A blog from BEA Director Vipin Arora
During the 1920s, Americans began investing more abroad than other countries were investing in the United States. This marked an important shift in U.S. foreign investment, and reversed the pattern seen before World War I. Around the same time, BEA began producing direct investment statistics—both U.S. direct investment abroad, or USDIA, and foreign direct investment in the United States, or FDIUS. Our experience measuring this part of the global economy is as keenly important today as it was back then.
Measuring direct investment is critical for the United States and other countries to see what is happening across the global marketplace. These measures reveal the United States’ connections to other countries’ economies, help businesses sharpen global strategies to enhance competitiveness, and give policymakers a clearer picture of what kind of connections are being formed by industry, country, and type of investment.
Statistics on American direct investment in foreign countries were first collected in 1929 (and periodically thereafter) to support balance of payments estimates. The 1950 survey was particularly notable because information from the survey led to significantly expanded detail available about USDIA. An even more comprehensive survey was administered in 1960, and an accompanying report analyzed the contribution made by USDIA to the economic development of foreign countries.
Despite garnering less attention than USDIA early on, BEA’s statistics on foreign investments in the United States gained in popularity over time as policymakers and businesses saw the importance of seeing both pieces of the global investment marketplace at the same time.
BEA’s foreign investment in the United States statistics were published as early as 1937. These estimates were quickly followed up in 1940 with additional statistics on FDIUS. After that, however, over 20 years would pass until another detailed report on FDIUS was published in 1962. As with USDIA, data on FDIUS was primarily used to supplement the balance of payments estimates.
Things changed in the 1970s and 1980s as investment growth in the United States accelerated. Data users began to place equal emphasis on getting information for investments in both directions. In response, BEA instituted new surveys to collect data on FDIUS and expanded existing surveys on USDIA. BEA also introduced statistics on new foreign direct investment in the United States.
For nearly 100 years, BEA’s direct investment statistics have helped to inform Americans about investments flowing in and out of the United States. Because of their popularity, these measures have expanded over time into what many regard as the world’s most fully developed system of data collection and publication on direct investment.