Abstract
This article analyzes data from 1979 to 1987 for foreign direct investment (FDI) in the United States. The European Community, Canada, and Japan accounted for 82 percent of the $261 billion in overall FDI activity and 84 percent of the $110 billion in manufacturing investments. New capital investments represented 10 percent of all investments and under 20 percent of manufacturing investments. Investment activity was highly concentrated by industry and in major industrial states. Japan supplied 44 percent of new plant investments in the United States during the period. Limiting Japanese FDI activity could slow technological advances in U.S. manufacturing. State-specific tax burdens and investment incentive programs had no impact on FDI activity. Tax-abatement programs deserve skepticism. FDI activity is concentrated in states with serious structural unemployment problems. Curbing FDI activity could worsen the unemployment problem. Cheap U.S. dollars and expanding U.S. markets have attracted foreign investments.
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