U.S. Direct Investment Abroad

U.S. Direct Investment Abroad

A major investment by an American corporation outside the United States. For example, an American company may buy a factory in Indonesia because labor costs are lower. Many economists believe that U.S. direct investment abroad is good for an economy, as it provides jobs and increases domestic capital. Critics point out that profits usually leave the invested country and go to the American company. U.S. direct investment abroad is a type of foreign direct investment.
References in periodicals archive ?
For the most part, the current cost and historical cost estimates have tracked closely together for U.S. direct investment abroad and for foreign direct investment in the United States, as indicated in Figure 1 and Figure 2, respectively.
Receipts on U.S. direct investment abroad were held back by continued economic slack and low profits in many foreign economies.
An example of U.S. direct investment abroad is the purchase by a U.S.
firms on businesses and real estate abroad, or U.S. direct investment abroad, (1) rose by 27% in nominal terms in 2011 over the amount invested in 2010, reflecting improvements in the rate of economic growth in Europe and elsewhere.
Although large financial inflows last year tended to increase net payments, the inflows were more than offset by an increase in the rate of return on U.S. direct investment abroad and a decline in the rate of return on foreign direct investment in the United States.
U.S. direct investment abroad, (1) although substantial, fell by almost
However, net investment income remained positive long after the net investment position became negative because foreign direct investment in the United States has earned a far lower rate of return than U.S. direct investment abroad (chart 6).
6 Reinvested earnings on U.S. direct investment abroad 331.9
three methods do provide estimates on U.S. direct investment abroad and
However, net investment income remained positive (chart 7) long after the net investment position became negative because foreign direct investment in the United States has earned a far lower rate of return than U.S. direct investment abroad.
(4) At the same time, U.S. direct investment abroad plummeted in
The former was attributable to the continued growth of, and remarkable profitability of, U.S. direct investment abroad, and the latter primarily to the large increase in net portfolio liabilities.
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