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Thomas Anderson: (202) 606-9879 BEA 03-19
Foreign Direct Investors' Outlays to Acquire or Establish U.S.
Businesses Fell Sharply in 2002 for the Second Year
In 2002, outlays by foreign direct investors to acquire or establish U.S. businesses
fell by more than half for the second consecutive year. Total outlays were $52.6
billion, down 64 percent from $147.1 billion in 2001 and 84 percent below the
record $335.6 billion in 2000, which was the final year of a three-year period
of exceptionally high outlays. As a result of these declines, spending for new
investments in 2002 was at the lowest level since 1994.
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Outlays for New Investment in the United
States by Foreign Direct Investors, 1980-2002
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Billion $  p Preliminary
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The decline in outlays in 2002 reflected continuing weakness in the U.S. economy
and in many foreign economies and a falloff in merger and acquisition activity
worldwide. New investment may also have been dampened by uncertainty about the
value of potential targets for acquisition and their future earnings prospects,
due to declines and volatility in the U.S. stock market and a few highly publicized
cases of questionable accounting practices.
Outlays fell in all major industry sectors, particularly in finance and insurance,
manufacturing, and information. The decline was especially severe in finance
and insurance, which had maintained high levels of outlays in 2001, even as
spending declined in other sectors. The decline was also widespread across investing
countries. In countries such as Germany, the United Kingdom, the Netherlands,
and Japan, which historically have been major sources of investment outlays,
weak economic conditions slowed the flow of direct investment into the United
States. Among major source countries, only France had an increase in investment
outlays.
This news release is available on BEA's web site at <www.bea.gov/newsreleases/rels.htm>
Outlays in 2002
By industry, outlays were largest in manufacturing ($17.3 billion) and information
($14.2 billion). Within the information sector, outlays increased substantially
in motion pictures and sound recording, while outlays in broadcasting and telecommunications
declined sharply, from $15.5 billion in 2001 to $2.4 billion in 2002. Outlays
in the finance (except depository institutions) and insurance sector declined
to only $3.2 billion; the decline followed three consecutive years in which
investments, driven by acquisitions of U.S. insurance companies, exceeded $40
billion.
By country of ultimate beneficial owner, France and the United Kingdom had
the largest outlays in 2002, together accounting for over half of the total.
Outlays by investors from France increased to $15.6 billion from $5.8 billion
in 2001, while outlays by investors from the United Kingdom fell to $13.0 billion
from $17.1 billion in 2001. Outlays by investors from many other European countries,
including the Netherlands ($3.2 billion), Switzerland ($2.8 billion), and Germany
($2.2 billion), were far lower in 2002 than in 2001. Outlays by investors from
Canada fell to $3.5 billion, from $16.6 billion. In the Asia and Pacific region,
Japan ($3.4 billion) was the largest source of investment outlays, followed
by Australia ($1.7 billion).
The ultimate beneficial owner is that person, proceeding up a U.S. affiliate’s
ownership chain, beginning with and including the foreign parent, that is not
owned more than 50 percent by another person.
The estimates of outlays for 2002 are preliminary. The estimate of total outlays
for 2001 has been revised up 11 percent from the preliminary estimate published
last year.
Employment of newly acquired or established businesses
Newly acquired or established businesses employed 182,000 people in 2002.
Manufacturing, with 74,000 employees, accounted for the largest share of employment.
Employment was also substantial in administration, support, and waste management (included in
“other industries”) and in information.
* * *
Estimates in this report are based upon a Bureau of Economic Analysis survey
that covers (1) existing U.S. business enterprises in which foreign investors
acquired, either directly or through their U.S. affiliates, at least a 10 percent
ownership interest and (2) new U.S. business enterprises established by foreign
investors or their U.S. affiliates, also using the 10 percent ownership interest
threshold.
Additional details on the new investments by foreign investors in 2002 will
appear in the June issue of the Survey of Current Business, the monthly journal
of the Bureau of Economic Analysis.
