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U.S. net international investment ("debt") position: a review of some major issues.


The concern about a high level of U.S. internal debt has been augmented by a deteriorating trend in its net international investment (asset) position in the recent past. The latter has been often used as a proxy for U.S. "net external debt." Based on this measure of indebtedness, after being a net foreign creditor nation for a long time, the U.S. became a net foreign debtor nation in the mid 1980s and ended the decade with an estimated net foreign indebtedness of over $660 billion. The size of external debt, if taken at face value, makes the U.S. by far the largest debtor in the world. The public debate on the size and economic implications of external indebtedness has been fraught with misconceptions, exaggerations, and sometimes radically different interpretations of the same set of facts. Some observers, reflecting the public sense of unease about U.S. status as "the largest debtor country," view the rise in the size U.S. foreign obligations as an indication of erosion of economic sovereignty. They predict a decline in future American living standards due to rising future debt-servicing obligations. Others, based on the "safe haven" argument, interpret this phenomenon as a vote of confidence on the U.S. economy by foreign lenders. They hold that purchases of dollar denominated financial and physical assets by foreigners help to boost investment and, consequently, future living standards in the U.S.

This paper focuses on some major issues which need to be taken into consideration in assessing the size and economic effects of U.S. (net) external debt. In sections 1 and 2, we briefly discuss the official definition of net external debt, its historical trend, the distortions which arise from the way it is defined and measured, and features which make U.S. foreign debt distinct from that of a typical debtor nation. Sections 3 and 4 are devoted to a brief discussion of some of the underlying causes of the rapid rise in the official measure of net external debt and evidence on the crucial link between foreign inflows and investment spending in the United States. Along the way, some misconceptions surrounding the public debate on the U.S. external debt will be noted. We conclude that the size of net external debt, when put in perspective, does not justify the anxiety and adverse reaction expressed by the public, the media, and politicians. However, the deteriorating trend in the net external debt is disconcerting and its reversal requires correcting certain fundamental macroeconomic imbalances in the U.S. economy.

Net External "Debt": Definition and Trend

The external debt of a typical debtor country usually refers to its stock of gross outstanding debt to foreign commercial banks, foreign governments, international organizations (e.g., the IMF and the World Bank), and other creditors. In the case of the U.S., however, net external "debt" is the concept usually employed. It refers to the difference between the value of total (i.e., financial and physical) U.S. assets abroad and total foreign assets in the U.S.|1~ A positive difference indicates a "net-foreign-asset" (or a net creditor) position while a negative difference indicates a "net-foreign-liability" (or a net debtor) position.

An examination of historical data on the net external debt (measured as a percentage of national income) since the Civil War, by Faust (1989) indicates that the U.S. was a net foreign debtor over the period 1874-1917, became a net foreign creditor over the period 1918-1984, and turned into a net foreign debtor again since 1985. For the entire period TABULAR DATA OMITTED since the Civil War, two major trends in the net external debt are discernable: First, an improving trend beginning from a peak net indebtedness of over 20 percent in the early 1890s and lasting for the next forty years (with the U.S becoming a net creditor around WWI and reaching its highest net credit position of around 30 percent of income in 1933). Second, a deteriorating trend from 1934 on (with the U.S. becoming a net debtor since 1985).

Table 1 estimates the values of U.S. assets abroad and foreign assets in the U.S. along with their major components in the 1980s.|2~ According to the first row of Part C of the table, the U.S. began the 1980s as a net creditor nation (with an average net asset position of $96 billion over the period 1980-1984), but experienced a remarkable reversal in the middle of that decade. At the end of 1985, the size of net external debt was estimated to be about $118 billion which ballooned to $664 billion by the end of the decade. To understand changes in the level of net external debt, one needs to examine changes in the levels of its component parts. The average annual rate of growth of U.S. assets abroad (row A) over the period 1980-89 was approximately 9.7 percent. Over the same period, the corresponding rate for the foreign assets in the U.S. (row B) was about 16.4 percent. The differential in the growth rates is mainly due to the differential in the growth rates of U.S private assets abroad (row A2) and private foreign assets in the U.S. (row B2). These two sub-components grew at an average annual growth rate of approximately 11.2 and 20.4 percent, respectively, in the 1980s. The relatively high rate of accumulation of private foreign assets in the U.S. during the 1980s was, in turn, due to very fast growth rates of portfolio and direct investments as well as bank deposits by foreigners in the U.S. The ultimate sources of capital inflows into the U.S. in the 1980s were a few countries, notably Germany and Japan, which had been posting current-account surpluses for a number of years. However, the largest two direct foreign investors in the U.S. for most of the 1980s were the United Kingdom and the Netherlands.

