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NEWS RELEASE EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, MONDAY, November 30, 2015 Media: Jeannine Aversa Technical: Thomas Anderson Amanda Budny (202) 606-2649 (202) 606-9879 (202) 606-9844 BEA 15-57 Expenditures by Foreign Direct Investors for New Investment in the United States, 2014 Expenditures by foreign direct investors for new investment—that is, to acquire, establish, or expand U.S. businesses—totaled $241.3 billion in 2014, according to the Bureau of Economic Analysis (BEA) in statistics released today. Acquisitions accounted for most of the investment. Introduction to New Statistics With today’s release, BEA for the first time is producing statistics on how much foreign direct investors are spending to acquire, establish, or expand U.S. businesses. These statistics are based on information collected by the new BE-13 survey, which reinstates and expands on the old BE-13 survey, which was discontinued after 2008. Data from the old survey were used to produce statistics on establishments and acquisitions, but not expansions. State and national policymakers, as well as researchers, can draw on the statistics to assess the impact of foreign direct investment on the U.S. economy. Foreign entrepreneurs and others seeking to invest in the United States can use the new statistics to make more informed decisions. The BE-13 survey will also help ensure complete coverage of BEA’s other foreign direct investment -morestatistics. The new statistics will be released each year. Data for 2015 and revised data for 2014 will be available in the summer of 2016. -2Expenditures for acquisitions were $224.7 billion. Expenditures to establish new U.S. businesses totaled $13.8 billion, and expenditures to expand existing foreign-owned U.S. businesses totaled $2.8 billion. Planned total expenditures, which include both actual and planned future expenditures, totaled $263.9 billion in 2014. The portion of these expenditures provided by foreign direct investors rather than by their existing U.S. affiliates is included in BEA’s statistics on foreign direct investment transactions. These expenditures contribute to the foreign direct investment position in the United States, which represents the accumulated total value of foreign direct investment, totaling $2.9 trillion at yearend 2014. Similarly, only some of the transactions that contribute to the foreign direct investment position are included in the statistics on new investment expenditures. In particular, the new investment data exclude disinvestment flows and other transactions between foreign direct investors and their U.S. affiliates that do not fund the acquisition, establishment, or expansion of a U.S. business. Expenditures by industry, country, and state in 2014 Total expenditures in manufacturing were $139.1 billion in 2014, the largest among major industries. Within the manufacturing sector, expenditures were largest in pharmaceuticals and medicines at $75.9 billion. Outside of manufacturing, expenditures were notable in publishing industries and in real estate. By country of ultimate beneficial owner (UBO), the largest source country was Ireland, with first-year expenditures of $42.5 billion. Expenditures from Canada, Germany, and Japan were also notable. The largest source countries for new investment were most often countries that already have a large foreign direct investment presence in the United States. Of the eight largest countries by foreign direct investment position in the United States—Canada, France, Germany, Ireland, Japan, Netherlands, Switzerland, and the United Kingdom—seven were also among the top eight source countries for new investment. By U.S. state, the largest expenditures, $48.9 billion, were for U.S. businesses in California. The four largest U.S. states in terms of expenditures by foreign direct investors—California, New Jersey, New York, and Texas—together received over half of all new investment. These four states accounted for 35 percent of private industry GDP