* * *
BEA's major national, international, regional, and industry estimates; the
Survey of Current Business; and BEA news releases are available without charge on BEA's
Web site:
<www.bea.gov>
Summary BEA estimates are available on recorded messages at the time of public
release at the following telephone numbers:
(202) 606-5306 Gross domestic product
606-5303 Personal income and outlays
606-5362 U.S. international transactions
Most of BEA's estimates and analyses are published in the Survey of Current
Business, BEA's monthly journal. Subscriptions and single copies of the printed
Survey are for sale by the Superintendent of Documents, U.S. Government Printing
Office. Internet: <bookstore.gpo.gov>; phone: 202-512-1800; fax: 202-512-2250;
mail: Stop SSOP, Washington, DC 20402-0001.
Table 1. Investment Outlays
1992-2002
---------------------------------------
Year Outlays
(millions
of dollars)
---------------------------------------
1992 15,333
1993 26,229
1994 45,626
1995 57,195
1996 79,929
1997 69,708
1998 215,256
1999 274,956
2000 335,629
2001 r 147,109
2002 p 52,558
---------------------------------------
p Preliminary.
r Revised.
Source: U.S. Bureau of Economic Analysis
Table 2. Distribution of Investment Outlays by Size, 1992-2002
[Percent]
-----------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001r 2002p
-----------------------------------------------------------------------------------------------------------
Total outlays..................... 100 100 100 100 100 100 100 100 100 100 100
$5 billion or more.............. 0 0 0 (D) 0 0 55 55 48 30 (D)
$2 billion - $4.999 billion..... 0 (D) 27 18 29 12 11 16 20 22 19
$100 million - $1.999 billion... 42 51 51 48 55 67 27 24 27 40 45
Less than $100 million.......... 58 (D) 22 (D) 16 21 7 5 5 9 (D)
--------------------------------------------------------------------------------------------------------------
D Suppressed to avoid disclosure of data of individual companies.
p Preliminary.
r Revised.
Source: U.S. Bureau of Economic Analysis
Table 3. Investment Outlays by Industry of U.S. Business Enterprise, 1999-2002
[Millions of dollars]
---------------------------------------------------------------------------------------------------
1999 2000 2001r 2002p
---------------------------------------------------------------------------------------------------
All industries.......................................... 274,956 335,629 147,109 52,558
Manufacturing........................................... 73,122 143,285 37,592 17,259
Food.................................................. 859 (D) (D) 2,278
Beverages and tobacco products........................ 1,417 3,722 582 4,050
Petroleum and coal products........................... 158 (D) (D) 2,043
Chemicals............................................. 5,703 15,016 4,636 1,211
Plastics and rubber products.......................... 3,638 3,154 622 992
Nonmetallic mineral products.......................... 3,175 6,324 425 1,257
Primary metals........................................ 2,542 379 692 564
Fabricated metal products............................. 1,388 638 758 47
Machinery............................................. 13,941 1,213 (D) 526
Computers and electronic products..................... 30,601 42,600 10,052 488
Electrical equipment, appliances, and components...... 4,247 8,084 (D) 1,013
Transportation equipment.............................. 2,786 3,230 470 668
Other................................................. 2,667 6,529 5,214 2,122
Wholesale trade......................................... (D) 8,561 3,982 381
Retail trade............................................ 3,458 1,672 1,913 433
Information............................................. 90,855 67,932 27,599 14,235
Publishing industries................................. (D) 10,135 9,545 (D)
Motion pictures and sound recording industries........ (D) (D) 1,179 (D)
Broadcasting and telecommunications................... 78,202 (D) 15,529 2,374
Information services and data processing services..... (D) 12,228 1,345 (D)
Depository institutions................................. (D) 2,636 5,709 705
Finance (except depository institutions) and insurance.. 46,380 44,420 40,780 3,241
Real estate and rental and leasing...................... 5,206 4,526 3,572 4,573
Professional, scientific, and technical services........ 9,366 32,332 7,044 4,424
Other industries........................................ 32,680 30,264 18,917 7,306
---------------------------------------------------------------------------------------------------
D Suppressed to avoid disclosure of data of individual companies.
p Preliminary.
r Revised.
