Foreign Direct Investment in the United States: An Empirical Analysis of Foreign Investments
Bibliographic record
Abstract
ABSTRACT Foreign Direct Investment (FDI) is essentially the total purchases of domestic assets or claims by foreigners. The United States (U.S.) has been a favorite destination of FDI from Europe and Japan. The purpose of this paper is to determine the perspectives of foreign investments in the United States on a Historical-Cost Basis (FDIUS). The study will provide a comprehensive look at the players and the industries which receive the most foreign investment. In doing so, the study also provides some justification for such a trend. INTRODUCTION Foreign Direct Investment in the United States (FDIUS) is defined as the ownership or control, directly or indirectly, by one foreign person of 10 percent or more of the voting securities of an incorporated U.S. business enterprise or the equivalent interest in an unincorporated U.S. business. A U.S. affiliate is a U.S. business in which there is foreign direct investment (Bureau of Economic Analysis (BEA). Total foreign investment in a country is generally divided into portfolio investment, where the investor is a passive holder of stock or debt, and direct investment, where the investor maintains some degree of active control over the company in which the investment takes place. With the foreign markets approaching saturation and increasing competition from other foreign countries, (Canada, Europe, Latin America, Africa, The Middle East, and Asia/Pacific) the U.S. is an attractive target for foreign investment. Since the mid 1980's, foreign investment has become more and more important to the U.S. economy. Foreign investment helps to finance the large U.S. federal government deficit, as well as provide much needed capital for investment in new plant and equipment (Douglas Meade, 1997). John H. Dunning's Eclectic Paradigm Theory can be associated with Foreign Direct Investment (FDI). The principal hypothesis on which the Eclectic Paradigm is based suggests that a firm will engage in FDI if and when three conditions are satisfied. First, a firm must possess ownership advantages. These include such considerations as technology, know-how and brand names, and must be of sufficient value to overcome the risks of locating in an unfamiliar business environment. Second, a firm's motivation to invest abroad depends not only on its ownership advantages, but also on its desire and ability to internalize these ownership advantages. Internalization is the procedure by which a multinational firm preserves its ownership advantages by establishing a foreign subsidiary rather than leasing or selling its ownership advantages. The final aspect of the Eclectic Paradigm is location advantages. Location advantages determine which countries or regions host production by Multinational Corporations (MNC's) (O'Hagan and Anderson, 2000). Here are some reasons for why firms from one country would want to do foreign investment in another country. 1. Closer access to the market of the host country, especially in the face of protective tariffs or other restraints. 2. Low wages in the host country relative to the source country. 3. High return on investment in the host country relative to the source country. 4. High liquidity in the source country (Douglas Meade, 1997). The timing of foreign investment can be affected by the following factors: 1. Exchange rate movement--if the currency of the host country is perceived to be temporarily below its equilibrium level, then firms may perceive it is a good time to invest in that country. 2. Tax policy changes--an imminent change in tax policy may make foreign investment more urgent. 3. Business cycle effects--foreign investment tends to be correlated positively with the growth of GDP. One reason is that this signifies that the host market is strong, and the outlook for profits in that market is good. Another reason is that mergers and acquisitions tend to be more prevalent in periods of strong economic growth, and many of these mergers and acquisitions are financed by foreign capital (Douglas Meade, 1997). …
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.005 | 0.001 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.005 | 0.011 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.000 | 0.002 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".