Foreign Direct Investment
Impacts of Foreign Direct Investment in the U.S. Economy
High-Tech Industries: The Role of FDI in Driving Innovation and Growth
Select USA, September 2017
New Foreign Direct Investment in the United States in 2016 BEA, August, 2017
Spending by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $373.4 billion in 2016, down from $439.6 billion in 2015. Employment at these businesses was 480,800 workers, down from 483,800 in 2015. The 2016 decrease in new foreign direct investment in the United States reflected a decrease in global mergers and acquisition activity. There are 715,800 jobs in California that are directly supported by majority foreign-owned affiliates.
Highlights from the statistics:
- The current-dollar value added of majority-owned U.S. affiliates, a measure of their direct contribution to U.S. gross domestic product, totaled $894.5 billion in 2015. That’s an increase of $10.9 billion, or 1.2 percent, from 2014. U.S. affiliates accounted for 6.4 percent of total U.S. private industry value added in 2015, compared with 6.5 percent in 2013 and 2014.
- Affiliates with ultimate beneficial owners in seven countries— the United Kingdom, Japan, Germany, France, Canada, Switzerland, and the Netherlands —accounted for nearly three-fourths of the value added by all majority-owned U.S. affiliates in 2015.
- Majority-owned U.S. affiliates employed 6.8 million workers, up 3.1 percent in 2015, following a 7.0 percent increase in 2014. U.S. affiliates accounted for 5.5 percent of all U.S. private industry employment, up from 5.4 percent in 2014.
- The states with the largest shares of total private industry employment accounted for by U.S. affiliates in 2015 were New Jersey (8.1 percent), South Carolina (8.0 percent), and New Hampshire (7.7 percent).
- Exports of goods by affiliates decreased in 2015 by $70.3 billion, or 16.6 percent, and imports decreased by $51.2 billion, or 7.2 percent.
- Research and development performed by affiliates totaled $56.7 billion in 2015, a 0.4 percent decrease from 2014.
U.S. Commerce Department Releases New Report on Foreign Direct Investment Trends
U.S. Department of Commerce, June 20, 2016
2017 World Investment Report
UNCTAD, June 2017
In 2016, global flows of foreign direct investment fell by about 2 per cent, to $1.75 trillion. Investment in developing countries declined even more, by 14 per cent, and flows to LDCs and structurally weak economies remain volatile and low. Although UNCTAD predicts a modest recovery of FDI flows in 2017–2018, they are expected to remain well below their 2007 peak.
The Foreign Direct Investment in the United States: Update to 2013 Report
The United States is the world’s largest recipient of foreign direct investment. In 2015 alone, the United States received $348 billion in FDI. Foreign direct investment impacts the U.S. economy in many positive ways. For example, FDI:
- Creates New Jobs: U.S. affiliates of foreign companies (majority-owned) employ approximately 6.1 million U.S. workers, or 5.17% of private industry employment.
- Boosts Wages: U.S. affiliates of foreign companies tend to pay higher wages than the US average, at nearly $80,000 per U.S. employee in 2013, as compared to average earnings of $60,000 for workers in the economy as a whole.
- Increases U.S. Exports: U.S. companies use multinationals’ distribution networks and knowledge about foreign tastes to export into new markets. In 2013, 22.8 percent of all U.S. exports ($360 billion) came from U.S. subsidiaries of foreign companies.
- Strengthens U.S. Manufacturing: Nearly 70 percent of FDI flows in 2015, and more than one-third of jobs at U.S. majority-owned affiliates of foreign entities in 2013, were in manufacturing.
- Brings in New Research, Technology, and Skills: Affiliates of foreign companies (majority-owned) invested $53 billion on research and development in 2013, accounting for a record high 16.4 percent of the U.S. total expenditure on R&D by businesses.
- Contributes to Rising U.S. Productivity: Inward investment leads to higher productivity growth through an increased availability of capital and resulting competition. Productivity is a key factor that increases U.S. competitiveness abroad and raises living standards at home.
U.S. Net International Investment Position: End of First Quarter 2016, Year 2015, and Annual Revisions
US Bureau of Economic Analysis, June 2016
The U.S. net international investment position at yearend 2015 was -$7,280.6 billion (revised), as the value of foreign investments in the United States continued to exceed the value of U.S. investments abroad. At year end 2014, the U.S. net international investment position was -$7,046.1 billion (revised).
The $234.5 billion change in the U.S. net investment position from yearend 2014 to yearend 2015 was mostly due to net financial transactions—net U.S. acquisition of assets excluding financial derivatives less net U.S. incurrence of liabilities excluding financial derivatives plus net transactions in financial derivatives. Other changes in position, which include price changes, exchange-rate changes, and changes in volume and valuation n.i.e., also contributed to the decrease.
The following are highlights for 2015:
- The $234.5 billion decrease in the net investment position was mostly due to net financial transactions of -$195.2 billion.
- The net investment position decreased 3.3 percent from the end of 2014 to the end of 2015, compared with a 31.1 percent decrease from the end of 2013 to the end of 2014.
- U.S. assets decreased $1,376.8 billion, reflecting both an $818.8 billion decrease in the value of financial derivatives and a $558.0 billion decrease in U.S. assets excluding financial derivatives that was driven by the depreciation of major foreign currencies against the U.S. dollar.
- U.S. liabilities decreased $1,142.3 billion, reflecting both a $790.5 billion decrease in the value of financial derivatives and a $351.8 billion decrease in U.S. liabilities excluding financial derivatives. Decreases in U.S. equity prices lowered the value of both direct investment and portfolio investment equity liabilities, and decreases in U.S. bond prices lowered the value of portfolio investment debt liabilities.
US Direct Investment Abroad
In 2014, the U.S. direct investment abroad historical-cost position grew $227.3 billion to $4,920.7 billion. The 4.8 percent growth rate was much lower than the 6.4 percent increase in 2013 and only half of the average annual rate of 9 percent from 2004-2013. Concurrently, foreign direct investment in the United States historical-cost position grew $146.4 billion to $2,901.1 billion, reflecting a 5.3 percent growth rate.
Direct Investment Positions for 2014
Bureau of Economic Analysis, U.S. Department of Commerce
The best source for Foreign Direct Invest Statistics in the United States is the U.S. Department of Commerce, Bureau of Economic Affairs.
Bureau of Economic Analysis : Foreign Direct Investment
The BEA’s Interactive Data Analysis allows you to see create reports based on specific criteria, such as country, industry, amount, etc.
Investment Policy Central
Seven national business associations have an information
clearinghouse, Investment Policy Central,
to highlight the importance of an open investment climate.
SelectUSA seeks to highlight the many advantages the United States offers as a location for business and investment.
The Bureau of Economic Analysis (BEA) news release of June 2009 entitled “Foreign Direct Investors’ Outlays to Acquire or Establish U.S. Business Increased in 2008.” Outlays by foreign direct investors to acquire or establish U.S. businesses increased 3 percent in 2008, to $260.4 billion. Outlays in 2008 were the third-largest on record and the sixth consecutive increase since a falloff in outlays in 2001-2002.
US Department of Commerce releases Report – The U.S. Litigation Environment and Foreign Direct Investment (October 2008)