Home > News > News Release Archive > 2006 > News Release: Foreign Direct Investors’ Outlays to Acquire or Establish U.S. Businesses Changed Little in 2005

News Release: Foreign Direct Investors’ Outlays to Acquire or Establish U.S. Businesses Changed Little in 2005

Available for this release: Full Release (PDF - KB ) | Tables (XLS - KB)

EMBARGOED UNTIL RELEASE AT 8:30AM EDT, THURSDAY, JUNE 1, 2006
Lawrence McNeil: (202) 606-9860 BEA 06-22

Foreign Direct Investors’ Outlays to Acquire or Establish
U.S. Businesses Changed Little in 2005

In 2005, outlays by foreign direct investors to acquire or establish U.S. businesses were $86.8 billion, little changed from the $86.2 billion in outlays in 2004. Outlays remained considerably below those in 1998-2001, when new investment outlays were historically high, ranging from $147.1 billion to $335.6 billion.

Outlays for New Investment in the United States
by Foreign Direct Investors, 1980-2005

Billions of Dollars
bar graph showing Outlays for New Investment in the United States by Foreign Direct Investors, 1980-2005
p — Preliminary
r — Revised
Source: U.S. Bureau of Economic Analysis

Outlays increased substantially in manufacturing, information, and depository institutions. Together, these three sectors accounted for 58 percent of total outlays. The increase in information was the first increase since 1999. Outlays in finance (except depository institutions) and insurance declined sharply, by $20.0 billion, or 76 percent.

Outlays from Europe increased substantially, particularly those by investors in the United Kingdom, Germany, and the Netherlands. Outlays from the Asia and Pacific and Middle East regions also increased substantially. For the Asia and Pacific region, the increase was largely accounted for by Japanese and Australian investments. These increases were partly offset by a decline in investment outlays from Canada, where outlays had risen sharply in 2004.

Outlays in 2005

In 2005, as in previous years, outlays by foreign direct investors to acquire existing U.S. businesses (at $79.2 billion) were significantly larger than outlays to establish new U.S. businesses (at $7.6 billion).

By industry, outlays in manufacturing increased to $31.3 billion from $18.3 billion in 2004. Transportation equipment, primary metals, and chemicals had the largest increases within manufacturing. Investment growth in industries other than motor vehicles accounted for most of the increase in transportation equipment. Outlays in information increased for the first time since 1999, to $9.6 billion from $4.3 billion in 2004. The telecommunications and publishing sub-sectors had the largest increases within information. The major sector posting the largest decrease in outlays was finance (except depository institutions) and insurance.

By country of ultimate beneficial owner, outlays by European investors increased to $57.2 billion from $43.8 billion in 2004. British investment accounted for over half of European outlays. Investment from the Netherlands increased substantially to $3.1 billion. Asia and Pacific region outlays also rose in 2005, increasing to $10.7 billion from $6.0 billion in 2004. This increase reflected larger outlays from Australia as well as the first increase in outlays from Japan since 2000. Canadian outlays declined 58 percent to $13.3 billion from $31.5 billion in 2005.

The ultimate beneficial owner is the investor, proceeding up a U.S. affiliate’s ownership chain, beginning with the foreign parent, that is not owned more than 50 percent by another investor. The data on new investment outlays are classified by country based on the location of the UBO; thus, they are shown against the country of the investor that ultimately owns or controls the affiliate, even though the investor may have channeled the funds for the investment though another country, such as a financial center.

The estimates of outlays for 2005 are preliminary. The estimate of outlays for 2004 has been revised up 8 percent from the preliminary estimate published last year.

Employment and assets of newly acquired or established businesses

Newly acquired or established businesses employed 223,800 people in 2005, up 6 percent from 211,600 in 2004. Manufacturing accounted for the largest share of employment, with 92,200 employees. The total assets of newly acquired or established businesses were $170.5 billion, down from $308.6 billion in 2004.

* * *

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 2005 will appear in the June issue of the Survey of Current Business, the monthly journal of the Bureau of Economic Analysis.

* * *

BEA’s national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA’s website at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

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
(202) 606-5303 Personal income and outlays




Table 1. Investment Outlays by Type of Investment and Investor, 1992-2005
[Millions of dollars]
  1992 1993 1994 1995 1996 1997 1998 1999 2000  2001 2002  2003  2004 r 2005 p
Total outlays 15,333 26,229 45,626 57,195 79,929 69,708 215,256 274,956 335,629 147,109 54,519 63,591 86,219 86,823
By type of investment:                            
  U.S. businesses acquired 10,616 21,761 38,753 47,179 68,733 60,733 182,357 265,127 322,703 138,091 43,442 50,212 72,738 79,220
  U.S. businesses established 4,718 4,468 6,873 10,016 11,196 8,974 32,899 9,829 12,926 9,017 11,077 13,379 13,481 7,603
By type of investor:                            
  Foreign direct investors 4,058 6,720 13,628 11,927 32,230 13,899 120,828 120,878 105,151 23,134 13,650 27,866 34,184 43,579
  U.S. affiliates 11,275 19,509 31,999 45,268 47,699 55,809 94,428 154,078 230,478 123,975 40,869 35,725 52,035 43,244
                           
   p Preliminary                            
   r Revised                            
Source: U.S. Bureau of Economic Analysis                          


Table 2. Distribution of Investment Outlays by Size, 1992-2005    
[Percent]    
  1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002  2003 2004 r 2005 p
Total outlays 100 100 100 100 100 100 100 100 100 100 100 100 100 100
  $5 billion or more 0 0 0 (D) 0 0 55 55 48 30 (D) (D) (D) 0
  $2 billion - $4.999 billion 0 (D) 27 18 29 12 11 16 20 22 18 (D) 13 27
  $100 million - $1.999 billion 42 51 51 48 55 67 27 24 27 40 45 43 47 65
  Less than $100 million 58 (D) 22 (D) 16 21 7 5 5 9 (D) 12 (D) 7
                           
   p Preliminary                            
   r Revised                            
  D  Suppressed to avoid disclosure of data of individual companies.                      
Source: U.S. Bureau of Economic Analysis                          


