22.7.1.3. Read the text “Has Globalization Affected the usa?” Make a synopsis of it.

Has Globalization Affected the USA?

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During periods when Western Europe thought that communism would take a strong hold, the

Germans and the French increased their investments in the United States. Also, when the value of

the dollar fell dramatically in the late 1980s, everything in America suddenly looked cheap to the

rest of the world, particularly to the Japanese. So because of the first law of demand, they bought

more, and the US became even more of a world-integrated economy.

Why is the question of foreign control important? Presumably, foreign investors purchase American

productive assets in order to maximize their net wealth. Their interest in running a corporation

would seem to be identical to the interest of any domestic investor who owned that same

corporation. In other words, the profit-maximizing behavior of a corporation presumably does not

depend on the nationality of the owner of that corporation. If the Eden Roc Hotel in Miami Beach

Is taken over by Arabs (as indeed it was), would the service be any different in the long run? Economic

analysis predicts that it would not.

Commentary and Notes to Text 22.7.1.3

1. direct foreign investment — прямые иностранные инвестиции

2. the global integration — глобальная интеграция

3. real estate — недвижимость

4. buying binge — скупка

5. unabated — не ослабевал, не спадал

22.7.1.4. Read the text “Expansion of Japanese Industry and Capital in the USA,” translate it

and enumerate the nations mentioned in the text, which make investments in the USA.

Expansion o f Japanese Industry and Capital in the USA

A few years ago a famous US historian, Theodore White, wrote, “The Japanese are on the move

again in one of history’s most brilliant commercial offenses as they go about dismantling American

industry.” White suggested that the Japanese economic invasion of the United States during the

1980s was analogous to its military invasion of Pearl Harbor in 1941. Other historians, commentators,

and journalists have picked up the theme introduced by White. Not surprisingly, in financial

centers in the United States, particularly in New York, investment bankers have indicated that the

Japanese position in the US stock market is threatening national security.

What do the numbers tell us? Today Japan’s share of total foreign holdings in the United States is

less than 13 percent. Japan’s ownership of an estimated $15 trillion of US capital is about 1.2 percent.

Compared to Western European ownership of American assets, Japan doesn’t look so imposing.

Western European investors own over 50 percent of all foreign-owned assets in the United States.

What does Japan invest in? About a third of its investments are in finance and insurance. Real

estate and manufacturing constitute less than 20 percent of Japanese investments. The remainder

are in transportation and commerce, as well as in US Treasury securities.

The question, then, is, Why does Japanese investment in the United States seem like such a

threat today? The answer probably lies with the more visible direct investments that Japan has

made. When a Japanese purchases a Los Angeles hotel or an American landmark, such as the

Algonquin Hotel or Rockefeller Center in New York, it generates a lot of publicity. It also reminds

many Americans of the special relationship, objectionable to some, that exists between Japan and

the United States: Japan relies almost exclusively on the United States for its national defense.

That means that Japan’s national defense system is in effect provided by the American taxpayer.

This special relationship allows Japan to concentrate on economic growth while the United States

bears a disproportionate share of defense costs among Western nations.

Commentary and Notes to Text 22.7.1.4