with the U.S.A. economy in decline, is it best to invest inside or outside of the U.S.A.

Running head : INVESTING IN AMERICA AMIDST AN ECONOMIC DECLINE

Investing in America amidst an Economic Decline

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The decline in the economy of the United States has been a cause of major concern for both the local and international markets . Much of today 's industries worldwide depend on the performance of the American economy to a certain extent , thus either a decline or progress in the U .S . economy will eventually affect negatively the status of companies especially those operating within the United States . Nevertheless industries

outside of America but trades or deals with America can benefit from the indicators of the decline in the U .S . economy such as a weak dollar or a weak stock market . It is best to invest outside of the United States but target the country as the market when the country is in an economic decline . One way to do this is to invest in outsourcing certain types of goods and services to America

Higher inflation rates or the excessive increase in either the credit or the supply of money in America has generally led to the substantial increase in the general prices of commodities and other goods in the local market of America . The devaluation of the dollar contributes to higher inflation rates , especially in the cases of imported goods and imported raw materials from foreign markets (Chattopadhyay , 1994 ,

br 12 . For the local investors operating within the United States but imports their materials for production outside of the country , a higher inflation rate means higher cost for the purchase of these materials since trade is usually conducted in terms of currency exchanges . The devaluation of the dollar tips the scale in favor of the foreign currency meaning , as the dollar weakens in value , foreign currencies gain a stronger value in comparison to the dollar . In effect , the industries that produce goods locally but require the purchase of imported materials for their operation would have to adjust the prices of the goods and services they produce just to compensate for the higher expenses brought by the currency exchange adjustments . In some cases companies can opt to lessen their production levels in to address the effects of higher inflation rates

On the other hand , foreign companies who already have established business trade with local American companies can further maximize their financial benefits from the decline in the U .S . economy adjusting their capacity for production output . For example , a Japanese company can choose to increase the quantity of raw materials for automobiles that it sells to local American automobile companies if the American companies decide to increase their production of cars in to compensate for their probable loss in revenues from car sales both locally and internationally in the face of the economic decline in the U .S . Or the same Japanese company can choose to lessen the quantity of automobile parts they produce and ship to America in to further lessen their expenses for production...