Features, Relative Size and Burden

There are reasons to believe that, at least until quite recently, official figures published by the Department of Commerce grossly misstated the size of U.S. net external debt and its components. One major reason is the problems related to the valuation of U.S. assets abroad and foreign assets in the U.S.|3~ The size of net external debt may vary substantially depending on whether these assets are valued based on their original purchase prices ("historical-cost" or "book-value" basis) or based on their current market prices. Table 1 indicates the valuation method applied to each major component of U.S. and foreign assets by the Department of Commerce until 1990. This valuation method (hereafter referred to as the "old" valuation method) results in distortions in the size of net external debt as illustrated by the following examples:

(1) The valuations of direct investment component of U.S. assets abroad and foreign assets in the U.S. have been traditionally based on the book values of these assets rather than their current market prices. Since U.S. physical assets abroad are of an "older average vintage" than those acquired by foreigners in the U.S., the use of book value of assets understates the market value of U.S. holdings abroad by a larger margin than the market value of foreign holdings in the U.S. Consequently, the official figures tend to exaggerate the size of U.S. net external debt.

(2) The valuation of U.S. government holdings of gold (a component of A1 in Table 1) at the official price of $42.22 per troy ounce understates U.S. total claims and, thus, overstates the net external debt.

(3) On the other hand, U.S. bank loans (a component of A2 in Table 1) to some heavily indebted countries in the 1970s and 1980s have market values which are substantially below their corresponding book values. The use of book values, therefore, overstates the true size of this component of U.S. total claims on foreigners and understates the size of net external debt.|4,5~

Due to various shortcomings of the old valuation method, the Department of Commerce suspended reporting its estimates of the size of net external debt in June 1990. The Department's most recent report on U.S. international position published in June 1991 includes estimates based on a "new" valuation method which attempts to correct some of the misstatements noted above. In particular, the size of net external debt has been reestimated by calculating the market value of U.S. official gold stock. Similarly, the direct U.S. investment abroad and foreign investment in the U.S. have been valued at the current stock market-value of owner's equity. To gain a quantitative appreciation of the effect of the new valuation method on U.S. assets abroad, foreign assets in the U.S., and U.S. net external debt, the revised estimates for these categories are shown in Table 1 in parentheses underneath the corresponding old estimates.|6~ As one might have expected, the revised set of estimates differ substantially from the old ones in years shown. For example, the revised estimate of the size of U.S. external debt in 1989 ($268 billion) is only 40% of the old estimate for that year ($664 billion). Also, over the period 1982-89 for which both sets of estimates are available, the old estimates indicate that the U.S. had an average annual net external debt of approximately $217 billion. According to the revised estimates, however, the U.S. was a net creditor by an average amount of $27 billion over the same period. Thus, in retrospect, it seems that much of the adverse reaction to the size of U.S. net external debt in the 1980s was based on highly exaggerated figures.

As the preceding discussion indicates, the U.S. net external debt is an amalgamation of several heterogeneous components and its size constantly fluctuates with the variations in the market values of these components. An increase in the values of stocks and real estate in the U.S. during the 1980s, for example, automatically raised the size of U.S. net indebtedness as the value of foreign holdings of these assets increased. As such, U.S. foreign debt is conceptually different from that of a typical (developing) country debtor whose debts are mainly in the form of cash borrowings and credits, and often rise as a result of deliberate policy actions. In this connection, it should be noted that in measuring U.S. net external debt, direct foreign investment is treated as regular debt. This is a questionable practice because investment in productive assets (e.g., Japanese investment in an automobile manufacturing plant in the United states) generates employment and income in the United States. Moreover, returns to foreign investment are in the forms of dividends and/or profits which, unlike the debt owed by a typical debtor country, are not normally contractually fixed amounts; rather they vary with general economic conditions. For these reasons, the true burden of "servicing" that portion of the external debt arising from the increase in direct foreign investment is relatively light.|7~

