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Thomas Anderson:	(202) 606-9879					BEA 04-24


			Foreign Direct Investors' Outlays to Acquire or 
			Establish U.S. Businesses Rose Modestly in 2003

In 2003, outlays by foreign direct investors to acquire or establish U.S. businesses rose 
modestly. Outlays were $60.3 billion, up 11 percent from 2002, when outlays were $54.5

Outlays for New Investment in the United    
States by Foreign Direct Investors, 1980-2003              

Billion $ 

 
p Preliminary
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billion.  Outlays remained far below those in 1998-2001, when new investment outlays ranged 
from $147.1 billion to $335.6 billion.  As in other recent years, large investments of more than 
$5 billion accounted for a sizable share of total outlays.

The persistence of reduced levels of outlays partly reflects weak conditions in some 
industries, such as manufacturing and telecommunications, in which foreign direct investors 
were active in recent years.  It also reflects a sharp slowdown in worldwide merger and 
acquisition activity in recent years.

Outlays in 2003 were boosted by a substantial increase in outlays in financial industries, 
as foreign banks sought to gain access to the large U.S. banking and consumer credit markets.  
Outlays in manufacturing and information, which accounted for a large share of the new 
investment in 1998-2001, declined substantially.  

Outlays from the United Kingdom and Germany increased, while outlays from France 
and several other European countries fell substantially.  Outlays from Japan declined for the third 
consecutive year.  There was a large increase in outlays from Australia.

Outlays in 2003

	As in previous years, outlays to acquire existing U.S. businesses--$52.6 billion--
accounted for most of the total outlays. Outlays to establish new businesses were $7.7 billion.

	By industry, outlays were largest in finance (except depository institutions) and insurance 
($21.6 billion).  Outlays in depository institutions, at $5.4 billion, were also relatively large,  
rebounding from outlays of $0.6 billion in 2002.  Outlays in information were $10.0 billion, 
which consisted mostly of investments in broadcasting, and were down from $14.2 billion in 
2002.  Outlays in manufacturing continued to decline, falling from $16.4 billion in 2002 to $9.5 
billion in 2003.  Within manufacturing, outlays were largest in food ($2.7 billion) and in 
computers and electronic products ($2.3 billion). Outlays in real estate fell to $2.6 billion in 
2003, down from $5.3 billion in 2002.

	By country of ultimate beneficial owner, outlays from the United Kingdom, which 
increased from $12.2 billion in 2002 to $22.5 billion in 2003, were the largest.  Outlays from 
Germany ($9.0 billion) were also higher than in 2002, but outlays from several other European 
countries, such as France ($1.1 billion), the Netherlands ($0.7 billion) and Switzerland ($0.5 
billion), were far lower than in 2002.  Outlays from Japan declined for the third consecutive year, 
to $1.5 billion. Outlays from Australia rose considerably, to $11.3 billion.  Outlays from Canada 
rose to $6.9 billion in 2003 from $4.3 billion in 2002.

      	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 2003 are preliminary. The estimate of total outlays for 2002 
has been revised up 4 percent from the preliminary estimate published last year.

Employment of newly acquired or established businesses

	Newly acquired or established businesses employed 160,900 people in 2003, down from 
218,500 in 2002.  Finance (except depository institutions) and insurance, with 34,000 employees, 
accounted for the largest share of employment in 2003.  Manufacturing also accounted for a 
large share of employment, with 33,100 employees.

					*     *     *

     	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 2003 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 
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