Foreign Investment in the United States: Major Federal Statutory Restrictions


Publication Date: January 2009

Publisher: Library of Congress. Congressional Research Service


Research Area: Economics



For a number of years foreign investment in the United States has been a matter of congressional concern. Although the issue has not recently received the media attention that it did in the mid and late 1980's, it is an issue that remains. It is believed by some that the United States has an unusually liberal policy which allows foreigners to invest in virtually all American businesses and real estate and that these foreign investments undermine the American economy by making it vulnerable to foreign influence and domination. These critics argue that there is even foreign domination of some key defense-related industries and that the ability of the country to protect itself in a time of national emergency could greatly suffer. These critics further argue that extensive foreign investment in this country drives up prices which Americans have to pay for investments and, even more importantly, for houses and farmland in areas where there is a significant amount of foreign ownership.

However, others argue that the United States should welcome foreign investment because the influx of foreign money contributes to the creation of jobs in this country. Some also believe that the United States should be a kind of sanctuary for foreign money because of the political and economic instability which characterizes much of the rest of the world. It is also argued that, in this age of globalization of the world's economy, United States restrictions on foreign investment will only impair this nation's economy and cause us to appear isolationist.

This report will take a look at some of the major federal statutes which presently restrict investment by foreigners. The report will first give a brief history of foreign investment in the United States. It will then review constitutional justifications and constitutional limitations which exist concerning federal and state statutory restrictions on foreign ownership of property. After that follows a discussion of some of the major federal statutes which limit foreign investment in the United States. Some of these statutes will be looked at in detail, but a detailed treatment of such other laws as the tax laws, the antitrust laws, and the immigration laws is beyond the scope of this report.

The report will be updated as needed.