What Tata Tells Us

Foreign Direct Investment Effects

It cannot be denied that globalization has already provided a whole new way for international businesses to flourish . Previously , America is at a leadership in global trade since it has the best capital structure that makes the world 's trading platform at a stable pace . However , as global trade continues to extend its power over medium and small economies , the United States has started to realize that sharing an economic leadership fueled by capitalism is becoming more and more inevitable . The article What Tata Tells Us ' provides a

picture that Foreign Direct Investments are good for the US economy . On a personal note however , these FDIs translate to a more problematic scenario for the United States as they cover more problems beneath the seemingly good flow of money towards the US economy

If foreign multinational companies are putting their investments to the US , isn 't it that a good indicator of the economy 's health Actually , Matthew Slaughter 's argument can be considered to be optimistic as it translates that the US is still by far one of the most stable markets in the world . However , there are at least three major perspectives that need to be realized why such scenario is not good for the US . First of all , an increase in FDI means that more and more multinational entities are starting to grow in terms of global market influence . This means that previously unheard companies , or nations , are developing drastically that they are now able to penetrate the stringent characteristic of the US market . In this situation , the world market would be more competitive , thus limiting the capability of the United States to further hold its trade position

Another argument why FDIs are not good for the US is that they readily equate to the fact that part of the US ' growth since 1987 is fueled by the investments made by foreign multinational companies (Mann 2000 , or at least through mergers and acquisitions of US companies This means that the United States was not really able to cushion the impact of very high current-account deficit which caused the US economy to experience a few recession or near-recession states since then . If not for the foreign investors , the economy would have not buoyed its sinking status towards an imbalanced capital distribution in the world previously done by American investors as they have allocated their funds outside of the country . Therefore , if FDIs will continue to increase its wave towards the United States , it will only translate to more dependencies of the economy to these capital entities and would not resort to use its own economic capability to level-off the market deficits

Lastly , FDIs truly do not promote benefits for the United States since this could start the very end of the US ' capital power . As more and more external companies enter the market , more and more basic utilities will be taken away out of the Americans ' control . It is very possible that there will come...