Even if one ignores the aforementioned measurement deficiencies and conceptual problems, the absolute size of U.S. net external debt alone does not constitute an appropriate basis for assessing its quantitative significance. Such an assessment requires defining the size of (gross or net) debt relative to a measure of ability or capacity to pay. A "standardized" measure obtained in this manner provides a more accurate picture of the severity of the external debt problem. In 1989, for example, an inflated estimate of U.S. net external indebtedness was roughly equal to $664 billion which, if taken at its face value, is a historical high. However, even this staggering amount was equal to only 12.8 percent of U.S. nominal GNP in 1989. Both historically and in comparison to other countries with a similar measure of external indebtedness, this is a moderate value for the net-indebtedness-to-GNP ratio.|8~ The size of net external debt when measured as a percentage of U.S. net wealth (computed at historical cost) is even less significant.|9~

As for the burden of external debt in terms of sacrifices that the servicing of debt demands. the annual service cost of U.S. gross external debt has been about 10 percent of U.S. exports (see Amuzegar, 1990). By comparison, the average annual ratios of total debt service to exports for three highly indebted countries of Argentina, Brazil and Mexico over the period 1982-89 were equal to 58, 49 and 49 percent, respectively.|10~ The distinction between U.S. external debt and that of a typical debtor country becomes even more pronounced if one bears in mind that U.S. debts are denominated in dollars which enjoys worldwide demand as a key reserve currency. Therefore, the U.S. can fully repay its outstanding foreign debt by issuing new dollar-denominated debt obligations and/or, at least in theory, by printing more dollars. Admittedly, these policies may make it increasingly more difficult for the U.S. to find new lenders in the long run. But they do help to avert the emergence of a crisis situation associated with payment difficulties in the short run. Such is not the case, however, for a typical developing country debtor which must earn principal foreign currencies through exports in order to service its debt. Finally, due to the dollar's unique position as an internationally acceptable currency, there is no significant economic difference between U.S. internal and external debts. The burden of servicing U.S. external debt may thus be expressed as the ratio of its total debt-service payments to its GNP (rather than exports) in which case it would be much smaller.

Some Causes of the Deteriorating Trend

Although, the accuracy of official data as an indicator of the size of U.S. net external debt in a particular year is rather doubtful, the data are helpful in discerning the trend in the debt variable. There is little doubt that the trend in the U.S. net external debt/investment position has been deteriorating in the post-WWII period and that the rate of deterioration was particularly high in the 1980s.

The decline in the U.S. net external investment position, in part, reflects long-term changes in distribution of economic power. Specifically, U.S. assets abroad sharply rose during the decade following the end of WWII reflecting U.S. substantial contribution to the rebuilding process underway in Europe and Japan through direct investment and loans. The net outflow of capital from the United States, however, slowed down by the mid-1950s as Japan and Germany gradually recovered from the devastation inflicted by the War. The collapse of the Bretton Woods system in the early 1970s removed some of the incentive to use U.S. dollars to purchase foreign assets and thus further weakened the U.S. net international investment position.|11~

The rapid rate of deterioration of the net investment position of the United States in the 1980s, however, also reflects some fundamental macroeconomic imbalances which were particularly pronounced in this period. According to the "absorption approach" to the trade balance, the rise in the net inflows of capital to the United States (and thus the increase in its net external indebtedness) in the 1980s simply mirrored the rise in the U.S. trade (current-account) deficits.|12~ The latter itself was due to an excess of U.S. domestic absorption (i.e., total spending by the private and public sectors) over total income (output) or, alternatively, an excess of investment spending over national saving. The relationship between these imbalances and inflows of foreign capital may be formally presented by the following identity:

|S.sub.n~ - I = X - M |is equivalent to~ NFCI (1)

where |S.sub.n~ is national (domestic) saving, I is private domestic investment, X is exports, M is imports, and NFCI is net foreign inflows of capital.

Equation (1) indicates that if investment in an economy is fully financed by national saving then net exports (X-M) and net inflows of capital must be zero. This follows from the fact that in this situation the economy's total income (output) is equal to total spending. However, when the economy is "overspending its income" (as evidenced by a situation in which national saving falls short of investment spending), then this must mean that net exports are negative. The trade deficits are actually paid for by borrowing from foreigners through issuing claims (e.g., stocks, bonds, and currency) and/or selling assets on a net basis. The inflows of capital, in turn, produce a capital-account surplus which matches the trade deficits.

Data presented in Table 2 suggest that the latter scenario provides a reasonable explanation of the unprecedented accumulation of foreign debt by the United States in the 1980s. (All figures in the table are expressed as a fraction of GNP). In order to interpret the data in Table 2, we rewrite equation 1 as follows:

|Mathematical Expression Omitted~

where |S.sub.h~, |S.sub.b~, and |S.sub.g~ are household, business, and government saving, respectively, and they add up to |S.sub.n~.

