from an economics correspondent As noted by Harry Magdoff, in his excellent article in Socialist Register, 1965, "Problems of United States Capitalism", despite the decline in the importance of capital investment by U.S. capitalism foreign investment has made a striking move forward. ‘“hilst total investment in fixed capital declined from 10.3% of the G.N.P. during the years 1947-57 to 8.6% during the years 1958-64 its foreign investment increased rapidly, The total flow of capital out of the U.S. in the form of direct investments added up to $6.3 billion for the combined years 1947-55. This jumped to $15.8 billion for the years 1956-64, This fapign investment is not only concerned with finding new markets or lower labour costs; it is a vital part of the U.S. export drive, For example, in 1963, foreign affiliates of U.S. industrial countries bought at least #5 billion of U.S. goods. This represented about 25% of all U.S. exports of merchandise in 1963.. Moreover, although U.S. corporations sent out $16 billion for direct foreign investments in the years 1956-64, in the same years the rest of the world returned to the U.S. about $23 billion as dividends, interests and branch profits resulting from direct investment.** A major recipient of U.S. investment in recent years has been the Common Market. ig investment has been attracted by the rapidly growing market and a desire get ‘behind! the gradually increasing tariff walls. However, this U.S. investment has reached such a scale the worries are being expressed by various sections in the Six. As might be expected General De Gaulle has spoken out against the possible effects on the political as well as economic fronts. The latest issue of Buropean Community, the publication of the London Information Office of the Common Market, carries an article giving background material to the controversy which has flared up. This article is worth quoting in extensio both for facts and figures and the attitudes revealeds "U.S, investments in Western Europe and West European investments in the U.S.A. amount to very much the same in value. But the manner in which Americans invest in Europe is more important that the amount. Until recently Buropean investments in the United States far exceeded American investments in Europe. Despite the massive sales of British-owned assets in the U.S. and the seizure of German and Italian assets as war booty during the second world war, Western European private long-term investment in the U.S.A. in 1956 was valued at 29,008, while U.S. investment in Europe amounted to only 5,224 million. "Since that time the gap has narrowed sharply. At the end of 1963 long-term European investment in the U.S.A. were worth $16,237 million, while U.S. investments in Europe were rapidly approaching the same level. The great difference between these two groups of investment is that the bulk (810,351 million at end of 1963) of the American assets in Europe are directly-owned concerns, whereas only about one-third ($5,491 million of European assets in the United States were of this nature, the remainder consisting 6€ share portfolio investments in U.S. concerns. Thus, in terms of directly-owned assets the U.S. "owned" twice as much of Europe as Europe
** Mr. Magdoff's figures are all culled from U.S. Government reports and publications.
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U.S. investments in Europe continued/
"Moreover, European direct investments in America are confined principally to a few companies (e.g. Royal Dutch/Shell, Unilever, Philips, Bowater, English Sewing Cotton) and constitute a relatively small proportion of total investments. Spread over the entire American industrial scene European investment is small and, what is more, largely anonymous. Surh obviously European firms as Lever Brothers are an interesting rarity. By contrast, the predominance of U.S. enterprise in some Furopean industries is immediately striking. For example, about 30% of the output of the 18 motor manufacturing companies in Western Europe is produced by seven American concerns, It is this sector predominance, above all in such key industries as oil and computers, that gives rise to European disquiet. The sometime dramatic take-over battles for complete or partial control by U.S. companies, as in the case of Ford and Rootes in Great Britain, Machine Bull in France and Olivetti in Italy, help to increase these anxieties. Employees in modern industry, already remo‘te from the powers of decision over their livelihoods, are doubly restive when that control passes to management based at least 3,000 miles away, and which is sometime ignorant of the many deep-rooted social and cultural differences between European and American life and industry.
"Ty,re has been a sharp rise in the inflow of U.S. capital into ‘lestern Europe in recent years, as the table below for 1961 and 1963 indicates. Last year..there was probably a further rise, though figures are not yet available. Thus, although new U.S. investment represents a very small proportion of all new investment in Western Europe (and relatively much more in the U.K. than in the Community) it is rising much faster than total new investment in Western European countries. This fact, plus the concentration in particular industries noted above, contributes to the current controversy. «"
The article goes on to point out that "as yet" Western European nations have not limited U.S. capital imports but rather encouraged them (by loans, reduced interest rates, accelerated depreciation provisions, etc.). One country, however, is reacting: "In recent months..in France, where American investments between 1958 and 1964 averaged $560 million a year, the Government has tightened up on approvals of new investment by foreign companies. Of the several dozen applications received since last January only two have been accepted, and only investments likely to contribute to the government's regional policies are likely to be permitted..." The article concludes by saying that other Community countries have not adopted this policy. As a postscript the journal quotes some remarks by the Common Market Commission President, Walter Hallstein, which while being very polite,call for restraint. U.S. Capital investment in Western Europe in relation to total national and {ndustrial development. (in % million and percentage of total) ~~ ~~~ ~~~" as 1961 1963
Total US in manufact- Total US in manufact-
investment uring industry investment uring industry
$mill % mill & $mill% mill % France 104 1,2 62 lol 199 1.25 149 2el5 West Germany 168 0.85 112 1.1 272 1.15 137 1.2 Ttaly 19 1.0 16 0.45 1350 1.25 40 0.85 Netherlands 26 0.85 16 1,05 62 1.8 19 1.1 Total Community 406 0.85 228 1.0 720 1.3 390 1.45 U.K. 318 205 148 2025 387 2.85 206 3.1