Foreign Direct Investment 5

US foreign direct investment (FDI) is a constant source of foreign exchange for the United States. It also serves as a conduit for one-third of all US merchandise exports, thus providing domestic US employment. US FDI should be recognized as a valuable national asset, but instead it is often criticized or at best ignored. Unions have argued that foreign direct investment harms the home country of the parent by “exporting jobs” in order to take advantage of cheaper foreign labor and by exporting manufactured goods back to the home market, especially in the United States. The issue of foreign direct investment among industrial countries is vastly different from that concerning investment in developing countries. The foreign direct investment is a vital component of trade flows, serving as a conduit for exports. Therefore, any persistent imbalance in investment flows amplifies the lopsidedness in trade flows.