in the United States in 2014. Greenfield expenditures In this release, BEA is presenting statistics on greenfield investments for the first time. Greenfield investment expenditures—expenditures to either establish a new U.S. business or to expand an existing foreign-owned U.S. business—totaled $16.6 billion in 2014. Total planned greenfield expenditures, which include both first-year expenditures and spending in other years, was $39.2 billion. By U.S. industry, 2014 greenfield expenditures were largest in real estate, at $4.7 billion. In manufacturing, expenditures for 2014 greenfield investments were $2.8 billion and expenditures were particularly large in primary and fabricated metals and chemicals. By country of UBO, the largest source of first-year greenfield expenditures was Canada at $4.0 billion. Including expenditures from other years, the largest source countries for greenfield expenditures were China and Japan. By U.S. state, California and Texas attracted the largest expenditures for greenfield investments, with first-year expenditures of $3.2 and $2.7 billion respectively, and planned total expenditures of $7.7 billion for each state. -more- -3Additional Information The statistics of new investments by foreign direct investors are based on data reported in the Survey of New Foreign Direct Investment in the United States (BE-13) conducted by the Bureau of Economic Analysis (BEA). The survey covers U.S. business enterprises that were acquired, established, or expanded by foreign direct investors. Information on the filing requirements for the survey may be found at http://www.bea.gov/surveys/respondent_be13.htm. In the survey, a U.S. business enterprise is categorized as “acquired” if a foreign entity acquired a 10 percent or more voting interest in an incorporated U.S. business enterprise, or an equivalent interest of an unincorporated U.S. business enterprise, either directly or indirectly through an existing U.S. affiliate. (A U.S. affiliate is a foreign-owned U.S. business enterprise.) Acquisitions include instances where the acquired enterprise operates as a separate legal entity or where the acquired enterprise is merged into the operations of an existing U.S. affiliate. For the survey, a U.S. business enterprise is categorized as “established” if a foreign entity, or an existing U.S. affiliate of a foreign entity, established a new legal entity in the United States in which the foreign entity owns 10 percent or more of the new business enterprise’s voting interest, or an equivalent interest if unincorporated. An existing U.S. affiliate is categorized as “expanded” if it expands its operations to include a new facility where business is conducted and the expansion has a projected total cost of more than $3 million. BEA reinstated the Survey of New Foreign Direct Investment in the United States in 2014 after ending the series after survey year 2008 due to budget cuts. The reinstated survey now includes expansions in an effort to better capture greenfield investments. Greenfield investment includes establishments of new companies by foreign investors and expansions of already existing companies. Because expansions were not included in the series that ended in 2008, the current series starting with 2014 and the previous series ending in 2008 are not directly comparable. The statistics of new foreign direct investment include transactions resulting from corporate inversions. A corporate inversion occurs when a U.S. corporation that is currently the ultimate owner of its worldwide operations takes steps to become a wholly-owned subsidiary of a foreign corporation. A U.S. corporation can initiate an inversion either by creating a foreign corporation to be its new parent or by merging with an existing foreign corporation and ceding control. BEA’s direct investment surveys do not collect information on whether a U.S. corporation became foreign owned as a result of a corporate inversion, so these transactions cannot be separately identified in the statistics based on the survey data alone. BEA