Previous studies of U.S. policy towards foreign direct investment in less developed nations by U.S. business corporations fail to fully identify policy content and the inter play of variables over time. Utilizing a public policy approach, this research is limited in scope to investment guaranty and expropriation policy. The policies are conceptualized both as dependent variables which need to be explained and as independent variables with influence on political and economic outcomes in inter-state relations. Drawing on Congressional hearings, historical accounts, roll call votes, nationalization cases, comparative country data, and detailed investment, insurance and aid statistics, the research found that international environmental conditions precipitated the formulation of policy content through a particular policy network concerned with investment issues. Investment guaranty policy was found to be primarily determined by foreign policy goals, liberal-conservative ideology, the House Foreign Affairs Committee, and Congressional specialists. Politicization of investment issues, accompanied by domestic pressures, caused the breakdown of consensus and policy reorientation in 1973. Investment policy effects, measured by goal aspirations, were marginal but implementation by the Overseas Private Investment Corporation provided unexpected utilities. Adverse effects were created by concentrations of investment, a by-product of unrestricted capital flows. Expropriation policy was determined by business corporate interests and Congress. As nationalizations of U. S. property increased from 1962-1974, counterproductive policy sanctions were mandated. To avoid policy decisions as crisis response, the full range of investment policy issues needs a comprehensive coordinated re-formulation through a restructuring of priorities in the Executive branch of the U. S. government and within the international community.