Many observers write off the "old continent" as less and less relevant to American prosperity. Asia, they say, is the future. Hamilton and Quinlan's annual report, based on detailed surveys of economic activity, is crammed with data belying the conventional wisdom. It is not just that many U.S. regions and cities still depend primarily on European trade. More important, in the modern global economy, foreign investment is a deeper form of economic integration than trade, dwarfing the movement of goods and services. Up to three-quarters of U.S. foreign direct investment remains directed toward Europe. Research and development, closely connected to investment, moves primarily across the Atlantic as well. These patterns are particularly pronounced in the service sector, a harbinger of the new economy. The authors also find that the financial crisis has made Europe even more attractive, with U.S. firms actually divesting from China. An analysis of portfolio investments and money markets would have made the argument more persuasive. Still, no geopolitician or political economist can afford to ignore this case for the continued predominance of the $4.3 trillion transatlantic economy.
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