Foreign Investment

Pursuant to a congressional request, GAO discussed the effects of foreign direct investment in the United States, focusing on four sectors of the U.S. economy and the availability and types of data needed to analyze them.

GAO found that: (1) concerns about foreign investment focused on whether foreign-controlled banks' lending decisions might be able to affect the growth and direction of U.S. industry; (2) foreign investment trends and specific transactions showed increased Japanese activity; (3) foreign investors owned 22.6 percent of U.S.-based bank assets, of which 12.1 percent was Japanese; (4) assessing bank lending patterns and competitive behavior requires data other than foreign investment data; (5) concerns about foreign investment by oil-producing countries stemmed from U.S. dependence on imported oil and focused on whether foreign investment tended to discourage U.S oil exploration and production; (6) U.S. dependence on imported oil also raised concerns over increased U.S. vulnerability to political changes in these countries; (7) foreign investment in the U.S. petroleum industry tripled between 1980 and 1988, from about $11 billion to about $34 billion; (8) the high level of foreign investment in the chemical sector has not raised concern, but has been recognized as an economic indicator of international operations in that industry; (9) concerns about biotechnology were that foreign firms might reap the benefits of technologies developed in the United States as a result of technology transfers; and (10) these trends indicate increased foreign participation in the U.S. biotechnology industry.