms. However, while our MNCs have considerable weight in some foreign countries, by most measures, foreign-owned businesses do not loom very large in the U.S. economy. Although the free flow of foreign direct investment promotes economic efficiency and world welfare, from a national viewpoint MNCs appear threatening. In particular, the U.S. public is concerned that our MNCs export U.S. jobs and that foreign MNCs can use U.S. resources to undercut our national goals. These fears are largely unfounded. On the whole, the traditional U.S. “open door” to foreign investment has served this country well. Nevertheless, many foreign governments are now trying to channel foreign investment flows to maximize their own national advantage. To protect our interests, the U.S. government is being urged to adopt similar regulations. The United States has no need for such measures; however, U.S. and world interests would be well served by an international agreement limiting efforts to distort foreign investment decisions. Because U.S. investment flows are huge by world standards but have a relatively small impact on our own economy, the United States has a unique ability to help form an international consensus on acceptable foreign investment policies.