Investing Abroad Creates U.S. Jobs

U.S. direct investment in manufacturing abroad creates rather than destroys jobs in the U.S., according to a Harvard Business School study headed by Robert B. Stobaugh, associate professor of Business Administration.

If there were no direct U.S. investment in manufacturing facilities abroad, 600,000 U.S. workers might lose their jobs, the study estimated.

American firms abroad make use of machinery and components that are manufactured in America.

Asked whether foreign investment for the purpose of creating employment in the home country was a form of imperialism. Robert H. Hayes, associate professor of Business Administration, and a member of the research team said. "It boils down to the difference between seduction and rape. The results of our study show the purposes of the firms are not aggressive but defensive--to protect markets we already have, instead of losing them to foreign firms."

Hayes said the host countries are anxious to get foreign investment. He recalled the case of a Middle East oil-producing government that was forcing a foreign firm to increase the annual output of oil so that the country's GNP would increase.