Chapter 20, Problem 15AA

To determine

To explain: The ways in which the U.S. government is influenced indirectly by the foreign corporations.

Explanation of Solution

Many foreign companies make direct investment into the companies of the United States. This also gives these foreign companies a direct control in these companies. Mostly foreign investors do investment in companies of U.S. to maximize profits, but it is also said that control is also one of the motives.

The foreign investors and corporations have now owned almost 50% of the government securities. This is done by foreign investors to gain more profits. The government has more control on the foreign corporations. However, as they own 50% of the public debt, they have to consider the government policies. The Federal government through its policies can remove the owned debt of foreigners. Hence, the foreign corporations have an indirect influence on the government.

Economics Concept Introduction

Introduction:

Direct Foreign Investment − This is a kind of direct investment where foreigners purchase real estate and business in another countries. Many countries restrict other countries in making direct foreign investment after certain limit.