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• Article | Harvard Business Review | November 2012

  Accelerate!

  John P. Kotter

  Citation:

  Kotter, John P. "Accelerate!" Harvard Business Review 90, no. 11 (November 2012): 45–58.

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• Case | HBS Case Collection | 2012 (Revised from original 2005 version)

  The U.S. Current Account Deficit

  Laura Alfaro, Rafael M. Di Tella, Ingrid Vogel, Renee Kim and Matthew Johnson

  Investors and policymakers throughout the world were confronted with the risk of painful economic consequences arising from the large U.S. current account deficit. In 2007, the U.S. current account deficit was $731 billion, equivalent to 5.3% of GDP. The implications of the deficit were debated with intensity. At one extreme, it was argued that large deficits would eventually resolve themselves smoothly, even if they persisted for many more years. Former Federal Reserve Chairman Alan Greenspan was among those expecting a "benign resolution to the U.S. current account imbalance." Other analysts, such as economists at the World Bank, believed the large deficits raised the risk of a sharp and disorderly fall of the dollar and that necessary macroeconomic adjustment could be painful, for the United States as well as for the rest of the world. The Financial Times asked: "How long will foreigners be prepared to make such generous 'gifts' to the US?" In this environment, Berkshire Hathaway, run by legendary investor Warren Buffett, postulated that current account imbalances would lead to "some chaotic markets in which currency adjustments play a part" and announced to shareholders a plan to increase investment in overseas companies to protect against this risk. It remained to be seen what the short and long-term implications of the current account deficit would ultimately yield.

  Keywords: Macroeconomics; Borrowing and Debt; Currency; Foreign Direct Investment; Business and Government Relations; United States;

  Citation:

  Alfaro, Laura, Rafael M. Di Tella, Ingrid Vogel, Renee Kim, and Matthew Johnson. "The U.S. Current Account Deficit." Harvard Business School Case 706-002, October 2012. (Revised from original July 2005 version.)

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• Chapter | The Evidence and Impact of Financial Globalization

  Foreign Direct Investment and Growth

  Laura Alfaro and Matthew Johnson

  This paper examines the evolution of the literature on the relationship between foreign direct investment (FDI) and growth in host countries, particularly developing countries. It provides a broad overview, with a focus on two elements that have recently become particularly important, (1) the role of complementary local conditions conducive to reaping the benefits of FDI (which relate to when FDI will generate growth) and (2) the mechanisms by which FDI creates positive externalities (which relate to how FDI generates growth).

  Keywords: Globalization; Foreign Direct Investment;

  Citation:

  Alfaro, Laura, and Matthew Johnson. "Foreign Direct Investment and Growth." In The Evidence and Impact of Financial Globalization, by Gerard Caprio. Elsevier, 2012.

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