Abstract: The Internationalization of Production and the Balance of Payments in the 1960s: An Anglo-American Comparison

Neil Rollings

Abstract

In the 1960s the two countries responsible for the majority of outward foreign direct investment (FDI), the United States and the United Kingdom, imposed controls on FDI to help correct their balance of payments deficits. This paper considers the similarities and differences in experience and attitudes of government and business at this formative stage in the postwar rise of multinational enterprise. There was a common sense of frustration in business that national governments failed to understand the new global economy that was emerging. Governments in the two countries adopted a location-based view of business activities, whereas business was more ownership-based in outlook. In the British case the issue was starker because of longstanding concerns about levels of FDI, economic ideas at the heart of government, and concerns about economic decline, all of which emphasized the need for more domestic investment and higher exports to improve national competitiveness. Further study of the micro-level response of business to these restrictions offers a means of better understanding the roots of the tension between multinational enterprise and national governments.