NBER Reporter, no. 3
Tariff reductions, falling transport costs, and reduced barriers to international capital flows have created extensive opportunities for multinational firms and investors in increasingly integrated global markets. For example, the outbound foreign direct investment (FDI) position of American firms grew at an average annual rate of 11 percent to $2.4 trillion from 1982 to 2006 while inbound FDI to the United States grew to $1.8 trillion. Foreign portfolio investment (FPI) has grown similarly. By 2005, 16 percent of all U.S. long-term securities (equity and debt) were held by foreigners. Foreign holdings of American stocks increased from $400 billion to $2.3 trillion over the last decade, while American holdings of foreign stocks increased from $600 billion to $3 trillion.
