Title page for ETD etd-07242012-040013

Type of Document Master's Thesis
Author Burke, Robert Vincent
URN etd-07242012-040013
Title Effects of the foreign direct investments program on the U. S. balance of payments.
Degree Master of Arts
Department Economics
Advisory Committee
Advisor Name Title
Schmidt, Wilson E. Committee Chair
Brown, Norman L. Committee Member
Meiselman, David I. Committee Member
  • investments
Date of Defense 1974-08-05
Availability restricted
This study evaluates the effect of the Foreign Direct Investment

Program on the U.S. balance of payments. It fits several simple models

to cross-section data reported to the Office of Foreign Direct Investments

by U.S. multinational firms. With these, estimates of earnings

and exports associated with direct investments were made. The reduction

in the level of direct investment itself was estimated, using a

flexible accelerator model. Finally, the amount of foreign borrowing

and associated interest payments induced by the Program were calculated.

It appears that the Program produced a reduction of about $1 billion in each of its first two years. The reduction in subsequent

years was substantially less. The internal rate of discount, a key

summary measure of the effect of controls, is discussed. Evidence is

presented showing that the internal rate of discount associated with

reductions in investment is quite high, suggesting that the Program

was an inferior policy choice to the extent that it reduced investment


The internal rate of discount associated with foreign borrowing was substantially less. To the extent that the Program induced foreign borrowing, it appears neither clearly better nor clearly worse than policy alternatives.

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