As can be seen, the national saving rate (|S.sub.n~/GNP) dropped from an annual average rate of 16.3 over the period 1950-1979 to 13.9 percent over the period 1980-1990. The poor saving performance in the 1980s was mainly due to a fall in household saving rate (|S.sub.h~/GNP) and an increase in the federal government dissaving in the form of a persistent budget deficit. The share of investment in GNP (I/GNP), on the other hand, dropped only marginally (from 16 percent to 15.5 percent) between the two periods. Therefore, over the period 1980-90, a gap existed between demand for investment funds (15.5 percent of GNP on the average) and supply of national saving (13.9 percent of GNP on the average). This gap drove U.S. real (i.e., inflation adjusted) interest rates up and attracted capital inflows of roughly an equal magnitude (1.7 percent of GNP).|13~ The inflows of foreign capital to the U.S. were facilitated, among other things, by changes in the U.S. tax laws in the early 1980s and a prolonged period of economic expansion both of which raised returns to investment.|14~

In effect, the inflows of foreign capital helped to maintain the investment-to-GNP ratio in the 1980s close to its average value for the previous three decades. Had it not been for these inflows, investment would have probably been "crowded out" by a larger amount due to the drop in the national saving rate as mainstream theory predicts.|15~

Link Between Debt and Investment

Historical facts indicate that periods of rising net creditor (or falling net debtor) position have not necessarily been associated with economic prosperity in the U.S. Neither have periods of rising net debtor (or falling net creditor) position always signaled bad economic times. For example, U.S. net creditor position improved during the early years of the Great Depression of 1929-1932 as lack of profitable investment opportunities in the United States encouraged higher net outflows of capital. But the U.S. was a net debtor over the period 1884-1893 in which foreign inflows contributed to an investment boom and rapid industrial expansion (see Faust, 1990).

Therefore, current effects and future economic implications of a rise in net external indebtedness to a large extent depend on current allocation of capital inflows. If the inflows are channeled to productive investment projects which will raise future income growth rate by an amount greater than the rate of growth of debt-servicing obligations, then an increase in current external indebtedness is not necessarily inconsistent with higher future living standards. On the other hand, if the inflows are mainly diverted to finance government budget deficits and/or are used to sustain a high level of household consumption expenditures, income growth rate in the future will be slower than it could have otherwise been. In this situation, servicing of external debt out of a relatively smaller future income implies economic austerity.

The available evidence on the nature and strength of the relation between foreign capital inflows and domestic investment in the 1980s is not conclusive. As Table 2 shows, gross private domestic investment rate for most of the 1980s was slightly below the corresponding rate over the period 1950-79. On this basis, it appears that the inflows of foreign capital in the 1980s were used to fill the gap between income and spending created by the federal government and household dissavings. However, simple comparisons of this kind may be misleading because they do not control for other factors which might have affected investment during that period. Furthermore, as Faust (1990) indicates, the analysis of foreign debt-investment linkage is further complicated by disagreements regarding the definition of investment and the standards that should be employed in measuring and comparing the size of investment.|16~ According to Faust, when judged based on the share in total income and the rate of growth of net fixed investment, the performance of investment over the economic expansion of 1983-1989 has been poor compared to previous expansions.|17~ This conclusion is moderated but not overturned when other measures and concepts of investment are employed. In sum, Faust maintains that the United States did not invest what it borrowed during the recent expansion.
Table 2
The Changing Finance of Investment From 1950-90 (as percent of
 1950-79 1980-90
Gross private domestic investment (I) 16.0 15.5
National saving (|S.sub.n~) 16.3 13.9
a. Private 16.8 16.4
Household (|S.sub.h~) 5.0 3.7
Business (|S.sub.b~) 11.8 12.7
b. Government (|S.sub.g~) -0.4 -2.5
Federal -0.6 -3.7
State and local 0.2 1.2
Net foreign capital inflows -0.3 1.7
Note: Detail may not add to totals because of rounding.
Source: The figures for the 1950-79 pried are from Economic
Report of the President (1990, Table 4-2, p. 123). The figures
for the 1980-90 period were calculated by the author based on
the data in 1991 issue of the same source.

