In This Review

U.S. National Security and Foreign Direct Investment
U.S. National Security and Foreign Direct Investment
By Edward M. Graham and David M. Marchick
Institute for International Economics, 2006, 220 pp

Two prospective foreign acquisitions of U.S.-based businesses have recently caused enormous political controversy -- implying a greatly enlarged concept of U.S. national security. An economist and a lawyer have teamed up to offer a history and a dispassionate evaluation of government review of foreign investment in the United States, with some reference to the policies of other countries. They present detailed discussions of the offer by a Chinese oil company, CNOOC, to purchase Unocal, an American energy firm with significant reserves in Southeast Asia, and the offer by Dubai Ports World to purchase P&O, a British-based global firm that operates six ports in the United States -- and the political outcry occasioned by each of these offers, neither of which was consummated. They also give suggestions for improving, and making more transparent, the existing review process for inward-bound foreign direct investment that could affect national security, which has been in place since 1975. In the end, however, the authors reject a number of more radical proposed changes on the grounds that they would not likely improve national security and could impede foreign investment in the United States.