Foreign Direct Investment

Pursuant to a congressional request, GAO assessed the Department of Commerce's and the Treasury's responses to two GAO reports on foreign direct investment in the U.S. real estate sector, the Department of Agriculture's (USDA) views on a GAO report on foreign investment in U.S. farmland, and the Department of Housing and Urban Development's (HUD) views on two issues relating to the U.S. residential property market. GAO noted that: (1) Commerce agreed that the cost of capital in Japan was lower than in the United States, although by less than the nominal interest rate differential would indicate; (2) Treasury commended the comprehensive and thorough GAO analysis and supported its conclusions; (3) USDA closely monitored foreign purchases of farmland at the state and county levels, and foreign ownership accounted for 1 percent of privately held American farmland in fiscal year 1988; (4) HUD believes that the inflow of foreign capital into the U.S. property market has been beneficial in providing American citizens with greater access to capital for investment in real estate; and (5) the Department of Defense commented on the types of information gathering and analysis performed by the administration in reviewing national-security-related foreign investments.