Tradeology, the ITA Blog

Kara Mazachek is an Economic Research Analyst at SelectUSA

As we approach the end of 2019, we’re reflecting on the positive state of foreign direct investment (FDI) in the United States. The most recent data update from the U.S. Bureau of Economic Analysis (BEA) was great news for economic growth and FDI’s important role in the U.S. economy.

By the end of 2017, 7.4 million workers were employed by majority foreign-owned firms in the United States, a 2.8 percent increase from 2016.[1] This accounts for nearly six percent of all private-sector employment in the United States and approximately seven percent of total U.S. business-sector GDP. Despite the United Nations Conference on Trade and Development’s (UNCTAD’s) World Investment Report finding the third consecutive annual decline in global FDI flows in 2018 – down 13 percent from $1.5 trillion to $1.3 trillion – the United States has consistently remained the largest recipient of FDI in the world. These data points further confirm that the United States is and will continue to be the best place to invest and do business.

The benefits don’t stop there. FDI accounted for 16.4 percent ($258.6 billion) of total U.S. private business capital expenditures in 2017. Foreign-owned companies also increased their U.S. R&D spending by 8.1 percent to $62.6 billion and accounted for a quarter ($382.7 billion) of total U.S. goods exports in 2017. These firms’ value-add to U.S. GDP increased by more than eight percent to $1 trillion in 2017 alone.

Specifically, the three global markets that contribute the most to FDI-supported employment in the United States are the United Kingdom, Japan, and Germany, which is not surprising as these markets historically are among those with the most FDI stock in the United States and are also among the largest economies in the world. At the national level, the states with the highest percentage of FDI-supported employment are Kentucky, South Carolina, and New Jersey, where over eight percent of employment is supported by foreign-owned firms. In all three states, those firms employed the most workers in the manufacturing industry.

So, what can we expect in 2020? UNCTAD reports that greenfield project announcements were up 41 percent in 2018, indicating forward investing plans. Further, the FDI Confidence Index estimates the United States will attract the most investment in the next three years due to our large domestic market, continued economic expansion, and technological and innovative capabilities. Again, this confirms what we already know, which is that the United States has the right mix of talent and innovation for companies to thrive in a competitive global economy. To ensure this trend continues, SelectUSA will continue to support business investment in the United States and work to give global business investors and U.S. economic developers the information and tools they need to succeed in the U.S. economy.

Stay Current on FDI
Keep your eye out for BEA’s next FDI data release in July 2020 that will provide  new investment opportunities in the United States. For more information on FDI in the United States, sign up for email updates from SelectUSA and visit SelectUSA.gov for resources such as FDI fact sheets, interactive data tools, and informative reports. You can also follow and contribute to our #FDIintheUSA campaign on Twitter!

About SelectUSA
Housed within the U.S. Department of Commerce’s International Trade Administration, SelectUSA promotes and facilitates business investment in the United States. To learn more about SelectUSA’s services, the U.S. business and investment climate, and how FDI benefits the U.S. economy, visit selectusa.gov and follow @SelectUSA on Twitter.

[1] Latest available data