IMTS Insider

Foreign Direct Investment

Category: Business Jul 27, 2020

Investing in the United States
The United States is the world leader in attracting foreign direct investment (FDI). Our diverse culture prioritizes innovation and entrepreneurship, and our business environment increases competitiveness. FDI contributes significantly to the United States and supports millions of American jobs. Even as the United States depends on those dollars, they’re drying up. New outward bound FDI is down as some countries adopt more nationalist policies due to greater uncertainty. The pandemic is sure to temporarily accelerate the contraction hurting less-developed nations the hardest and forcing the developed countries, like the United States, to compete for a smaller pool of investment.

By the Numbers
FDI is classified in one of three ways: acquisitions (i.e., when a foreign entity owns at least 10% of a U.S. business), new establishments, or expansions of existing establishments. The last two categories are referred to as greenfield investments. That’s the type of investment the United States seeks to attract because it represents job creation and growth in the manufacturing base.

According to the latest data from the U.S. Bureau of Economic Analysis (BEA), new FDI (the inward flow of FDI to the United States within a year) to the United States was $194.7 billion in 2019. That’s a 38 percent drop over 2018 and is well below the five-year annual average of $330 billion. Most of the investment was in acquisitions, which accounted for 98% of the total ($194.7 billion). Expenditures to establish new U.S. businesses were $2.5 billion, and expansions accounted for $1.5 billion. Planned total expenditures for greenfield investments initiated in 2019, which include both first year and planned future expenditures, totaled $12.9 billion.

In 2019, the largest sources of new FDI in the United States were the United Kingdom, Canada, Germany, and Japan. Europe contributed over half of the investment

BEA found that manufacturing accounted for more than 40 percent of expenditures for new FDI in 2019, about the same as 2018. The largest expenditures were found in chemical manufacturing, with more than $41 billion invested.

A Powerful Presence
A look at inward FDI stock (the cumulative value of FDI from a market to the United States at year-end) shows its significant impact on the economy, innovation, and jobs. The latest release from BEA shows that FDI stock in the United States was $4.46 trillion at the end of 2019. Manufacturing accounted for more than 40 percent of the total.

In 2019, BEA reported that majority-foreign-owned firms employed 7.4 million U.S. workers by the end of 2017, accounting for nearly six percent of total U.S. private sector employment. More than 2 million of those jobs were in manufacturing.

FDI in property, plants, and equipment stood at $258.6 billion, more than 16 percent of total U.S. private business capital expenditures at the end of 2017. R&D expenditures accounted for nearly 16 percent of total U.S. business R&D. More than $39.4 billion was invested in advanced manufacturing.

Rebuilding the Supply Chain
The dramatic decline in FDI last year can be attributed to several factors, but the biggest one is uncertainty about the future. The pandemic exposed fractured supply chains all over the world. Countries will react much like the United States, by analyzing their current situation and revising their investment and supply chain strategies to protect public health and national security.

Whether you are an advanced manufacturer, job shop owner, or OEM, you are experiencing your own supply chain challenges, uncertainties, and questions. In an extraordinary effort to support you, AMT and IMTS are dedicating significant staff and financial resources to help you rethink, reengage, and reestablish supply chains. Visit to learn more! To learn more about FDI, visit

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