Table 3. Investment Outlays by Industry of U.S. Business Enterprise, 2003-2005
[Millions of dollars]    
    2003 2004 r 2005 p    
      All industries 63,591 86,219 86,823    
             
Manufacturing 10,750 18,251 31,286    
Food 2,516 2,146 736    
Beverages and tobacco products            (D)             (D)             (D)     
Textiles, apparel, and leather products            (D)             (D)  0    
Paper            (D)  120 0    
Printing and related support activities            (D)             (D)  116    
Petroleum and coal products            (D)             (D)  219    
Chemicals 1,164 4,751 6,067    
Plastics and rubber products 498 84 1,157    
Nonmetallic mineral products            (D)  153            (D)     
Primary metals 91            (D)  5,546    
Fabricated metal products 123            (D)  116    
Machinery 122 642 287    
Computers and electronic products 2,125 2,934 4,030    
Electrical equipment, appliances, and components 139            (D)  861    
Transportation equipment 225 1,199 7,086    
Other 462 969 4,923    
Wholesale trade 1,086            (D)  2,292    
Retail trade 941 3,073 2,166    
Information 9,236 4,315 9,639    
Publishing industries 1,431 1,274 2,822    
Motion picture and sound recording industries 278            (D)             (D)     
Telecommunications            (D)             (D)  4,219    
Other            (D)  2,783            (D)     
Depository institutions 4,864            (D)  9,609    
Finance (except depository institutions) and insurance 23,511 26,234 6,196    
Real estate and rental and leasing 2,817 6,335 5,532    
Professional, scientific, and technical services 1,955            (D)  6,879    
Other industries 8,429 10,121 13,224    
           
   p Preliminary            
   r Revised            
  D  Suppressed to avoid disclosure of data of individual companies.      
Source: U.S. Bureau of Economic Analysis          


Table 4. Investment Outlays by Country of Ultimate Beneficial Owner, 2003-2005 
[Millions of dollars]      
  2003 2004 r 2005 p      
All countries 63,591 86,219 86,823      
             
Canada 9,157 31,502 13,269      
Europe 39,024 43,815 57,244      
France 2,955 6,415 6,105      
Germany 8,830 4,788 7,110      
Netherlands 1,077 461 3,110      
Switzerland 649 6,505 2,237      
United Kingdom 20,373 23,288 30,310      
Other Europe 5,140 2,358 8,372      
Latin America and Other Western Hemisphere 1,607 2,629 2,398      
South and Central America 182 1,382 763      
Other Western Hemisphere 1,425 1,247 1,634      
Africa          (D)           (D)  0      
Middle East 1,738 1,318 3,156      
Asia and Pacific 11,469 6,015 10,655      
Australia 9,032 3,850 5,148      
Japan 1,544 1,027 3,565      
Other Asia and Pacific 893 1,139 1,942      
United States 1          (D)           (D)  101      
           
   p Preliminary            
   r Revised            
  D Suppressed to avoid disclosure of data of individual companies.      
   1. The United States is the country of ultimate beneficial owner for businesses newly acquired or   
established by foreign investors that are ultimately owned by persons located in the United States.  
   Note. For investments in which more than one investor participated, each investor and each investor's
outlays are classified by the country of each individual ultimate beneficial owner.    
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, 2004-2005  
                           
  2004 r 2005 p      
Millions of dollars Thousands of employees Hectares of land 1 Millions of dollars Thousands of employees Hectares of land 1      
Total assets Sales Net income Total assets Sales Net income      
All industries 308,638 67,336 3,644 211.6 169,963 170,462 65,934 2,757 223.8 35,721      
                           
Manufacturing 33,008 22,089 954 61.5     (D)  37,911 40,308 1,819 92.2 15,030      
Wholesale trade     (D)  3,305 71 9.4 157 2,283 2,962 41 6.0 155      
Retail trade     (D)  9,742 137      K   149 3,099 3,012 48 14.4     (D)       
Information 4,426 1,424 -87      H       (D)  12,985 4,837 -73 8.7     (D)       
Depository institutions     (D)     (D)    (D)  11.8 62 59,398 3,194 348 17.0 303      
Finance (except depository institutions) and insurance 184,747 18,700 1,335 20.9     (D)  17,681 1,536 197 5.6     (D)       
Real estate and rental and leasing 8,285    (D)    (D)  2.8 4,019 15,099 1,218 283 2.7 12,524      
Professional, scientific, and technical services 3,973 2,296 -7 13.9     (D)  6,430 2,581 -64 17.4     (D)       
Other industries 13,952    (D)    (D)  44.7 33,469 15,577 6,285 158 59.8 7,697      
                         
   p Preliminary                          
   r Revised                          
   D Suppressed to avoid disclosure of data of individual companies.                    
  1.  One hectare equals 2.471 acres.  Thus, for all industries, acres of land owned in 2004 were 419,979 and in 2005 were 88,267.          
   Notes. For newly acquired businesses, the data cover the most recent financial reporting year preceding acquisition.  For newly established businesses, the data are projections for the first full year of operations.
  Size ranges are given in employment cells that are suppressed.  The size ranges are: A--1 to 499; F--500 to 999; G--1,000 to 2,499; H--2,500 to 4,999; I--5,000 to 9,999; J--10,000 to 24,999; K--25,000
  to 49,999; L--50,000 to 99,999; M--100,000 or more.                      
Source: U.S. Bureau of Economic Analysis