In the late 1960s, Europeans worried that investment by the powerhouse U.S. economy was threatening their economic independence. In the 1980s, Americans voiced similar fears about a tidal wave of direct investment by Japanese and European companies. Now, however, investment flows have changed direction again.
Economists at DRI/McGraw-Hill point out that direct investment in the U.S. by foreign companies actually declined last year for the first time in recent memory. A small inflow of new direct investment was overshadowed by debt repayments by U.S. subsidiaries of foreign companies to their overseas parents. The latest tally marks a sea change from the acquisition boom of the late 1980s, when such investment inflows averaged $60 billion a year.
Meanwhile, net U.S. direct investment overseas has been picking up steam. After averaging $20 billion in the late 1980s, it jumped to $35 billion last year from $27.1 billion in 1991.