Foreign Investment:

Issues Raised by Taiwan's Proposed Investment in McDonnell Douglas

NSIAD-92-120: Published: Feb 6, 1992. Publicly Released: Mar 24, 1992.

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Pursuant to a congressional request, GAO identified issues and questions relating to a Taiwanese firm's proposed acquisition of a 40-percent equity in a domestic firm's commercial aircraft division.

GAO found that considering both U.S. commercial competitiveness and national security, the proposed investment raised questions concerning the: (1) effect of a more complete separation of the domestic firm's military and commercial activities in regards to technology transfers and financial resources; (2) effects of the investment on the U.S. technology base; (3) U.S. government process for analyzing international partnerships; (4) nature of competition in the commercial aircraft industry; and (5) ability of U.S. financial markets to make long-term capital available at reasonable rates to firms in industries with large development costs and high financial risks.