The Determinants of U.S. Capital Imports
- 1 July 1991
- journal article
- Published by SAGE Publications in The Annals of the American Academy of Political and Social Science
- Vol. 516 (1) , 36-49
- https://doi.org/10.1177/0002716291516001004
Abstract
Since 1982 the United States has been a large net importer of capital. This condition, consistent with the standard explanation, appears to be primarily attributable to the large sustained federal budget deficit. In addition, net U.S. foreign investment in the 1980s appears to be more sensitive to changes in domestic demand, suggesting an increasing substitutability of domestic and foreign goods in the U.S. market. Changes in foreign economic conditions and policies in the 1980s do not appear to have had a substantial effect on the balance of capital flows. The article concludes that the large net U.S. importation of capital is not a policy problem but is the result of a policy problem, specifically, the decline in private saving and the large continuous federal budget deficit.Keywords
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