Concluding Remarks

It has been suggested in this paper that misgivings about certain aspects of U.S. external debt may stem from exaggerations and misconceptions about the size and nature of such a debt. Even if the entire U.S. net external debt is considered as "regular debt," its size and the amount of resources required to service it, when properly measured, are not large enough to warrant the anxiety expressed by the public. This, however, should not be interpreted to mean that there are no legitimate reasons for being concerned about the rising trend in the size of the U.S. external debt. For one, the period of rising indebtedness in the recent past has not been characterized by an investment boom. Apparently, much of the inflow of foreign capital in the 1980s was absorbed by the federal budget deficit and household dissaving, leaving the investment-to-GNP ratio during this period roughly the same as in earlier periods. If this situation continues, servicing of the debt would impose an increasingly heavier burden on the U.S. economy in the future.

Another related source of concern is that heavy reliance on foreign saving (in the form of inflows of foreign capital) may not be sustainable over a long period in the future. Foreign lenders, feeling that they have overexposed themselves to dollar denominated assets, may decide to cut back on their lending, ask that payments be made in currencies other than the U.S. dollar, and/or demand higher returns on their loans. Such outcomes will be more likely ff the rate of U.S. inflation is perceived by the lenders to be unacceptably high and if their confidence in the U.S. economy is eroded due to lack of fiscal discipline on the part of the federal government and sluggish economic growth. In this case, there would be a flight from the dollar and dollar-denominated assets. This, in turn, would lead to a steady devaluation of the dollar's exchange value and, ultimately, the loss of its "reserve-currency" status.|18~ Also, an escalating external debt may, through protectionist sentiments and political pressures by special interests, create an environment which is conducive to adoption of restrictive measures against free flows of financial capital and free trading and exchange systems. In a world characterized by an increasingly integrated and interdependent economies, the long-term costs of such practices may well exceed any likely short-term gains. An effective policy for slowing down the rate of growth of U.S. external debt and ultimately reducing the size of debt in the future requires dealing with the underlying cause of U.S. heavy reliance on foreign saving i.e., a low domestic saving rate. Accordingly, a higher household saving rate and reduced government budget deficits are essential ingredients of any policy package designed to bring the external debt under control.|19~ Achieving a higher domestic saving rate in the future may be facilitated by certain favorable demographic trends (e.g., an increase in the share of 45-64 age group in total population as the "baby-boom generation" grows older) and a monetary policy which is aimed at keeping the inflation rate low.


1. The Department of Commerce terms this difference as the U.S. "net international investment position."

2. For a detailed discussion of these components see Scholl (1990). As will be pointed out later, these estimates are based on a questionable methodology. However, they have been quoted frequently by the media and commentators during the 1980s.

3. The dollar significantly appreciated against other major currencies during the first half of the 1980s and sharply depreciated in the second half of that decade. As such, part of the variation in the net external debt in the 1980s also reflects fluctuations in the exchange rates.

4. The secondary market prices of developing country debts--which reflect the market assessment of current values of these debts--have been declining since the onset of the "debt crisis" in 1982. As of July 1989, the secondary market price of the claims on some heavily indebted countries who owe most of their debts to U.S. banks varied from 11 cents on the dollar for Bolivia to 55 cents on the dollar in the case of Uruguay.

5. One must also allow for possible underrecording of the foreign capital into the U.S. (e.g., inflows like "drug money" which originate from illegal activities). These underrecordings tend to understate the net external debt. Underrecorded (and unrecorded) capital inflows show up as "errors and omissions" in the capital account.

6. The revised figures for other (sub)components in Table 1 may be found in Scholl (1991, Table 3, p. 26).

7. For a discussion of the contribution of foreign direct investment to the U.S. economy in the context of addressing some of the misgivings about this type of investment see Ott (1990).

8. Historically, the peak of U.S. net indebtedness-to-GNP ratio (approximately a quarter of GNP) occurred following the Civil War and again following the periods of heavy investment in railroads in the 1880s and 1890s. Moreover, a similar ratio for Canada throughout the 1980s was 34 percent or more of that country's GDP (see Economic Report of the President, 1989, pp. 129-30). The frequently discussed debt-to-GNP ratio for (highly indebted) developing countries is based on the size of gross debt. For this reason, the debt-to-GNP ratios for the U.S. and the developing countries are not strictly comparable.

9. The ratio of net external indebtedness to net wealth varied between 2 to 4 percent in the second half of the 1980s (see Economic Report of the President, Chart 3-4, p.131).

10. The figures for Argentina, Brazil, and Mexico are based on the data in World Debt Tables (The World Bank, Washington D.C.: 1990-91). They refer to total debt service (i.e., principal repayments plus interest payments on long-term and short-term debts as well as "IMF repurchases and charges" related to the use of IMF credit) as a percentage of exports of goods and services.

