International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Tuesday, July 19, 2016

New Foreign Direct Investment in the United States, 2014 and 2015

Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $420.7 billion in 2015, an increase of 68 percent from 2014, when expenditures were $250.6 billion.  In 2015, as in 2014, the majority of the expenditures were to acquire existing businesses.  In 2015, expenditures for acquisitions were $408.1 billion. Expenditures to establish new U.S. businesses were $11.2 billion, and expenditures to expand existing foreign-owned businesses were $1.4 billion. Planned total expenditures, which include both actual and planned future expenditures, totaled $439.2 billion.New Investment by Foreign Direct Investors by Type, 1994-2014

Newly Available Statistics

In conjunction with today’s release, BEA is introducing new statistics for 2014 and 2015 on the activities of newly acquired, established, or expanded U.S. affiliates by state, country, and industry. These new statistics supplement the statistics on expenditures for new investment and include current and planned employment and balance sheet and income statement items, specifically sales, net income, assets, liabilities, and total owner’s equity, for the affiliates. The statistics offer more detail, including state-level detail, than similar statistics BEA produced until 2008. The new statistics are available with the statistics on expenditures for new investment on BEA’s web site in the interactive tables.

New investment expenditures include expenditures incurred by foreign direct investors and by existing U.S. affiliates of foreign direct investors. The portion of new investment expenditures provided by foreign direct investors is included in BEA’s statistics on foreign direct investment transactions. These expenditures contribute to the foreign direct investment position in the United States, which represents the accumulated total value of foreign direct investment, totaling $3.1 trillion (on a historical-cost basis) at year end 2015.

However, not all of the transactions that contribute to the foreign direct investment position are included in the statistics on new investment expenditures. The new investment data exclude disinvestment flows and other transactions between foreign direct investors and their U.S. affiliates that do not contribute to the acquisition, establishment, or expansion of a U.S. business.  (reference to tax inversions)

Expenditures by industry, country, and state

Expenditures for new investment in manufacturing were $281.4 billion in 2015. As in 2014, manufacturing accounted for more than half of total new investment expenditures. Within manufacturing, expenditures were largest in chemicals, mostly in pharmaceuticals and medicines. There were also large expenditures in finance and insurance, in real estate and rental and leasing, and in professional, scientific, and technical services.

By country of ultimate beneficial owner (UBO), the largest source country was Ireland, at $176.5 billion. There were also substantial expenditures from Canada and Germany. Of the eight largest countries in terms of foreign direct investment position in the United States—United Kingdom, Japan, Luxembourg, Netherlands, Canada, Switzerland, Germany, and France—six are also among the top eight countries for new foreign direct investment.

By U.S. state, the largest expenditures, $119.0 billion, or 28 percent of the total, were for investments in California.

Greenfield expenditures

Greenfield investment expenditures—expenditures to either establish a new U.S. business or to expand an existing foreign-owned U.S. business—totaled $12.6 billion in 2015. In 2014, greenfield expenditures were $14.8 billion. Total planned greenfield expenditures for investment initiated in 2015, which include both first-year expenditures and planned spending in other years, totaled $31.2 billion.

By industry, 2015 greenfield expenditures were largest in real estate and rental and leasing, at $6.2 billion, accounting for about half of total first-year greenfield expenditures. By U.S. state, New York attracted the most expenditures for greenfield investment, $4.0 billion. There were also large greenfield investments in Pennsylvania and California.

Employment by newly acquired, established, or expanded foreign-owned businesses

In 2015, employment at newly acquired, established, or expanded foreign-owned businesses in the United States was 422,200. (Statistics on employment at expanded business only include employment at the expanded portion of the business.) Total planned employment, which includes current employment of acquired enterprises, the planned employment of newly established business enterprises once they are fully operating, and the planned employment associated with new facilities, was 461,600. Of these totals, the current employment of acquired enterprises was 418,000.

By industry, manufacturing accounted for the largest number of 2015 employees, at 139,500. Employment was also substantial in administration, support, and waste management, and in retail trade. By country of UBO, the largest number of employees was accounted for by Canada and France. By U.S. state, the largest numbers of employees were in California and Arizona.


Revisions to 2014 Expenditures for New Foreign Direct Investment in the United States

[Millions of dollars]




First-year expenditures




   U.S. businesses acquired



   U.S. businesses established



   U.S. businesses expanded



Planned total expenditures




   U.S. businesses acquired



   U.S. businesses established



   U.S. businesses expanded



Additional Information

The statistics of new investment by foreign direct investors are based on data reported in the Survey of New Foreign Direct Investment in the United States (BE-13) conducted by the Bureau Econ AnalysisBureau of Economic Analysis (BEA). The survey covers U.S. business enterprises that were acquired, established, or expanded by foreign direct investors. Information on the filing requirements for the survey may be found at

A U.S. business enterprise is categorized as “acquired” if a foreign entity acquires a 10 percent or more voting interest in an incorporated U.S. business enterprise, or an equivalent interest of an unincorporated U.S. business enterprise, either directly or indirectly through an existing U.S. affiliate. A U.S. affiliate is a foreign-owned U.S. business enterprise. A U.S. business enterprise is categorized as “established” if a foreign entity, or an existing U.S. affiliate of a foreign entity, establishes a new legal entity in the United States in which the foreign entity owns 10 percent or more of the new business enterprise’s voting interest, or an equivalent interest if unincorporated. An existing U.S. affiliate is categorized as “expanded” if it expands its operations to include a new facility where business is conducted.

