ABSTRACT
This chapter shows how capital flows on a global scale, particularly the development of international financial markets and changing locations of industrial capital, manifested in unexpected and incongrous ways in the United States balance of payments. The balance of trade on goods and services is the least contentious section of balance of payments accounting; global processes have a profound impact on data recording. The development of the capital markets exerted impacts on the United States' balance of payments data through two related avenues. One was direct foreign investment flows; the other global credit markets, particularly Eurobonds. The entries in the capital account embrace the international mobility of money capital, and this was where the most unpredictable and dramatic transformation in the United States' accounts occurred. The change relating to direct foreign investment was not only that it increased rapidly throughout the world in the 1980s, but that the origin and target of this investment changed.
