Fiscal Policy Impacts on Foreign Direct Investments in the United States

Foreign direct investments in the United States have increased significantly over the last several years. Although not a newphenomenon the acceleration of the growth is noteworthy. In 1980 foreign investors spent $11 billion to acquire or establish businessesin the United States, which increased the foreign direct investment position at the end of the year to 20% or $65 billion. Though the 1980 increase was less than the $12 billion inflow the foreign investment position remains significant. Moreover, there is an increased rate of reinvested earnings by incorporated affiliates.This thesis concentrates on the influence offiscal policy on the economic system and specifically on foreign investments in the U.S. It tries to illuminate the importance and characteristics of fiscal policy, the tools of fiscal policy, and the tool's impacts on the investment climate in the U.S. as relevantfactors in the foreign investment decision making process.