Foreign investing in the U.S. rose sharply in 1986.

According to a Commerce Department report, foreigners spent a record $31.47 billion last year to buy or start up U.S. businesses, a sharp 36.2% increase from 1985. European, Canadian and Japanese investors accounted for the bulk of the 1986 spending, the Commerce Department said. The increased investment, made either directly by foreigners or indirectly through their existing U.S. affiliates, was the third consecutive annual increase. More than half the 1986 investments were in the final quarter, encouraged by U.S. tax reform, the department said.