11. The reduced net outflows of capital from the United States to industrial countries was only partially offset by official and private direct investment in and lending to major developing countries (particularly those in Latin America) during the 1960s and 1970s. This offsetting factor, however, has lost much of its significance since the onset of the "debt crisis" in 1982.

12. The current account is defined as net exports plus net unilateral transfers. The latter is relatively insignificant in terms of its size. Therefore, the current-account deficit and the trade deficit may be used interchangeably. Anderson (1988) argues that direct foreign investment in the U.S. is not the inevitable result of large U.S. current-account deficits in the 1980s. He maintains that several relatively permanent attributes of the U.S. economy (e.g., stability) and other fagots may be responsible for the surge of investment by foreigners in the U.S.

13. According to Blinder's (1990, p. 213) estimates, real long-term interest rates (i.e., the real interest rate on 10-year government bonds) rose sharply from approximately 0.9% in the 1970s to 6.5% in the 1980s.

14. Other contributing factors were financial liberalization in Japan which facilitated Japanese purchases of assets abroad and the developing county debt crisis which raised the supply of loanable funds to the U.S.

15. Based on equation 2, if the national saving rate drops, then I/GNP must fall enough for the identity to hold. In other words, investment would be "crowded out." But if I/GNP is kept unchanged, then (X - M)/GNP must decline. In this case, net exports (rather than investment) would be crowded out. Blinder, among others, argues that this is actually what happened in the 1980s. He notes "we saved investment by salvaging our international trade position." (1990, p. 219)

16. The performance of investment varies depending on whether net or gross fixed investment is used and whether the rate of growth of investment or investment-to-GNP ratio is calculated. In addition, the concept of investment employed may be extended to include spending categories such as education, research and development, defense and nondefense capital expenditures by the government, and expenditures on durable goods by consumers (see Faust, 1990, for pros and cons of using different measures and concepts).

17. The share of income allocated to net fixed investment during the economic expansion was 4.9 percent which falls short of the average of 6.5 percent in previous expansions. Also, the growth rate of net fixed investment was slightly negative over the two recessions and expansions in the 1980s. In contrast, net fixed investment during the previous five recessions and expansions grew over 4 percent.

18. In fact, there is some evidence suggesting that the process of erosion of the international position of the dollar is already underway. For example, the relative share of the dollar in currency denomination of the international bond issues fell from 78.3 in 1983 to 43.6 in the first quarter of 1988. The corresponding values for Japanese yen are 0.5 and 9.0 percent. See Economic Report of the President, 1989, p.136, Table 3-2.

19. See Economic Report of the President (1990, pp. 136-41) for some policy suggestions to boost the domestic saving rate.


Amuzegar, Jahangir, "The U.S. External Debt in Perspective." Finance and Development, June 1988, pp. 18-19.

Anderson, Gerald H., "Three Misconceptions About Foreign Direct Investment." Economic Commentary, Federal Reserve Bank of Cleveland, July 15, 1988.

Blinder, Alan S., "is the National Debt Really--I Mean, Really--a Burden?" in Debt and the Twin Deficits Debate, James A. Rock (ed.), Bristlecone Books, 1991, pp. 209-25.

Economic Report of the President, Washington D.C.: Government Printing Office, January, 1989, pp.129-136.

Economic Report of the President, Washington D.C.: Government Printing Office, January 1990, pp. 123-142.

Faust, Jon., "U.S. Foreign Indebtedness: Are We Investing What We Borrow?" Economic Review, Federal Reserve Bank of Kansas City, July/August 1989, pp. 3-19.

Meyer, Stephen A., "The U.S. as a Debtor Country: Causes, Prospects, and Policy Implications," in the International Financial Reader, Robert W. Kolb (ed.), Kolb Publishing Co. Miami: 1990, pp.68-80.

Ott, Mack, "Is America Being Sold Out?" in the International Financial Reader, Robert W. Kolb (ed.), Kolb Publishing Co., 1990, pp. 81-98.

Scholl, Russell B., "International Investment Position: Component Detail for 1989," in Survey of Current Business, Department of Commerce, Washington D.C.: June 1990.

-----, "The International Position of the United States in 1990," in Survey of Current Business, Department of Commerce, Washington D.C.: June 1991.

Saeid Mahdavi is Associate Professor of Economics at the University of Texas, San Antonio, Texas.
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