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New Foreign Direct Investment in the United States, 2014-2016

Summary:
Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled 3.4 billion in 2016. Spending was down 15 percent from 9.6 billion in 2015, but was above the annual average of 0.0 billion for 2014-2015, and was well above the annual average of 6.0 billion for 2006-2008. As in previous years, expenditures to acquire existing businesses accounted for a large majority of the total.With this release, the Bureau of Economic Analysis (BEA) is introducing new tables that present planned expenditures for greenfield investments—investments to either establish a new U.S. business or to expand an existing foreign-owned U.S. business—both as they were reported when the investment was initiated

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Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $373.4 billion in 2016. Spending was down 15 percent from $439.6 billion in 2015, but was above the annual average of $350.0 billion for 2014-2015, and was well above the annual average of $226.0 billion for 2006-2008. As in previous years, expenditures to acquire existing businesses accounted for a large majority of the total.

With this release, the Bureau of Economic Analysis (BEA) is introducing new tables that present planned expenditures for greenfield investments—investments to either establish a new U.S. business or to expand an existing foreign-owned U.S. business—both as they were reported when the investment was initiated and as they were reported a year later. New Foreign Direct Investment in the United States, 2014-2016

In 2016, expenditures for acquisitions were $365.7 billion, expenditures to establish new U.S. businesses were $5.6 billion, and expenditures to expand existing foreign-owned businesses were $2.2 billion. Planned total expenditures, which include both first-year (2016) and planned future expenditures, were $387.7 billion.

Expenditures by industry, country, and state in 2016

By industry, expenditures for new direct investment were distributed widely. Expenditures in manufacturing, $129.4 billion, accounted for more than one third of total expenditures, the largest share among major industries. Within manufacturing, expenditures were largest in chemicals, $64.7 billion. There were also notable expenditures in professional, scientific, and technical services ($59.1 billion) and in finance and insurance ($47.9 billion).

By country of ultimate beneficial owner (UBO), a small number of countries accounted for most of the investment. The largest source country was Canada, with expenditures of $58.5 billion. There were also substantial expenditures from the United Kingdom ($54.5 billion), Ireland ($35.4 billion), and Switzerland ($34.9 billion). By region, about one-half of the new investment in 2016 was from Europe and nearly one-quarter was from the Asia and Pacific region.

By U.S. state, the largest expenditures were for U.S. businesses in California ($64.7 billion), followed by Illinois ($41.3 billion).

Greenfield expenditures

Greenfield investment expenditures were $7.7 billion in 2016. Total planned greenfield expenditures for investment initiated in 2016, which include both first-year expenditures and planned spending in other years, were $22.0 billion.

By U.S. industry, greenfield expenditures in 2016 were largest in real estate and rental and leasing at $1.6 billion, accounting for 21 percent of total greenfield expenditures. By U.S. state, greenfield expenditures in 2016 were largest in California ($1.3 billion) and New York ($1.2 billion).

Employment by newly acquired, established, or expanded foreign-owned businesses

In 2016, newly acquired, established, or expanded foreign-owned businesses in the United States employed 480,800 workers. Total planned employment, which includes the current employment of acquired enterprises, the planned employment of newly established business enterprises when fully operational, and the planned employment associated with expansions, was 499,700. Current employment of acquired enterprises, a component of total planned employment, was 476,600.

Among major industries in 2016, manufacturing accounted for the largest number of employees at 162,900, followed by retail trade (110,600). By country of UBO, Canada accounted for the largest number of employees at 105,900, followed by the United Kingdom (51,100) and China (49,400). By U.S. state, Florida accounted for the largest number of employees at 66,000, followed by California (60,000), and Texas (57,600).

New Statistics on Planned and Actual Expenditures for Greenfield Investments

With today’s release, BEA is introducing new statistics on planned expenditures for greenfield investments that were reported when the investment was initiated and updated a year later. These statistics can help answer questions about whether greenfield projects are completed and whether there are significant differences between planned and actual costs. The new statistics are presented by industry, country, state, and type of investment and are available on BEA’s web site.

Updates to 2014 and 2015 Expenditures for New Foreign Direct Investment in the United States

Millions of dollars

Previously Published
Estimate

Revised
Estimate

2014

 

 

 

First-year expenditures

 

250,581

260,487

      U.S. businesses acquired

 

235,799

242,580

      U.S. businesses established

 

12,473

14,183

      U.S. businesses expanded

 

2,309

3,724

Planned total expenditures

 

275,767

294,268

      U.S. businesses acquired

 

235,799

242,580

      U.S. businesses established

 

33,516

40,559

      U.S. businesses expanded

 

6,453

11,129

2015

   First-year expenditures

420,691

439,563

      U.S. businesses acquired

408,056

425,788

      U.S. businesses established

11,249

10,739

      U.S. businesses expanded

1,387

3,037

   Planned total expenditures

439,209

460,569

      U.S. businesses acquired

408,056

425,788

      U.S. businesses established

24,509

24,731

      U.S. businesses expanded

6,644

10,051

Additional Information


Resources

The statistics of new investments by foreign direct investors are based on data reported in the Survey of New Foreign Direct Investment in the United States (BE-13) conducted by BEA.

In addition to the expenditures, the survey also collects data on the activities of the newly acquired, established, or expanded U.S. businesses. These additional data include balance sheet and income statement items, specifically sales, net income, assets, liabilities, and total owner’s equity, as well as the number of employees.

For more information about the survey and statistics see “New Foreign Direct investment in the United States in 2015,” Survey of Current Business 96 (August 2016). An updated article on new foreign direct investment in 2016 will be available in the August issue of the Survey.

The statistics of new foreign direct investment include transactions resulting from corporate inversions. A corporate inversion occurs when a U.S. corporation that is currently the ultimate owner of its worldwide operations takes steps to become a subsidiary of a foreign corporation. BEA’s direct investment surveys do not collect information on whether a U.S. corporation became foreign owned as a result of a corporate inversion. Using publicly available information, such as commercial databases and press reports, BEA estimates that newly inverted U.S. corporations accounted for a significant share of first-year expenditures in 2015, but not in 2016. For more information on how corporate inversions affect the new investment statistics see “New Foreign Direct investment in the United States in 2015” in the Survey.

Bureau of Economic Analysis

The BEA Advisory Committee advises the Director of BEA on matters related to the development and improvement of BEA’s national, regional, industry, and international economic accounts, especially in areas of new and rapidly growing economic activities arising from innovative and advancing technologies, and provides recommendations from the perspectives of the economics profession, business, and government.

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