Is the US Ready for FDI from China?
Studies in International Investment series
Edited by Karl P. Sauvant
Since the 1940s, under both Democratic and Republican administrations, the United States has led the world in opening global markets for goods, services and investment. This has facilitated the spread of technology and encouraged the development of faster and cheaper communications and transport. As a result, the world’s economies have become increasingly entwined since the early 1980s. The results have been spectacular. The explosion of world trade and investment has caused standards of living to soar at home and abroad. Economist Gary Hufbauer, in a comprehensive study published in 2005,1 calculates that the opening of global markets since World War II has increased our nation’s gross domestic product (GDP) by roughly $1 trillion per year, thus raising the average American household yearly income by $9500. Cross-border investment has contributed significantly to that gain. According to the International Monetary Fund such direct investment rose from 6.5 percent of world GDP in 1980 to 32 percent in 2006. Supply chains encircle the globe. Poor countries have also gained from the opening of global markets. According to studies by the World Bank, those economies that opened their markets grew more than three times faster than those that kept their markets closed. A recent paper by the staff of the International Monetary Fund pointed out that: “over the past 20 years, as a number of countries have become more open to global economic forces, the percentage of the developing world living in extreme poverty – defined as living on less than $1 per day...