is exploring ways to identify inversions, such as adding inversion-related questions to its data collection instruments or using outside sources, so that users can identify the impact of these transactions on the statistics. The transactions associated with corporate inversions are also included in other BEA direct investment statistics. For additional information on how corporate inversions affect BEA’s economic accounts, see Jessica M. Hanson, Howard I. Krakower, Raymond J. Mataloni Jr., and Kate L.S. Pinard, “The Effects of Corporate Inversions on the International and National Economic Accounts” Survey of Current Business 95 (February 2015). Holding companies established by foreign direct investors solely for the purpose of acquiring or establishing at least one other U.S. business enterprise are excluded from these statistics. A holding company is a company whose primary activity is holding the securities or financial assets of other companies. However, acquisitions or establishments that are undertaken by a foreign-owned U.S. holding company are included in the statistics. Holding companies are required to file the survey so that -more- -4these entities can be added to the sample frames for BEA’s other surveys of foreign direct investment in the United States and so the foreign parent’s direct transactions with these companies can be included in the International Transactions Accounts and the International Investment Position Accounts. In addition, the statistics on new investments do not cover the acquisition of additional equity by a foreign parent in an existing U.S. affiliate, the acquisition of an existing U.S. affiliate by one foreign investor from another, or the expansion of the operations of an existing U.S. affiliate when no new facility where business is conducted is established. Sell-offs or other disinvestments are not subtracted from new investments. The statistics on new foreign direct investment in the United States are classified by country of ultimate beneficial owner (UBO), by industry of the affiliate, and by state. For additional information on classifications by country of UBO or industry of affiliate please see the “Classification of Data” section of the “Methodology for the 2012 Benchmark Survey of Foreign Direct Investment in the United States.” Classification by country of UBO is used because the country that ultimately owns or controls a U.S. affiliate and therefore derives benefits from owning or controlling the affiliate generally is considered most important for analyzing these statistics. The UBO is the entity proceeding up a U.S. affiliate’s ownership chain, beginning with the foreign parent, which is not owned more than 50 percent by another entity. Classification by industry of affiliate means that each U.S. affiliate is classified in a single industry—the primary industry of the affiliate. As a result, any affiliate activities that take place in secondary industries are classified as activities in the primary industry. Classification by state indicates in which state the newly acquired, established, or expanded U.S. affiliate is located. If the newly acquired or established U.S. affiliate operates in more than one state, then the state where the greatest number of the employees were based was chosen. If there were no employees, then the state of incorporation was chosen. In addition to the expenditures, the survey also collects data on the activities of the newly acquired, established, or expanded U.S. affiliate. These additional data include balance sheet and income statement items, specifically sales, net income, assets, liabilities, and total owner’s equity for the affiliate, as well as the number of employees of each U.S. affiliate. Values for 2014 for these additional items will be released in summer 2016 with the revised statistics for 2014 and preliminary statistics for 2015. * * * BEA’s national, international, regional, and industry statistics; the SURVEY OF CURRENT BUSINESS; and BEA news releases are available without charge on BEA’s Web site at