Foreign Direct Investment: Effects of a Cheap Dollar

Since 2002, the dollar has depreciated against a broad basket of currencies and against the euro. This depreciation has prompted some observers to question whether the "cheap" dollar is leading to a "fire sale" of U.S. firms, especially of those firms that can be identified as part of the Nation's defense industrial base. Congress has displayed a long and continuing interest in foreign direct investment and its impact on the U.S. economy. Since September 11, 2001, Congress has demonstrated a heightened level of concern about the impact of foreign direct investment in critical industries or in sectors that are vital to homeland security. In the 110th Congress, Members are considering H.R. 556, the National Security Foreign Investment Reform and Strengthened Transparency Act of 2007, which was adopted by the full House on February 28, 2007. The measure reflects a heightened level of concern about the presence of foreign investors in the economy by increasing Congressional oversight over federal reviews of foreign direct investment and by expanding the current areas of review to include homeland security and critical infrastructure.