The New Competitors: How Foreign Investors Are Changing the U.S. Economy

The New Competitors: How Foreign Investors Are Changing the U.S. Economy

The New Competitors: How Foreign Investors Are Changing the U.S. Economy

The New Competitors: How Foreign Investors Are Changing the U.S. Economy

Excerpt

When our book first appeared in 1989, the time was ripe for a new look at foreign investment in the United States. Inward direct investment leaped by a record $61.3 billion. The debate over the "buying of America" was building.

With foreign takeovers of major U.S. companies occurring as frequently as revolutions in Eastern Europe, Americans became less concerned about military security and more troubled about economic security. Significant foreign acquisitions persisted in 1989 and into 1990: Genentech (biotechnology), Uniroyal Goodrich (tires), Holiday Inn (hotels)—even Dunkin' Donuts (restaurants). But two Japanese deals prompted the greatest reaction: Mitsubishi's majority interest in Rockefeller Center and Sony's purchase of Columbia Pictures. The authors of Selling Out sounded a clarion call to the barricades: "So much Japanese investment has flowed into the United States in the 1980s, that the nation is in danger of seeing its economic sovereignty washed away in a tide of yen, its history pawned to a foreign power." When the Japanese bought a "cultural institution" or a "landmark" office building, the media would report that the "soul of the United States was sold." Obscured in all this breathless rhetoric is the question, Why would Canadian-owned New York real estate or Australian-owned Twentieth Century Fox be any different?

As we shall see, Japanese investment is different in some respects. Nevertheless, we should spend less time worrying about "selling out" America to the Japanese and perhaps more time pondering Japanese investment in Japan. Although Japan has an economy 40 percent smaller than that of the United States and a population about one-half the size, it now invests more in its factories, machinery, and equipment. In absolute terms, Japanese capital investment in their home economy has been greater than U.S. domestic investment since 1987. Over a quarter of . . .

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