www.bea.gov. At the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements. -more- All industries Table 1. First Year Expenditures and Planned Total Expenditures for Investments Initiated in 2014, Industry of Affiliate by Type of Investment [Millions of dollars] First year expenditures ¹ Planned total expenditures (first year and planned future) 2 By type of investment By type of investment U.S. businesses U.S. businesses U.S. businesses U.S. businesses U.S. businesses U.S. businesses acquired established expanded acquired established expanded Total Total (1) (2) (3) (4) (5) (6) (7) (8) 241,261 224,688 13,822 2,751 263,858 224,688 31,345 7,825 Manufacturing 139,105 136,286 1,236 1,582 148,399 136,286 5,974 6,139 6,759 (D) 346 3 6,485 (D) (D) 0 224 0 0 0 50 0 (D) 3 6,894 (D) (D) 3 6,485 (D) (D) 0 (D) 0 (D) 0 (D) 0 (D) 3 78,928 1,211 75,888 1,829 78,249 (D) 75,875 (D) 200 0 (D) (D) 479 (D) (D) (D) 79,998 1,211 (D) (D) 78,249 (D) 75,875 (D) (D) 0 (D) 715 (D) (D) (D) (D) Plastics and rubber products Nonmetallic mineral products Primary and fabricated metals Primary metals Fabricated metal products 5,018 1,271 2,974 2,487 487 4,764 1,269 2,002 (D) (D) 250 2 228 190 38 4 0 744 (D) (D) 6,461 (D) 5,095 4,587 508 4,764 1,269 2,002 (D) (D) (D) (D) 402 (D) (D) (D) 0 2,691 2,671 20 Machinery 1,475 1,449 21 5 (D) 1,449 29 (D) 12,902 (D) (D) (D) 12,880 (D) (D) (D) 19 4 (D) (D) 3 3 0 (*) (D) (D) 141 (D) 12,880 (D) (D) (D) (D) 4 (D) 18 3 3 0 (*) 3,822 1,552 1,301 251 (D) (D) 1,324 1,092 232 (D) (D) 88 88 (*) (D) 3 140 121 19 (D) (D) 3,395 3,084 311 (D) (D) 1,324 1,092 232 (D) (D) 338 336 2 (D) 3 1,732 1,655 77 (D) Wholesale trade Motor vehicles and motor vehicle parts and supplies Electrical goods Petroleum and petroleum products Other 4,556 11 532 (D) (D) 4,482 7 (D) (D) 3,854 55 4 (D) 0 (D) 19 (*) 0 0 19 4,655 11 532 (D) (D) 4,482 7 (D) (D) 3,854 64 4 (D) 0 (D) 109 (*) 0 0 109 Retail trade Food and beverage stores Other 3,856 (D) (D) 3,827 (D) (D) (D) (*) (D) (D) 0 (D) 3,882 (D) (D) 3,827 (D) (D) (D) (*) (D) (D) 0 (D) 21,330 14,437 631 6,263 21,049 14,420 630 5,999 268 (D) (*) (D) 13 (D) 0 (D) 21,405 (D) 631 (D) 21,049 14,420 630 5,999 (D) (D) (*) (D) (D) (D) 0 (D) 8,701 82 4,731 3,888 7,265 (D) 3,802 (D) 1,327 (D) (D) (D) 109 (D) (D) 7 9,220 82 (D) (D) 7,265 (D) 3,802 (D) (D) (D) 1,071 (D) (D) (D) (D) 7 20,774 10,510 10,265 15,521 5,788 9,733 4,792 4,260 532 461 461 0 26,974 (D) (D) 15,521 5,788 9,733 (D) 10,285 (D) (D) (D) 0 8,190 525 1,329 436 5,899 7,676 522 1,303 430 5,420 499 2 (D) 6 (D) 15 1 (D) 0 (D) 8,214 525 (D) 436 (D) 7,676 522 1,303 430 5,420 524 2 34 6 482 15 1 (D) 0 (D) Other industries (D) (D) 34,749 28,581 41,108 28,581 11,635 Mining (D) (D) (D) (D) 13,173 11,794 11,794 Utilities (D) (D) (D) 7,240 6,241 10,687 6,241 Construction (D) (D) (D) 420 182 952 182 Transportation and warehousing (D) (D) (D) 3,519 3,466 3,466 11 Administration, support, and waste management 3,052 2,417 625 10 3,056 2,417 625 Health care and social assistance (D) (D) (D) (D) 1 2 1 Accommodation and food services 694 681 11 2 694 681 11 Other (D) (D) (D) (D) 2,826 21 3,468 (*) Less than +/- $500,000 (D) Suppressed to avoid disclosure of data on individual companies. 1. First year expenditures include expenditures in the calendar year in which the transaction occurred. 2. Planned total expenditures include first year expenditures for all investments plus planned future expenditures for establishments and expansions that are multiyear investments. For acquired U.S. businesses, first year expenditures and planned total expenditures are the same. 892 85 (D) (D) (D) 14 2 2 (D) Food Beverages and tobacco products Paper Petroleum and coal products Chemicals Basic chemicals Pharmaceuticals and medicines Other Computers and electronic products Semiconductors and other electronic components Navigational, measuring, and other instruments Other Electrical equipment, appliances, and components Transportation equipment Motor vehicles, bodies and trailers, and parts Other Other Information Publishing industries Telecommunications Other