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Foreign Investment Hit Record High Last Year, But Not For The Best Reasons

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Foreign Investment Hit Record High Last Year, But Not For The Best Reasons

Foreign investments in the US exploded 68% to $420.7B last year according to the Bureau of Economic Analysis, but unfortunately very little of that money is actually being pumped into the US economy.

A full 97% of foreign investment was connected to mergers or acquisitions of US businesses—and only a tiny fraction of that cash went to startups or expanding existing operations in the US, MarketWatch reports. Instead, many of the deals were corporate inversions—where an American firm acquires or is bought out by a foreign company mainly to legally move its headquarters overseas and pay less in corporate taxes.

Horizon Pharma is exhibit A—in 2014 the Illinois-based firm bought a small Irish company and then moved its entire corporate headquarters across the Atlantic. (Ireland has a very low corporate tax rate.) So while there was record foreign investment last year on paper, much of that was really a corporate-tax exodus. [MW]