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Foreign Direct Investment

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Michael Cunningham

on 11 May 2011

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Transcript of Foreign Direct Investment

Strengths Strengths Weaknesses Threats Opportunities Constituents Players Opinions American Foreign
Direct Investment
& Trade Strengths Weaknesses Opportunities Threats Coordination Commitment Interagency coordination is key to the
success of U.S. investment in developing countries. U.S. foreign policy supports the
international effort to reduce hunger
and poverty in developing countries by
investing in their economic growth, which
illustrates America's commitment to global issues. Support U.S. foreign direct investment is generally supported by
both the public and private sectors in the U.S. as a means
to increase revenues and create opportunities at home.
There is some opposition from the country's labor force. Power U.S. trade and foreign investment to
developing countries keeps America
in the global eye and confrims the U.S.'s
position as an international economic
power. Export-Import Bank Transactions in 2010:
28% was for the financing of oil and gas pipelines
29% was for the financing of commercial aircraft OPIC Exim Bank Exposure Mexico India Ireland Korea Turkey Papua New Guinea Saudi Arabia Brazil Canada Smaller transactions Who are OPIC's
Customers? Citibank &
Wells Fargo 2010 Do these large international banks need the
US government to underwrite their risks? Chemonics 2010 ~ 50% USAID Contractor Is Chemonics leveraging their government contract work to
develop for-profit business internationally? Is the U.S. competing
with China? Opinions Diffirent groups have different intrests, so opinion about
foreign direct investment and trade is widely varied. Tools of control as they relate to
OPIC and federal enterprise funds "I cannot see any redeeming aspect in the existence of OPIC.
It is special interest legislation of the worst kind" "Economists generally oppose the use of subsidized credits
to promote trade or investment abroad." -2009 CRS Government Economists & Policy
Professionals American Public Better Use Domestically Conclusions Foreign
Public The Hamilton Spectator 12-10-2010 Canada Bahamas Carribean News Now 11-19-2010 "Foreign parents have no qualms about shutting Canada right out of the picture, if cost calculations or head-office political concerns push them that way.” "In seeking financing from Ex-Im Bank of China, they apparently agreed that the work force, in effect, would be 71% Chinese and 29% Bahamian -- a bitter pill to swallow in the best of economic times and certainly indigestible in the present economic climate.” We would be happy to answer any questions you might have about... of OPIC Noah Cunningham Mike DiBella Brian Pricipato Jeff Young Mining
& Oil Relevancy Economic Liberalization Democratization Authoritarian Entrenchment Cash $566 M
Treasury Securities $5049 M
Loans Outstanding $1076 M
Other $387 M
Total Assets $7078 M

Liabilities $2668 M
Equity $4410 M
Total $7078 M 2010 Investment Increase & Fees $170 M
Interest on Program Deposits $33 M
Political Risk Ins Premiums & Fees $15 M
Interest on Treasury Securities $179 M
Total Revenue $397 M

Total Expenses $137 M

Net Income $260 M Balance Sheet OPIC Income Statement
Mexico $8.3 Billion $2.2 Billion Aircraft, oil production
India $4.6 Billion $53 Million
Ireland $4.2 Billion $1.4 Billion Aircraft
Papua New Guinea $3.0 Billion $3.0 Billion Natural Gas Facility
Korea $3.0 Billion $802 Million Aircraft
Brazil $2.7 Billion $553 Million Aircraft Foreign investment and trade are beneficial to domestic and global economies. Although adaptation is essential in an ever changing world, we see
no urgent need for reform in U.S. foreign direct investment and trade. Source: "The Challenge of Administration by Regulation: Preliminary
Findings Regarding the U.S. Government's Venture Capital Funds"
Jonathan G.S. Koppel
(1999 Journal of Public Administration Reasearch and Theory) Accountability BHP Billiton
Cliffs Natural Resources
Newmont Mining US Steel
Nucor Steel Exxon Mobil
Occidental Petroleum Major Mining Companies Major Oil Companies Major Metals Processing Companies Infant Industry Protection Labor Distribution Government Corruption Property Rights Enforcement Low Productivity Research & Development Efficiency Inflow of Capital & Technology Increased Wages Lower Production Costs Jobs in Poorer Countries Better Use of Domestic Human Capital Does FDI further national interests? Possible Loss of Domestic Jobs Resource Stripping Overinvestment Abroad Effects of MNCs on Local Communities Access to Foreign Markets Increased Demand for American Goods Long Term Growth Cultural Learning Education Humanitarian Benefits Overseas Private Investment Corporation Government Private Sector "These flows of money into a country [FDI] ... are critical
to the ability of any country to develope."
-"The Political Economy of Development" Mary Ellen Batiuk Total 2010 Purpose Key Players OPIC USAID Foreign Commercial Service Dept. of State Exim Bank U.S. Trade Representatives Private Sector Acquiring a controlling stake in a foreign entity. Total Exports $1.27T Exim Bank's Share $34.4B 2.7% Opinion As it Relates to OPIC "If we wish to combat poverty around the world our efforts must be geared toward promoting the institutions of growth first, not by pushing investments--and certainly not by reducing the cost of bad risk" Research & Development Efficiency Inflow of Capital & Technology Increased Wages Lower Production Costs Jobs in Poorer Countries Corporate Welfare Jobs Overseas Arguments Against Arguments For Resource Stripping -Milton Freidman -Tim Kane
Full transcript