Abstract
During the 1980s both foreign investment in the United States and the debate about its effects on the U.S. economy increased in volume. Proponents of foreign investment assert that it boosts the productive capacity of the U.S. economy, reduces interest rates, and brings with it new technology and management practices. Some Americans seek to restrict foreign investment in the United States, arguing that such investment has deleterious consequences for the domestic economy or national security. The economic and national security arguments offered in support of administrative restriction of foreign investment are flawed. Some are based on misapplications of the principles of economics or misperceptions concerning the behavior of foreign firms. Others ignore the remedies available to the U.S. government should it feel that national security is threatened by the behavior of foreign investors.
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