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Manufacturing, finance, logistics, mining, and health care sectors are prime recipients

WASHINGTON, DC – 06/05/07 – Outlays by foreign direct investors to acquire or to establish US businesses were $161.5 billion in 2006, up substantially from $91.4 billion in 2005.

According to the US Commerce Department’s Bureau of Economic Analysis (BEA), foreign direct investment (FDI) outlays in the US last year were the fourth largest recorded and the highest since 2000, when new investment outlays were at a historical peak of $335.6 billion.

FDI during the year increased substantially in manufacturing and finance (except depository institutions) and insurance, together accounting for half of total investment outlays in the US last year.

Outlays were also sizable in several other sectors, including real estate and rental and leasing, information, depository institutions, and wholesale trade.

FDI from investors in most major geographic areas also increased.By far the largest increase was attributable to European investors, whose outlays grew by $53 billion.

Overall, outlays from Europe accounted for approximately two-thirds of the worldwide total, the BEA said.

Investments from the Middle East, the Asia-Pacific region, and Latin America also rose considerably, while outlays from Canada declined further following a sharp decline in 2005.

In 2006, as in previous years, outlays by foreign direct investors to acquire existing US businesses – some $147.8 billion – were significantly larger than outlays to establish new US businesses – almost $14 billion.

Oversea outlays made by, or through, existing US affiliates of foreign investors reached $110.6 billion, or more than twice the $50.9 billion in outlays made directly by foreign investors.

The US manufacturing sector saw FDI increased to $56.6 billion from $34.0 billion in 2005, the BEA said.

The largest FDI increases in the manufacturing sector were in computers and electronic products, mostly for acquisitions of communications equipment manufacturers, and in chemicals mostly for acquisitions of pharmaceutical manufacturers.

FDI in the US finance – except depository institutions – and insurance sectors increased sharply to $25.3 billion from $5.5 billion in 2005, while outlays in “other industries” more than doubled to $31.2 billion in 2006, the most sizable of which were in transportation and warehousing, mining, health care, and social assistance.

By country of ultimate beneficial owner, outlays by European investors almost doubled, increasing to $109.9 billion from $56.4 billion in 2005.

Outlays in manufacturing and the non-bank finance and insurance sectors fueled much of the growth.

Expenditures by investors from Germany, France, Switzerland, and Spain grew substantially with German investment of $22.7 billion was the highest among individual countries, followed by UK-based investment of $21.9 billion.

Stepped-up investment from Japan and Australia contributed to a rise in overall investment from the Asia and Pacific region, while higher investment from Israel contributed to increased investment from the Middle East.

The ultimate beneficial owner is the investor, proceeding up a US affiliate’s ownership chain, beginning with the foreign parent, that is not owned more than 50% by another investor.

The estimates of outlays for 2006 are preliminary, the BEA said, with the estimate of outlays for 2005 revised up 5% from the preliminary estimate published last year.

Newly acquired or established businesses employed 215,300 people in 2006, down 9% from 235,900 in 2005.

The movement of employment and outlays in opposite directions occurred as new investments became more concentrated in industries with relatively low employment and relatively high acquisition values.

Manufacturing accounted for the largest share of employment, with 91,400 employees.The total assets of newly acquired or established businesses were $356.5 billion, up considerably from $181.8 billion in 2005.

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FDI in US to Get More ''Transparent'' Scrutiny

WASHINGTON, DC – 08/07/07 – Foreign direct investment in the US will come under closer, ''more transparent'' scrutiny under legislation that recently passed both the House and the Senate; the new mechanism is not expected to make the US business climate less friendly to foreign investment, say some observers, despite claims by foreign investors who say a new, enhanced review process would complicate business decisions.