- The Washington Times - Friday, March 16, 2001

Foreign investment in the United States topped $300 billion for the first time in 2000, demonstrating that offshore investors remain bullish about the prospects for the American economy even as growth slows, the Commerce Department reported yesterday.

Companies based overseas plowed $316.5 billion in foreign direct investment into facilities in the United States. The rise continues a dramatic trend in which investment has grown dramatically from $58.8 billion in 1995.

"These impressive figures show the continued confidence offshore companies have in the United States," said Todd Malan, executive director of the Organization for International Investment, an association of foreign-based multinationals that lobbies against restrictions on investment.

The figures on foreign investment were part of a broader report that showed the nation's current-account deficit the broadest measure of money moving in and out of the United States hit a high of $435.4 billion.

The number was a 31.3 percent increase over the previous record of $341.5 billion in 1999.

The current-account figures, which include imports, exports and a variety of capital flows, were widely anticipated because the Commerce Department reported a record $369.7 billion trade deficit last month.

Foreign direct investment is part of the capital inflows that allow Americans to finance their voracious appetite for imports. Because the United States does not earn enough from selling exports to the rest of the world, it relies on foreign investment, as well as foreign purchases of stocks and other financial products, to finance the trade deficit.

The trend, evident since the United States began running large trade deficits in the 1980s, has turned the nation into a net debtor, meaning that foreigners own more U.S. assets than the United States owns abroad.

This year's investment figures masked a dramatic fall in the rate of new investment. From 1998 to 1999, foreign investment grew by 46 percent. In 2000, the rate was a slower 15 percent.

Some of the investment last year was from acquisitions of U.S. companies by foreign businesses, the Commerce Department said.

Still, few economists expect the trend to reverse itself, given the consistently good returns foreigners have seen on their American investments.

"Their money is safer here than anywhere else, even if we are on the verge of a recession," said Richard Yamarone, an economist with Argus Research in New York.


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