Source: U.S. Bureau of Economic Analysis
Table 4. Investment Outlays by Country of Ultimate Beneficial Owner, 1999-2002 /1/ [Millions of dollars] -------------------------------------------------------------------------------------------------- 1999 2000 2001r 2002p -------------------------------------------------------------------------------------------------- All countries........................... 274,956 335,629 147,109 52,558 Canada....................................... 9,271 28,346 16,646 3,533 Europe....................................... 196,288 249,167 78,328 39,374 France..................................... 23,750 26,149 5,772 15,566 Germany.................................... 21,514 18,452 12,733 2,194 Netherlands................................ 22,265 47,686 14,879 3,181 Switzerland................................ 7,512 22,789 16,468 2,756 United Kingdom............................. 109,226 110,208 17,095 12,956 Other Europe............................... 12,021 23,883 11,381 2,721 Latin America and Other Western Hemisphere... 33,046 15,400 15,274 3,021 South and Central America.................. 1,622 5,334 431 407 Other Western Hemisphere................... 31,424 10,066 14,843 2,613 Africa....................................... (D) (D) (D) 565 Middle East.................................. 848 947 (D) 283 Asia and Pacific............................. 15,100 40,282 11,383 5,352 Australia.................................. (D) (D) 4,869 1,654 Japan...................................... 11,696 26,044 5,345 3,429 Other Asia and Pacific..................... (D) (D) 1,169 269 United States /2/............................ (D) (D) (D) 430 -------------------------------------------------------------------------------------------------- D Suppressed to avoid disclosure of data of individual companies. p Preliminary. r Revised. 1. For investments in which more than one investor participated, each investor and each investor's outlays are classified by country of each ultimate beneficial owner. 2. The United States is shown as the country of ultimate beneficial owner for businesses newly acquired or established by foreign investors that are, in turn, ultimately owned by persons located in the United States. Source: U.S. Bureau of Economic Analysis
Table 5. Selected Operating Data of U.S. Business Enterprises Acquired or Established, by Industry of U.S. Business Enterprise, 2001-2002
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2001r 2002p
------------------------------------------------------ -----------------------------------------------------
Millions of dollars Thousands Number Millions of dollars Thousands Number
---------------------------- of of ------------------------- of of
Total Sales Net employees hectares Total Sales Net employees hectares
assets Income of land assets Income of land
owned/1/ owned/1/
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
All industries....................................... 382,308 108,909 951 410.0 103,539 94,839 49,086 -2,548 182.2 105,075
Manufacturing.......................................... 55,269 35,986 760 125.4 24,031 22,325 22,666 -3,655 73.6 11,149
Wholesale trade........................................ 6,507 13,129 100 31.9 243 420 1,476 23 1.4 33
Retail trade........................................... 2,407 4,491 16 31.1 507 435 657 4 9.0 32
Information............................................ 42,581 8,758 -863 44.7 142 15,687 6,677 325 25.3 (D)
Depository institutions................................ 66,645 4,217 309 8.2 101 4,488 290 21 1.0 (D)
Finance (except depository institutions) and insurance. 68,202 22,136 1,854 34.1 (D) 10,959 1,334 143 4.4 3
Real estate and rental and leasing..................... 4,224 418 38 0.5 (D) 12,747 2,768 180 0.8 8,639
Professional, scientific, and technical services....... 15,678 10,485 -497 58.3 (D) 1,141 420 -54 3.0 0
Other industries....................................... 20,795 9,290 -765 75.7 33,017 26,637 12,797 464 63.7 84,071
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
D Suppressed to avoid disclosure of data of individual companies.
p Preliminary.
r Revised.
1. One hectare equals 2.471 acres. Thus, for all industries, acres of land owned in 2001 and 2002 were 255,845 and 259,640, respectively.
NOTE. For newly acquired businesses, data cover the most recently completed financial reporting year. For newly established businesses, data
are projections for the first full year of operations.
Source: U.S. Bureau of Economic Analysis
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