BEA reinstated the Survey of New Foreign Direct Investment in the United States in 2014 after ending the series after survey year 2008 due to budget cuts. The reinstated survey now includes expansions in an effort to better capture greenfield investments. Greenfield investment includes establishments of new companies by foreign investors and expansions of already existing companies. Because expansions were not included in the series that ended in 2008, the current series starting with 2014 is not directly comparable to the previous series ending in 2008.

The statistics of new foreign direct investment include transactions resulting from corporate inversions. A corporate inversion occurs when a domestic corporation that is currently the ultimate owner of its worldwide operations takes steps to become a subsidiary of a foreign corporation. A U.S. corporation can initiate an inversion either by creating a foreign corporation to be its new parent or by merging with an existing foreign corporation and ceding control. BEA’s direct investment surveys do not collect information on whether a U.S. corporation became foreign owned as a result of a corporate inversion; hence these transactions cannot be separately identified in the statistics based on the survey data alone. Using publicly available information, such as commercial databases and press reports, BEA estimates that newly inverted U.S. corporations account for approximately 20 percent of first-year expenditures for acquisitions in 2015.

Following an inversion, the foreign parent of the inverted U.S. corporation may acquire additional U.S. businesses – either directly, or through the inverted U.S. corporation, or through other subsidiaries. The U.S. targets of these second round acquisitions might also be considered inverted U.S. corporations, but these transactions cannot be readily disentangled from other changes in the consolidated U.S. operations of the foreign parent. Therefore BEA has not attempted to identify the impact of these second round inversions on the statistics.

The transactions associated with corporate inversions are also included in other BEA direct investment statistics. For additional information on how corporate inversions affect BEA’s economic accounts, see Jessica M. Hanson, Howard I. Krakower, Raymond J. Mataloni Jr., and Kate L.S. Pinard, “The Effects of Corporate Inversions on the International and National Economic Accounts” Survey of Current Business 95 (February 2015).

Holding companies established by foreign direct investors solely for the purpose of acquiring or establishing at least one other U.S. business enterprise are excluded from the statistics on new foreign direct investment. A holding company is a company whose primary activity is holding the securities or financial assets of other companies. However, acquisitions or establishments that are undertaken by a foreign-owned U.S. holding company are included in the statistics. In addition, the statistics on new investments do not cover the acquisition of additional equity by a foreign parent in an existing U.S. affiliate, the acquisition of an existing U.S. affiliate by one foreign investor from another or the expansion of an existing U.S. affiliate when no new operation or facilities are established. Sales of parts or all of the U.S. affiliate or other disinvestments are not subtracted from new investments.

July 19, 2016 in Finance | Permalink | Comments (0)

Saturday, April 30, 2016

Financing SMEs and Entrepreneurs 2016

 More information
This report monitors SME and entrepreneur access to finance in 37 countries.

April 30, 2016 in Finance, Financial Regulation | Permalink | Comments (0)

Tuesday, March 1, 2016

12 Million Jobs Linked to FDI

The International Trade Administration (ITA) today released a new report that details the employment impact of foreign direct investment (FDI) in the United States. The report, prepared by ITA’s Office of Trade and Economic Analysis, attributes 12 million jobs – 8.5 percent of the total U.S. labor force – to FDI. 

“FDI continues to be a key economic driver for the United States. This report reinforces the significance of FDI in the U.S. economy and highlights that for every direct job attributable to FDI an additional job is indirectly attributable.” - U.S. Under Secretary of Commerce for International Trade Stefan M. Selig

Check out our blog post to learn more about the numbers, read about some examples, and download the full report.

12 Million U.S. Jobs Attributed to FDI (Graphic)

March 1, 2016 in Finance | Permalink | Comments (0)

Tuesday, September 29, 2015

The Tax Boondoggle Donald Trump Should Attack, But Didn't

My new article in Forbes on Donald Trump, carried interest and 1031 exchanges.

ImgresI speak to his contrary positions on carried interest and 1031s.  "One intriguing aspect to all this is that thanks to Trump, talk of repealing the carried interest loophole has overshadowed Washington discussion of eliminating another questionable tax giveaway: section 1031Section 1031 has long been an unsupervised real estate tax boondoggle, one from which Trump has most likely benefited."

I conclude by saying "Back to Trump’s attack on carried interest for hedge fund managers: he says that they didn’t “build” anything. But 1031 isn’t a tax break for construction—it’s a benefit when you are trading one investment property for another, just as hedge fund managers trade assets.

If Trump is happy getting rid of the carried interest loophole for hedge funders, then he should be just as happy getting rid of carried interest for real estate fund managers and the even bigger 1031 loophole for real estate investors."

September 29, 2015 in Finance, Tax Compliance, Wealth | Permalink | Comments (0)