Finance and insurance Depository credit intermediation (banking) Finance, except depository institutions Insurance carriers and related activities Real estate and rental and leasing Real estate Rental and leasing (except real estate) Professional, scientific, and technical services Architectural, engineering, and related services Computer systems design and related services Management, scientific, and technical consulting Other All countries Table 2. First Year Expenditures and Planned Total Expenditures for Investments Initiated in 2014, Country of UBO 1 by Type of Investment [Millions of dollars] First year expenditures 2 Planned total expenditures (first year and planned future) 3 By type of investment By type of investment U.S. businesses U.S. businesses U.S. businesses U.S. businesses U.S. businesses U.S. businesses acquired established expanded acquired established expanded Total Total (1) (2) (3) (4) (5) (6) (7) (8) 241,261 224,688 13,822 2,751 263,858 224,688 31,345 7,825 Canada 30,669 26,661 3,284 724 31,870 26,661 3,826 1,383 137,774 668 811 259 4,914 133,099 633 763 (D) (D) 3,473 32 (D) (*) (D) 1,201 3 (D) (D) 5 144,734 668 (D) (D) (D) 133,099 633 763 (D) (D) 7,628 32 45 (*) (D) 4,006 3 (D) (D) (D) Germany Ireland Italy Netherlands 29,042 42,545 600 9,025 28,357 (D) 467 8,149 420 (*) 109 863 265 (D) 24 14 30,161 42,545 665 9,187 28,357 (D) 467 8,149 (D) (*) (D) (D) (D) (D) (D) (D) Spain Sweden Switzerland United Kingdom Other 1,841 1,385 17,078 24,399 5,206 1,697 1,383 16,358 23,492 4,487 (D) 2 (D) 863 (D) (D) 0 (D) 44 (D) (D) 1,386 (D) 26,761 (D) 1,697 1,383 16,358 23,492 4,487 224 2 386 (D) (D) (D) 0 (D) (D) (D) 15,725 14,951 745 28 (D) 14,951 (D) (D) South and Central America Brazil Mexico Venezuela Other 1,815 11 (D) (D) (D) 1,716 (*) (D) 0 (D) (D) 10 10 (*) (D) (D) 0 0 (D) 0 (D) 11 (D) (D) (D) 1,716 (*) (D) 0 (D) (D) 10 10 (*) (D) (D) 0 0 (D) (D) Other Western Hemisphere Bermuda 13,909 6,524 13,235 6,419 13,235 6,419 6,452 365 (D) 1 (D) 0 14,096 6,681 7,021 365 (D) 104 (D) 1 7,050 365 6,452 365 (D) 261 (D) 1 (D) 1 (D) 0 95 (D) (D) (D) (D) (D) (D) 0 (D) 0 0 0 95 (D) (D) (D) (D) (D) (D) 0 (D) 0 0 0 1,809 738 111 (D) (D) 1,566 655 1 (D) (D) (D) (D) (D) (*) (D) (D) (D) (D) 0 0 2,305 (D) 348 (D) (D) 1,566 655 1 (D) (D) (D) (D) (D) (*) 265 (D) (D) (D) 0 0 51,538 2,358 3,694 6,657 440 27,870 2,452 7,913 35 120 45,146 2,316 2,370 (D) 75 25,055 1,188 7,830 (D) (D) 5,687 40 (D) (D) 366 2,665 (D) 82 (D) (D) 706 2 (D) 0 0 150 (D) 0 3 0 65,106 (D) 9,996 (D) (D) 32,325 4,651 (D) 37 120 45,146 2,316 2,370 (D) 75 25,055 1,188 7,830 (D) (D) 17,927 (D) (D) 496 (D) 6,474 (D) (D) (D) (D) 2,033 2 (D) 0 0 796 (D) 0 3 0 United States 5 (D) (D) (D) (D) (D) 3,651 423 (*) Less than +/- $500,000 (D) Suppressed to avoid disclosure of data on individual companies. 1. The Ultimate Beneficial Owner (UBO) is the entity, proceeding up the foreign ownership chain, which is not more than 50 percent owned by another entity. The UBO is the entity that ultimately owns or controls and thus ultimately derives the benefits and assumes the risks from owning or controlling an affiliate. 2. First year expenditures include expenditures in the calendar year in which the transaction occurred. 3. Planned total expenditures include first year expenditures for all investments plus planned future expenditures for establishments and expansions that are multiyear investments. For acquired U.S. businesses, first year expenditures and planned total expenditures are the same. 4. The “United Kingdom Islands, Caribbean” consists of the British Virgin Islands, the Cayman Islands, Montserrat, and the Turks and Caicos Islands. 