US Multinationals and Europe: An Update

Direct investment by US-based firms, once highly controversial in Europe, has become all but a non-issue. Long gone are the days of the late 1960s and early 1970s when “le défi américain” could dominate parlor talk in Europe. However, US direct investment in Europe has not gone away. Indeed, what has come to be termed the “globalization” of industry — largely the international spread of the operations of business firms into a multiplicity of nations via foreign direct investment (FDI) — has if anything accelerated since the middle 1980s. Indeed, FDI has been expanding at rates well above growth rates of either world output or world trade for about ten years now (United Nations 1991 and 1996). And, although not as dominant as a source (home) nation of FDI as thirty years earlier, a substantial portion of the world’s direct investment is still carried out by US-based firms.