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Chicago Fed Letter, No. 105, May 1996
Foreign Direct Investment in the U.S. and Midwest
The globalization of the world’s economies over the last two decades has, in many ways, tied the U.S. economy to events and actions that take place throughout the world. One measure of globalization is foreign investment, both at home and abroad. Foreign investment is a two-way flow—persons and entities invest in a foreign country and, in turn, that country’s citizens and corporations invest abroad. Foreign direct investment (FDI) refers to business ownership as opposed to limited portfolio investment. Historical data on FDI in the United States (FDIUS) show that FDI annual capital flows have grown considerably since 1980.
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