066
2022

Will Deglobalization Dim the Gains from Global Investment?

Foreign direct investment (FDI) has been essential to many economies and integral to the process of globalization. In recent years, the benefits of FDI are threatened by geopolitical risks and chronic supply chain disruptions. However, any security gains achieved from the retrenchment of trade must be measured against its costs.


In 1982, amid growing trade tensions and persisting problems in the US auto industry, the first foreign nameplate automobile ever produced in the United States rolled off Hondas new assembly lines in Marysville, OhioSince then, Japanese car companies in aggregate have invested more than US$51 billion across 28 US states, directly and indirectly accounting for 1.6 million jobs in the country.


The dividends accruing to the US economy due to this kind of inward foreign direct investment (FDI) have been substantial in both absolute and relative terms. Without the participation of foreign companies in the United States, US manufacturing GDP growth rate would have been between 8.4% to 20.9% (US$177 billionUS$463 billion) lower than it was in 2019.


The benefits of FDI are not unique to the US. FDI is not only a source of capital investment, but also a facilitator of technology, expertise, and best business practices around the world. Unfortunately, these benefits are threatened by the specter of de-globalization.


This paper by Daniel Ikenson of ndp | analytics examines some of the potential costs of de-globalization. First, it describes and quantifies the benefits of FDI to the overall US economy. Second, it focuses on the contributions of US affiliates of foreign companies to the US manufacturing sector. Third, it considers the potential impact of dissipating FDI on US manufacturing. Finally, the paper reminds the readers of the potential costs of deglobalization to the US economy which would be even more significant in the many economies that are heavily dependent on FDI.


This analysis is part of a series of papers by Daniel Ikenson that highlight the importance of trade and investment to both developed and developing economies. Access other papers here:

Mercantilist reciprocity or free trade: Globalization at a crossroadsTrade and development in an age of crisis: Mind the fundamentals

© The Hinrich Foundation. See our website Terms and Conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).


About the Author

Daniel Ikenson is an economist and renowned international trade expert who has spent over 30 years analyzing, communicating, and influencing the formulation of US and global trade policy. In 2021, Daniel joined ndp | analytics after nine years as director of the Cato Institutes Center for Trade Policy Studies, where he led a team of lawyers, economists, and political scientists conducting research on all manner of trade policy.

原文:https://www.globaltrademag.com/the-dividends-accruing-to-the-us-economy-due-to-this-kind-of-inward-foreign-direct-investment-fdi-have-been-substantial-in-both/?gtd=3850&scn=

声明:以上内容来源于互联网,仅供英文学习,并无商业应用,如有侵权请联系客服。

分享到:
译文
问题反馈
返回顶部