Foreign Enterprise in Florida: The Impact of Non-U.S. Direct Investment

By Mira Wilkins | Go to book overview

ezuela, Robert McClintock, expressed concern. The Federal Energy Administration refused to cooperate in the inquiry, fearing an international incident. 10 In another case, an insurance company was excluded from Florida because it was controlled by the French government. 11 It is not clear how often this type of situation occurs; as government-owned enterprise spreads abroad, it may arise more frequently in the future. Non-U. S. investors in Florida include a number of government-owned companies: the British government owns British Leyland; the Mexican government owns Azufrera Panamericana; the French government has a large interest in Compagnie Franqaise des Pétroles; and the Canadian government owns Canada Development Corp. In general, government-controlled companies have functioned similarly to nongovernment enterprises. It is a topic which requires far more research. 12

Often, there is special concern about non- U. S. investments in land, agriculture, and natural resource industries on the grounds that limited resources are being used for the benefit of non-U. S. residents rather than the community. From an economic standpoint, it is hard to formulate a precise evaluation of how the costs of non-U. S. use of these resources may exceed those of domestic use. Indeed, this argument seems ultimately to be based on noneconomic grounds (except as it pertains to the foreign investor's paying premium prices-- see p. 53).

The fear that foreign investors will export U. S. agricultural output, forcing higher food prices at home, seems overly dramatic. Both domestic and non- U. S. farmers seek foreign markets. Likewise, the argument that the foreign investor will convert farmland into urban development--that is, take it out of agricultural production--would seem to apply to domestic as well as to foreign purchases of such land. Community zoning rules can control this problem.

Finally, there is a vague feeling that companies incorporated in certain taxhaven countries are "mysterious" --that they may be concealing improper behavior. Indeed, the use of tax havens by U. S. investors to evade taxes has become intermingled in the popular mind with the legal use of these havens by non- U. S. investors to avoid taxes. The association is based on fuzzy thinking. One practice is illegitimate and does not involve "foreign" investment; the other is legal and does involve non-U. S. stakes. If, however, a non-U. S. investor through the use of tax havens is able to avoid taxes paid by U. S. investors, this inflicts a social cost. We have noted the competitive advantages and the inflationary consequences of this practice. It serves to subsidize the non-U. S. investor at the expense of the domestic investor.


SUMMARY

Although costs are imposed by non- U. S. investments upon the domestic economy, we suggest that the benefits of these investments in terms of added capital,

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