The United States remains an attractive destination for foreign direct investment (FDI) for a variety of reasons, including a large consumer base, a productive workforce, a highly innovative environment and legal protections. As a result, foreign firms make investments in the United States on a regular basis by establishing new operations, purchasing existing operations of another company or providing additional capital to their existing U.S. operations. This report, which updates a report released in 2013, examines recent trends in FDI and highlights newly released “greenfield” FDI data from the Bureau of Economic Analysis (BEA).¹ Foreign direct investment trends identified in the earlier report have continued to 2015.

• The United States is the largest recipient of global FDI with an inward FDI stock of $2.9 trillion on a historical-cost basis in 2014. On a current-cost basis, the United States’ FDI stock was more than three times larger than that of the next largest destination country in 2014.²
• Investment in the United States remains strong; total stock of FDI in the United States grew at an average annualized rate of 6 percent per year from 2009-2014.
• FDI inflows in 2015 alone totaled a record $348 billion, rebounding from 2014 ($172 billion), and well above 2013 inflows ($201 billion).
• Advanced economies, led by the United Kingdom, Japan and Germany, hold the largest FDI positions in the United States.³
• Majority-owned U.S. affiliates of foreign entities affiliates produced $360.0 billion in goods exports in 2013, and are a catalyst for research and development in America, spending $53.0 billion in R&D and accounting for a record high 16.4 percent of the U.S. total expenditure on R&D by businesses.⁴
• Majority-owned U.S. affiliates of foreign entities employed 6.1 million U.S. workers in 2013, up from 5.8 million in 2011, and generally provide compensation at higher levels than the U.S. 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.
• The U.S. manufacturing sector continues to benefit greatly from inbound FDI flows, as nearly 70 percent of FDI flows in 2015 and over one-third of jobs at U.S. majority-owned affiliates of foreign entities were in manufacturing in 2013.
• Newly collected data shows that “greenfield” investment expenditures by foreign entities totaled $16.6 billion in 2014,⁵ with expenditures on establishing new businesses totaling $13.8 billion and expenditures on expanding existing businesses totaling $2.8 billion.⁶
• In 2014, foreign investors spent $224.7 billion on new acquisitions of U.S. companies; therefore, total first-year expenditures by foreign entities (acquisitions plus expansions plus establishment of new businesses) were $241.3 billion.⁷

¹ The earlier report, “Foreign Direct Investment in the United States.,” was a joint release of the White House Council of Economic Advisors (CEA) and the Economic and Statistics Administration. This update is solely an Office of the Chief Economist, Economics and Statistics Administration publication.

² $5.4 trillion on a current-cost basis, based on latest available 2014 inward FDI stock data measured in U.S. dollars at current prices and current exchange rates. United Nations Conference on Trade and Development UNCTADstat Database. unctadstat.unctad.org/ Accessed 6/9/2016.

³ Based on latest available 2014 inward FDI position by Ultimate Beneficial Owner (UBO). The UBO measure of investment attributes FDI ownership to the country of the highest level decision maker in a company’s ownership chain. This measurement removes distortions in data that may arise from FDI into the United States that passes through intermediary countries. Foreign Direct Investment in the U.S.: Balance of Payments and Direct Investment Position Data. U.S. Bureau of Economic Analysis. Accessed June 9, 2016. www.bea.gov/international/di1fdibal.htm

⁴ The latest available data on compensation, employment, goods exports, and R&D activities by U.S. affiliates of foreign entities is from 2013. Activities of U.S. Affiliates of Foreign Multinational Enterprises, U.S. Bureau of Economic Analysis. Accessed June 9, 2016. http://www.bea.gov/international/di1fdiop.htm Business R&D Performance in the United States Increases Over 6% to $323 Billion in 2013 Infobrief. National Science Foundation (NSF). August 20, 2015. www.nsf.gov/statistics/2015/nsf15329/

⁵ FDI can be characterized by the way a company chooses to invest in the United States, either via a “greenfield” or “M&A” investment. Greenfield investments are when a company newly establishes an affiliate “from scratch” or expands an existing affiliate. Mergers and Acquisitions, or M&A investment occurs when a foreign entity acquires a 10 percent or more lasting voting interest in an incorporated U.S. business enterprise. BEA reinstated the survey of new foreign direct investment in the United States, which collects data on acquisitions and establishment of new entities, in 2014 after ending the series in 2008 because of budget cuts. The reinstated survey now also includes data on expansions of existing entities. As of June 17, 2016, data on greenfield investments is only available for 2014.

⁶ Expenditures by Foreign Direct Investors for New Investment in the United States, 2014. Bureau of Economic Analysis. www.bea.gov/newsreleases/international/fdi/fdinewsrelease.htm

⁷ In 2014, financial transactions associated with all types (that is, new investments and changes in positions of existing investments) of foreign direct investment in the United States (FDIUS) were $172 billion. The value of these transactions was less than the $241.3 billion in expenditures for new investment largely because of a single deal in April 2014 where U.S. based Verizon Wireless bought back its stake in U.K. based Vodaphone for a reported $130 billion. Source: United Nations World Investment Report 2015. Page 2.