Foreign investment

Definition

Foreign investment refers to the capital that individuals, companies, or governments from one country invest in businesses, assets, or projects located in another country. This investment can take various forms, such as direct investment in physical assets or purchasing financial instruments. It plays a significant role in shaping economies and can influence political relationships, particularly when foreign interests seek to establish control or influence over local resources.

5 Must Know Facts For Your Next Test

1. Foreign investment surged in Hawaii during the late 19th century as American interests sought to control the islands' sugarcane industry.
2. The presence of foreign investors led to significant economic changes in Hawaii, transforming it from a largely subsistence economy to one focused on cash crops for export.
3. American planters and business interests organized the Committee of Safety to push for political changes that favored their economic interests amidst growing foreign influence.
4. Increased foreign investment raised concerns among native Hawaiians about the loss of sovereignty and control over their land and resources.
5. The annexation of Hawaii by the United States was heavily influenced by the interests of foreign investors who sought greater security for their investments.

Review Questions

• How did foreign investment influence the economic structure of Hawaii during the late 19th century?
  • Foreign investment played a pivotal role in transforming Hawaii's economy from subsistence farming to a cash crop system focused primarily on sugar production. As American investors poured capital into plantations, they developed large-scale agricultural operations that not only reshaped the local economy but also increased Hawaii's dependency on external markets. This shift significantly altered social structures and labor dynamics, as local practices were replaced by those tailored to meet the demands of foreign investors.
• Analyze the role of the Committee of Safety in relation to foreign investment and political change in Hawaii.
  • The Committee of Safety was formed by American businessmen and planters who were alarmed by the political power shifts that threatened their economic interests due to native Hawaiian governance. This group actively lobbied for annexation to the United States, arguing that closer ties would provide stability and security for their investments. Their actions directly led to the overthrow of Queen Liliʻuokalani in 1893, demonstrating how foreign investment can catalyze political movements that reshape governance to favor external economic interests.
• Evaluate the long-term impacts of foreign investment on native Hawaiian communities and their sovereignty.
  • The influx of foreign investment has had profound long-term impacts on native Hawaiian communities, often undermining their sovereignty and cultural identity. The prioritization of economic interests associated with foreign capital led to land dispossession and a loss of traditional practices tied to the land. As foreign investors gained control over essential resources, native Hawaiians faced increasing marginalization within their own homeland, raising critical questions about self-determination and the preservation of cultural heritage in an economically driven landscape.

Related terms

Colonialism:

A practice where a country establishes control over a foreign territory, often exploiting its resources and people.

Economic Dependency: A situation where a country relies heavily on foreign investment and aid, which can limit its economic independence and decision-making.

Land Tenure: The legal framework governing land ownership and use, which is crucial in contexts where foreign investors seek to acquire land for agricultural or development purposes.