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The Determinants of U.S. Capital Imports

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  • WILLIAM A. NISKANEN

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.

Suggested Citation

  • William A. Niskanen, 1991. "The Determinants of U.S. Capital Imports," The ANNALS of the American Academy of Political and Social Science, , vol. 516(1), pages 36-49, July.
    • Handle: RePEc:sae:anname:v:516:y:1991:i:1:p:36-49
    DOI: 10.1177/0002716291516001004
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    1. Bovenberg, A Lans, 1989. "The Effects of Capital Income Taxation on International Competitiveness and Trade Flows," American Economic Review, American Economic Association, vol. 79(5), pages 1045-1064, December.
    2. Bovenberg, A.L., 1989. "The effects of capital income taxation on international competitiveness and trade flows," Other publications TiSEM e64b6c96-399c-460f-9eff-7, Tilburg University, School of Economics and Management.
    3. William A. Niskanen, 1988. "The Uneasy Relation between the Budget and Trade Deficits," Cato Journal, Cato Journal, Cato Institute, vol. 8(2), pages 507-532, Fall.
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