U.S. politics and greater regulation of inward foreign direct investment

Abstract

An analyst of U.S. foreign economic policy observes that each wave of antiforeign sentiment associated with the surge of foreign direct investment (FDI) coming into the United States washes ashore a flotsam of restrictive and exclusionary laws that recedes slightly or becomes buried and forgotten in the sand only to advance again with a new wave. During the late 1980s, the controversy generated by the sharp rise of Japanese acquisitions in the United States washed ashore the latest flotsam of regulatory measures and further advanced the tangle of rules and regulations targeting inward foreign direct investment (IFDI). Of the various types of FDI, the present study is concerned mainly with the policy change toward foreign investment in an already established domestic business. This type of investment often involves merger or acquisition and is distinct from a “greenfield” investment where the foreign investor establishes “from scratch” a new business in the host economy.