Felicia Pullam is the Director of Outreach for SelectUSA.
Foreign direct investment (FDI) is tremendously important to the American economy. The U.S. affiliates of foreign companies are responsible for roughly 12 million jobs in the United States, and they spent $53 billion on U.S. research and development and exported $360 billion worth of U.S. goods in 2013 alone. New data from the United Nations Conference on Trade and Development (UNCTAD) on global FDI shows that the United States remains the leading destination for investment. The long-term outlook inherent in FDI decisions means that confidence in our economy continued to grow.
UNCTAD recently published its Global Investment Trends Monitor Report on 2015 FDI flows, which analyzes FDI flows between countries and regions. The report reveals that flows into the United States increased to $384 billion, more than any other country and a record high.
Worldwide, FDI flows recovered “unexpectedly” strongly in 2015, increasing 36 percent to an estimated $1.7 trillion – the highest level since the recession. The report notes that this growth can be attributed to a surge in mergers and acquisitions (M&As), as well as corporate reconfigurations. Internationally, greenfield investment was relatively flat, with 0.9 percent growth.
FDI flows, however, are notoriously volatile. A handful of deals – or even just one large investment – can swing annual flows dramatically. For this reason, our team at SelectUSA relies primarily on “stock” or “position” data – the total cumulative amount of FDI – to understand FDI trends. Nonetheless, the overall patterns of FDI flow and long-term trends in these flows can be instructive.
For example, the report highlights the reversal of a trend in global investment flows in 2015. Between 2012 and 2014, developing countries received a larger share of FDI inflows than their developed counterparts. In 2015, FDI inflows to developed economies grew to their second highest level ever ($936 billion), or 55 percent of all FDI, driven by flows to the European Union and the United States. FDI inflows to developing economies increased just 5 percent last year to $741 billion.
Last year also marks the ninth time in ten years that the United States recorded more FDI inflow than any other country. Combined with the fact that the United States is home to the largest amount – by far – of FDI stock, it is clear that investors have been consistently confident in the quality of the investment environment and opportunities in the United States.
That’s not a surprise: we hear from companies all the time about why they chose to invest here, and international executives ranked the United States at the top of A.T. Kearney’s FDI Confidence Index for the third year running. Business leaders know that success in the U.S. market can help drive global success. The United States is not only home to the largest and most attractive consumer market, it also thrives through a culture of innovation and a workforce that is among the world’s most productive. Companies of all sizes – from start-ups to multinationals – can find the ideas, resources, and market they need to be competitive.
SelectUSA will hold the 2016 Investment Summit on June 19-21 in Washington, D.C. to showcase investment opportunities from every corner of our country to investors from 70 countries. Participants can learn more about how, where, and why to invest in the United States from high-profile executives, senior officials, and economic developers. Visit SelectUSASummit.us to learn more and register today.
About SelectUSA: Housed within the U.S. Department of Commerce, SelectUSA promotes and facilitates business investment into the United States by coordinating related federal government agencies to serve as a single point of contact for investors. SelectUSA assists U.S. economic development organizations to compete globally for investment by providing information, a platform for international marketing, and high-level advocacy. SelectUSA also helps investors find the information they need to make decisions; connect to the right people at the local level; navigate the U.S. federal regulatory system; and find solutions to issues related to the U.S. federal government.