Management has instructed your unit to submit a brief report on the issue of a r

Question

Management has instructed your unit to submit a brief report on the issue of a reduction in Foreign Investments in the US and globally. Your manager has instructed you and your colleagues (fellow students) to discuss this issue, e.g. why this has occurred, what could be the long term effect, who should be worried, etc. She also suggested you start with articles she has found interesting so far (see links below), and add other articles you might find useful.

https://www.cnbc.com/2018/07/05/ripple-effect-from-pending-us-china-trade-war-drop-in-fdi-worldwide.html (Links to an external site.)Links to an external site.

https://www.dw.com/en/foreign-investment-in-us-down-sharply/a-44643998 (Links to an external site.)Links to an external site.

Explanation / Answer

Foreign direct investment historically has been a driver of economic growth for developed countries like USA. However, the cornerstone of smooth and seamless foreign direct investment is stable economic policy and a political establishment which supports growth of trade and business. The Trump administration has increasingly been hostile to any globalization policy and have been implementing protectionist policy. These policy decisions are not conducive for foreign direct investment and as a result investor sentiment throughout the world has suffered. Any investor would want political stability and forward looking economic outlook. These two requirements have suffered significantly under the Trump administration and there is also no hope for the situation to change in recent future. Therefore, there needs to be a stable government with proper inclusive economic outlook for investor sentiment to improve and foreign direct investment in the USA to regain its previous levels.

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