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FDI Trends: Continued Growth in 2015

Companies around the world have realized that by locating in the United States they can access a market of 320 million people, avail themselves of a productive workforce, and establish roots in a business-friendly environment.

Location USA 2016
When a company establishes, expands, or acquires operations in a foreign market, its management is generally making an investment with an eye toward long-term growth. To make that commitment, those managers need to see opportunity. The United States is home to more foreign direct investment (FDI) than any other country, with a total stock valued at $2.9 trillion as of 2014. Managers from around the world clearly see opportunity in America.

Optimism continued into this past year. In January 2016, the United Nations Conference on Trade and Development (UNCTAD) released the Global Investment Trends Monitor Report on FDI flows between countries and regions. The data show that flows into the United States increased to $384 billion, a record high. Because they can be affected by a small number of large deals, annual flows are notoriously volatile and a one-year spike is not necessarily cause for celebration. However, flows can reveal trends over time, and 2015 is the ninth year in 10 that the United States has led the world in FDI inflow.

According to the most recent data from the Bureau of Economic Analysis (BEA), the top five market sources for FDI in the United States remain consistent: Investments from the United Kingdom are valued at $465 billion, followed by Japan ($374 billion), Germany ($312 billion), Canada ($311 billion), and France ($240 billion). In total, investments from these countries account for just shy of 60 percent of all FDI in the United States.

“Business-friendly” may be a buzzword, but Americans work hard to make it a reality. FDI from eight countries grew at compound annual growth rates (CAGR) above 18 percent from 2009–2014. China continued its streak as the fastest-growing source of FDI, with a CAGR of 38.5 percent, and the total amount of Chinese FDI reached $10.2 billion in 2014. Investors from Luxembourg (26.8 percent CAGR), Brazil (25.2 percent), India (22.1 percent), Malaysia (19.6 percent), South Korea (19.4 percent), Switzerland (18.2 percent), and the United Arab Emirates (18.1 percent) also increased their investments in the U.S. market rapidly during that period.

This investment plays an important role in the American economy. In 2013, U.S. affiliates of foreign companies spent $53 billion on U.S. research and development and exported $360 billion worth of U.S. goods. New research published in February by the International Trade Administration (ITA) reveals that these companies are responsible for at least 12 million jobs in the United States, including 6.1 million direct jobs. An additional 2.4 million jobs are attributable to the economic activity of majority foreign-owned firms; this includes jobs in the supply chains of those firms and jobs supported by the spending of direct employees, as well as other economic effects. Foreign investment can also drive productivity gains, and the report estimates that 3.5 million jobs in the manufacturing sector alone can be attributed to FDI.

There are many reasons that companies continue to choose the United States — the U.S. economy remains strong with the world’s most attractive consumer market, enhanced access to other markets through free-trade agreements, a culture of innovation, a highly productive workforce, and a “business-friendly” environment.
Expand 2014 FDI in the U.S. - Breakout of $2.9 Trillion Inward Position
Close 2014 FDI in the U.S. - Breakout of $2.9 Trillion Inward Position
2014 FDI in the U.S. - Breakout of $2.9 Trillion Inward Position
World’s Largest Market
Data from the White House Council of Economic Advisors shows that, as of February 2016,4 the United States has experienced the two best years of private-sector job growth since the 1990s, and consumer confidence is near its highest level in nearly a decade. With a diverse population of 320 million, there is room for companies of all sizes to find their market in the United States.

Opportunities to Export
Many companies also choose to export from the United States. In fact, the U.S. affiliates of foreign companies exported goods worth $360 billion in 2013 — more than one-fifth of all U.S. goods exports. Free-trade agreements with 20 nations give U.S.-based exporters enhanced access to markets with hundreds of millions more potential customers, and, according to the World Bank, no country has more rapid export procedures.
Largest Sources of FDI in the United States (by UBO*)
Largest Sources of FDI in the United States (by UBO*)
The United States is a world leader in research and development (R&D) and intellectual property protection, providing a fertile environment for innovation. As of late 2013, it was estimated that more than 31 percent of total world R&D expenditures take place in the United States.

The American workforce is among the world’s most productive. According to The Conference Board’s Total Economy Database, the output per hour of the American worker is approximately 25 percent above the average of the world’s mature economies.
Fastest-Growing Sources of FDI in the United States (by UBO*)
Fastest-Growing Sources of FDI in the United States (by UBO*)
Business Friendly Environment
“Business friendly” may be a buzzword, but Americans across the country work hard to make it a reality: U.S. economic development organizations (EDOs) guide international investors through the process of establishing their businesses. The World Bank’s Doing Business 2016 report ranks the United States seventh globally, and first among countries with populations over 100 million. The U.S. system is well known to be transparent, fair, and stable, with thriving capital markets to support growing companies, and SelectUSA is ready to help companies find their way even more easily.

Services to Facilitate Investment

SelectUSA is the U.S. government program to facilitate foreign investment into the United States. We provide services to companies, as well as U.S. EDOs. SelectUSA helps investors find the information they need to make decisions, connect to the right people at the local level, and find answers to questions related to federal regulations. SelectUSA assists U.S. EDOs to compete globally for investment by providing information, a platform for international marketing, and high-level advocacy. SelectUSA’s highest profile event is the Investment Summit. The 2015 Summit, hosted by President Obama, was oversubscribed with more than 2,000 participants from every corner of the United States and 70 countries. The 2016 Summit will take place on June 19–21 in Washington, D.C. Participants will learn more about how, where, and why to invest in the United States from high-profile executives, senior officials, and economic developers. Visit to learn more and register today.

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