The role of multinational companies in the world economy has expanded rapidly over the last decades. Multinationals both react to and a major driving force within the changing world economy1. The globalisation of markets is responsible for the increase in worldwide foreign direct investments. International inflows of foreign direct investment (FDI) amount for around $560 billion in 2003, representing an increase of around 130 per cent over 1990 levels. In terms of its share of global FDI, the United States of America are a major source country worldwide with a share of five per cent of total global FDI inflows in 2003. Furthermore, the United States of America were the last 25 years on position one of the Inward FDI Potential Index published by the UNCTAD23. These foreign direct investments may play a significant role in helping to transfer leadingedge skills, technologies, management styles and other important practises to host economies4. This report is based on secondary research and will assess the impact of Multinational Enterprises on the U.S. economy and is divided into three parts. First of all, I am going to give in my report a brief overview about foreign direct investments into the United States in order to give a good descriptive base for the main part. In the major part I will point out the costs and benefits of foreign direct investments for the United States both in theoretical and empirical terms. After this analysis my report will suggest policy implications based on the assessment of the costs and benefits. 1 Young, St., Hood, N., Hamil, J. (1988) 2 UNCTAD (2004) 3 See Appendix 4 South Centre (1997)

Excerpt

1. Introduction

2. Descriptive base of foreign direct investment into the United States

3. The impact of Multinational enterprises in theoretical and empirical terms
3.1 Balance-of-Payments effects
3.2 Employment effects
3.3 Technological effects
3.4 Sovereignty

4. Policy implications

B. Bibliography

C. Appendix

1. Introduction

In terms of its share of global FDI, the United States of America are a major source country worldwide with a share of five per cent of total global FDI inflows in 2003. Furthermore, the United States of America were the last 25 years on position one of the Inward FDI Potential Index published by the UNCTAD^[2] ^[3].

These foreign direct investments may play a significant role in helping to transfer leading-edge skills, technologies, management styles and other important practises to host economies^[4].

This report is based on secondary research and will assess the impact of Multinational Enterprises on the U.S. economy and is divided into three parts.

First of all, I am going to give in my report a brief overview about foreign direct investments into the United States in order to give a good descriptive base for the main part. In the major part I will point out the costs and benefits of foreign direct investments for the United States both in theoretical and empirical terms. After this analysis my report will suggest policy implications based on the assessment of the costs and benefits.

2. Descriptive base of foreign direct investment into the United States

The term foreign direct investment^[5] is important to distinguish between the flow of FDI and the stock of FDI. The flow of FDI refers to the amount of FDI undertaken over a year into a country. The stock of FDI refers to the total accumulated value of foreign-owned assets at a given time^[6].

The largest share of FDI is traditionally accounted for developed countries such as the United Kingdom, Japan and Canada. In order to analyse the “impact” of the USA in the major part I am going to present a descriptive base about inward FDI flows, the investment position into the USA for the last years in several diagrams.

Total global inflows of FDI declined over the last years and the share of the United States as well.

Illustration 1