Direct investments from other countries into the U.S. total $2.9 trillion on a historical-cost basis, according to a revised report from the U.S. Department of Commerce‘s top economist.
The retail trade garners a 2 percent share of that total, worth $59.3 billion. The historical-cost basis is the total investments made from 1997 through to 2014. The initial study was done in 2013, and was updated this week using “universal beneficial owner” (UBO) data from the U.S. Bureau of Economic Analysis.
“The UBO measure of investment attributes FDI [foreign direct investments] ownership to the country of the highest level decision-maker in a company’s ownership chain,” the researchers said in their study. “This measurement removes distortions in data that may arise from FDI into the United States that passes through intermediary countries.”
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This clearer picture of direct investments also revealed that FDI inflows to the U.S. grew at an annualized rate of 6 percent from 2009 to 2014. Preliminary data for 2015 showed a total of $358 billion — the highest amount to date, and well above 2014’s $172 billion.
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The analysis showed that these investments are being led by the United Kingdom, Japan and Germany. The investments include “greenfield” types, which are when a company creates an affiliate from scratch in the U.S. or expands an existing affiliate. The FDIs also include mergers and acquisitions. With greenfield investment, the researchers said the total inflows were $16.6 billion in 2014. Of that amount, $13.8 billion was to establish new businesses in the U.S. while $2.8 billion was for expanding existing ones.
When it comes to the market segments benefiting from these investments, manufacturers lead the way with 70 percent of FDI inflows pouring into the sector. The other beneficiaries of these investments include the workers as well.
“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 researchers said.
The Top 10 Investor Countries of Origin
Ranked by UBO for 2014
Country: % of Total FDI:
1. United Kingdom 16.1%
2. Japan 12.9%
3. Germany 10.8%
4. Canada 10.7%
5. France 8.3%
6. Netherlands 6.4%
7. Ireland 5.5%
8. Switzerland 5.2%
9. Spain 1.9%
10. Australia 1.8%