By 1990 the market value of US direct investment abroad measured $714.1 billion compared with $530.4 billion for foreign investment in the US (Graham and Krugman 1991:17). Instead of making products domestically and exporting them, corporations have become multinational, acquiring foreign assets with which to produce goods for sale in local markets. The United States has long been at the forefront of this movement: Coca-Cola, Nike and General Motors have contributed to the Americanization of the world by investing directly in local distribution networks. Subsidiaries, once the vehicle for tight control over foreign operations, have become more independent as firms realize the value of the cultural knowledge and skills of its foreign employees.

US firms have long sought foreign markets as growth opportunities. For example, the Big Three automakers have produced cars in Europe for decades, forcing smaller, local manufacturers to consolidate operations. Such investment has caused a backlash that includes sanctions, tariffs and public outcry against foreign “invasion” of products and ideas.

The fear of foreign cultural and even physical invasion did not hit American shores until the 1980s. While the United Kingdom and the Netherlands have long held significant US investments, it was not until a weakened dollar allowed foreign firms to acquire US assets at “fire-sale” prices that Americans took notice of the phenomenon of foreign investment and multinational corporations. Anecdotal evidence, such as Japanese purchases of cultural icons such as the Rockefeller Center by Mitsubishi and Columbia Pictures by Sony led to fears that the US was losing its leadership role in the global economy Ironically the Rockefeller Center was ultimately sold at a massive loss to Mitsubishi just six years later. While Japanese companies gobbled up $57 billion in US real estate from 1987 to 1990, American firms invested more than that in other countries.

Regardless, globalization is creating a reality in which Japanese firms Toyota and Honda produce identical cars whether they come off a Tokyo or Cleveland, OH production plant.

The fear of capital flight long led countries to place restrictions on inflows and outflows of investment and currency. Restrictions on direct foreign ownership of institutions and land, as well as limits on currency conversion are common examples.

With the onslaught of technology and freetrade reforms in the late twentieth and early twenty-first centuries, most countries have accepted globalization. The General Agreement on Tariffs and Trade (GATT) provides for neutrality with respect to foreigninvestment ownership. Without capital controls, domestic fiscal and monetary policies approach futility For example, increasing domestic interest rates to combat inflation attracts foreign investment, which may fuel further inflation. The 1990s environment of “hot money” (institutions ready to divert assets at a moment’s notice) requires refocused attention on capital flows. Developing countries such as India, Malaysia and China maintain strict controls with varying success.

Investors worldwide are realizing the need to invest globally Americans and non-Americans alike are investing as much as 25 percent of their portfolios in foreign assets.

International mutualfund assets have mushroomed to over $400 billion. Foreign corporations, it is realized, have no specific allegiance to their country of origin, but are primarily focused on creating profits for their shareholders. This fact further dispels the fear that foreign investment will create any serious national security threats.