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by Mack Ott
In the short run, foreign capital invested in the United States raises U.S. gross domestic product (GDP). This means that U.S. residents are better off than they would be without foreign capital. Still, long-run scenarios of foreign ownership trouble many critics: What payment will foreigners exact for our use of their capital? Will sustained inflows of foreign capital give foreigners control of the U.S. capital stock, reduce job quality, or distort U.S. investment and research? Fortunately, these concerns can be dispelled by reviewing the extent of foreign investment in the U.S. economy vs. U.S. investment abroad, considering the motivations for foreign investment, and computing the negligible potential for foreign control...
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| Featured Biography
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(1727-1781)
Turgot was the Frenchman's Adam Smith. His Reflections on the Production and Distribution of Wealth, which predated Smith's The Wealth of Nations by six years, argued against government intervention in the economic sector. Turgot recognized the function of the division of labor, investigated how prices were determined, and analyzed the origins of economic growth. Like Quesnay, Turgot was a leading Physiocrat and attempted to reform the most stifling of government economic policies.
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