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U.S. net direct investment position

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Explain the underlying basis for foreign direct investment, and discuss several factors that may contribute to it. What factors have likely contributed to the current U.S. net direct investment position?

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U.S.'s net direct investment position is uncovered.

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Foreign direct investment (FDI) in its classic definition, is defined as a company from one country making a physical investment into building a factory in another country.

- In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate.
- The UN defines control in as owning 10% or more of the ordinary shares of the firm.

The parent enterprise and the foreign affiliate together form a Multi-National Corporation (MNC).

There are various factors that contribute to FDI. FDI can be divided into four different ...

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