5. The United States is the country of ultimate beneficial owner for businesses newly acquired, established, or expanded by foreign investors that are ultimately owned by persons located in the United States. (D) Europe Belgium Denmark Finland France Latin America and Other Western Hemisphere United Kingdom Islands, Caribbean 4 Other Africa South Africa Other Middle East Israel Saudi Arabia United Arab Emirates Other Asia and Pacific Australia China Hong Kong India Japan Korea, Republic of Singapore Taiwan Other Table 3. First Year Expenditures and Planned Total Expenditures for Investments Initiated in 2014, State 1 by Type of Investment [Millions of dollars] First year expenditures 2 Planned total expenditures (first year and planned future) 3 By type of investment By type of investment U.S. businesses U.S. businesses U.S. businesses U.S. businesses U.S. businesses U.S. businesses acquired established expanded acquired established expanded Total Total (1) (2) (3) (4) (5) (6) (7) (8) 241,261 224,688 13,822 2,751 263,858 224,688 31,345 7,825 Total New England: Connecticut Maine Massachusetts New Hampshire Rhode Island Vermont 1,461 (D) 7,019 1,108 189 (D) (D) (D) 5,090 1,108 189 (D) (D) 0 (D) 0 0 0 0 0 (D) 0 0 0 1,461 296 7,099 1,108 189 (D) (D) (D) 5,090 1,108 189 (D) (D) (D) (D) 0 0 0 0 0 (D) 0 0 0 Mideast: Delaware District of Columbia Maryland New Jersey New York Pennsylvania 2,411 1,084 2,940 17,546 35,711 7,446 1,145 847 2,806 17,434 (D) 7,429 1,262 237 (D) 112 (D) 14 4 0 (D) 0 (D) 2 3,633 (D) 2,952 17,824 37,956 7,453 1,145 847 2,806 17,434 (D) 7,429 (D) (D) (D) (D) (D) 18 (D) 0 (D) (D) 92 6 Great Lakes: Illinois Indiana Michigan Ohio Wisconsin 12,818 5,437 1,990 2,095 2,510 12,206 5,260 1,873 1,852 2,497 587 103 76 (D) (D) 25 73 41 (D) (D) (D) 6,153 2,185 2,311 2,511 12,206 5,260 1,873 1,852 2,497 588 (D) (D) 299 (D) (D) (D) (D) 160 (D) Plains: Iowa Kansas Minnesota Missouri Nebraska North Dakota South Dakota 1,316 263 2,869 2,201 (D) (D) (D) (D) (D) 2,648 2,122 (D) (D) (D) (D) (D) (D) 79 0 0 0 0 0 (D) 0 0 0 0 1,316 263 2,869 2,201 (D) (D) (D) (D) (D) 2,648 2,122 (D) (D) (D) (D) (D) (D) 79 0 0 0 0 0 (D) 0 (*) 0 0 Southeast: Alabama Arkansas Florida Georgia Kentucky Louisiana Mississippi North Carolina South Carolina Tennessee Virginia West Virginia 664 61 4,274 1,652 (D) 579 (D) 3,771 564 1,233 (D) 5 (D) (D) (D) 863 (D) (D) (D) 3,642 530 (D) (D) 5 (D) (*) (D) 718 (D) (D) (D) (D) (D) (D) (D) 0 (D) (D) 0 72 (D) 0 2 (D) (D) 1 0 0 669 (D) (D) 2,260 (D) (D) (D) 3,909 (D) 2,988 3,932 5 (D) (D) (D) 863 (D) (D) (D) 3,642 530 (D) (D) 5 (D) 2 1,137 1,219 (D) (D) (D) (D) (D) (D) (D) 0 (D) (D) 0 178 (D) 0 (D) (D) 54 (D) 0 0 (D) (D) 1,937 20,496 (D) (D) (D) 17,831 (D) 1 (D) 961 (D) (*) 0 1,704 (D) (D) 1,937 25,576 (D) (D) (D) 17,831 (D) (D) (D) 3,399 (D) (*) 0 4,346 3,405 3 (D) (D) 2 3,371 0 (D) (D) 2 33 3 0 0 0 2 0 0 (D) 0 (D) 3 (D) (D) (D) 3,371 0 (D) (D) 2 (D) 3 0 0 (D) (D) 0 0 (D) 0 (D) 48,947 444 246 551 16,415 (D) 45,792 274 193 546 16,283 0 3,029 170 (D) 0 130 0 126 0 (D) 5 2 (D) 53,516 629 (D) (D) 16,575 (D) 45,792 274 193 546 16,283 0 7,535 355 (D) 0 (D) 0 189 0 (D) (D) (D) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Unspecified 1,019 369 552 98 1,019 369 552 (*) Less than +/- $500,000 (D) Suppressed to avoid disclosure of data on individual companies. 1. The state in which the newly acquired, established, or expanded U.S. business enterprise is located. If the U.S. business enterprise operates in more than one state, it is the state where the largest number of employees are based; if there are no employees it is the state of incorporation of the U.S. business enterprise. 2. First year expenditures include expenditures in the calendar year in which the transaction occurred. 3. Planned total expenditures include first year expenditures for all investments plus planned future expenditures for establishments and expansions that are multiyear investments. For acquired U.S. businesses, first year expenditures and planned total expenditures are the same. 4. Consists of the U.S. Virgin Islands, Guam, American Samoa, and all other outlying U.S. areas. 5. Expenditures are listed as unspecified if BEA has no indication of the affiliate location, such as on the claim for exemption forms, where this information is not collected. 98 Southwest: Arizona New Mexico Oklahoma Texas Rocky Mountains: Colorado Idaho Montana Utah Wyoming Far West: Alaska California Hawaii Nevada Oregon Washington Puerto Rico Other U.S. areas 5 4