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News Release: Foreign Investors' Spending to Acquire or Establish U.S. Businesses, 2002


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EMBARGOED UNTIL RELEASE AT 10:00 A.M. EDT, TUESDAY JUNE 3, 2003


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.

Outlays for New Investment in the United
States by Foreign Direct Investors, 1980-2002

Billion $   p Preliminary

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