Abstract

The value of the U.S. investments abroad has increased rapidly-from $10.7 billion in 1949 to a worldwide total of $59.3 billion by 1967. Great Britain is one of the major areas of United States direct investment with the 1967 total there reaching $6.1 billion and employment in American subsidiary plants exceeding a half million. An involvement of this magnitude is bound to have enormous repercussions on the British economy. In the space available here a complete analysis of socio-politico-economic effects of the U.S. presence in Britain is out of the question. Thus the focus here is limited to some aspects of three problem areas, the balance of payments, labor relations, and management practices. No precise estimate of the balance of payments effect of U.S. investments in Great Britain is available. Calculating such a figure poses insuperable problems. Dunning derives a crude estimate for 1965, but it serves only a limited purpose. Despite the data shortage this article might still throw light on the forces which determine the balance of payment impact and the direction, if not magnitude, of the balance of payment effect. Attention centers on the effect on the British balance of payments, not the U.S. Three models undergo scrutiny. Each assumes different entry conditions for the American firm.