Survey of Current Business
September 2019
Volume 99, Number 9

Activities of U.S. Multinational Enterprises in 2017

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Worldwide current-dollar value added by U.S. multinational enterprises (MNEs)—a measure of the goods and services produced by these businesses—increased 2.0 percent in 2017 to $5.3 trillion. By area, value added by U.S. MNEs’ operations abroad (foreign affiliate value added) increased 8.9 percent to $1.4 trillion, while value added by U.S. MNEs’ domestic operations (U.S. parent value added) decreased 0.3 percent to $3.9 trillion.

Most of the increase in value added came from U.S. MNEs in petroleum-related industries. Value added by U.S. MNEs in petroleum-related industries increased 21.3 percent, compared with a 0.8 percent increase in nonpetroleum industries, reflecting a 24.6 percent increase in oil prices.1 The increase in value added by U.S. MNEs’ operations abroad also reflected continued economic growth in most major host countries. In 2017, current-dollar value added of foreign affiliates in 10 major host countries increased 8.2 percent, consistent with a 6.2 percent increase in current-dollar value of gross domestic product (GDP) in these host countries.2

These and other statistics on U.S. MNEs presented here are based on preliminary 2017 and revised 2016 data collected by the U.S. Bureau of Economic Analysis (BEA) on the Annual Survey of U.S. Direct Investment Abroad from companies engaged in “outward” direct investment. The statistics cover the worldwide activities of U.S. MNEs and provide information on finances and operations including value added, balance sheet and income statement details, employment and employee compensation, sales, capital expenditures, trade in goods, and expenditures for research and development (R&D).3 BEA also produces statistics that cover the activities of U.S. affiliates of foreign MNEs, that is, U.S. companies that are part of U.S. “inward” direct investment.4 Jointly, these outward and inward direct investment statistics are referred to as statistics on the activities of MNEs.5

This article focuses on changes in 2017 in five measures of the worldwide operations of U.S. MNEs: value added; employment; expenditures for property, plant, and equipment; U.S. trade in goods; and R&D expenditures.

The worldwide operations of a U.S. MNE reflect both its domestic operations, represented by the U.S. parent company, and its foreign operations, represented by the foreign affiliates. For the foreign affiliates, statistics are presented for two categories: (1) all affiliates, which are at least 10 percent owned by their U.S. parents, and (2) majority-owned foreign affiliates (MOFAs), which are more than 50 percent owned by their U.S. parents. Majority-owned affiliates in 2017 accounted for about 92 percent of all foreign affiliates and for 85 percent of the employment by all foreign affiliates. BEA publishes greater detail for MOFAs partly because some data items are collected only for MOFAs. The focus on MOFAs also allows the statistics on foreign affiliates to be placed on the same ownership basis as the statistics on U.S. parents, which are defined to include all majority-owned domestic operations of the MNE. In this article, the activities of U.S. MNEs cover the combined operations of U.S. parent companies and their MOFAs. For ease of discussion, the term “foreign affiliate” is used in this article to denote MOFAs, except where otherwise noted.

Worldwide employment, expenditures for plant, property, and equipment, and expenditures on R&D increased for U.S. MNEs in 2017, reflecting increases in the United States and abroad. Employment by U.S. MNEs worldwide increased 0.4 percent. Expenditures for property, plant, and equipment by U.S. MNEs increased 2.0 percent. R&D expenditures by U.S. MNEs increased 3.3 percent.

For the remainder of this article, “capital expenditure” is used to denote expenditures for property, plant, and equipment, except where otherwise noted.

Additional highlights of the activities of U.S. MNEs in 2017 include the following:

  • The activities of U.S. MNEs continued to be concentrated in the United States; U.S. parents accounted for nearly three-quarters of worldwide MNE value added, for more than three-quarters of worldwide MNE capital expenditures, for nearly two-thirds of worldwide MNE employment, and for more than four-fifths of worldwide MNE R&D expenditures. Foreign affiliates accounted for one-third or less of these measures.
  • Most value added of foreign affiliates continued to be located in high-income countries, such as Canada, the United Kingdom, and Germany.6 Affiliates in high-income countries accounted for three-fourths of foreign affiliate value added.
  • Employment of foreign affiliates continued to be concentrated in a few large countries, such as China, the United Kingdom, Mexico, India, and Canada. In 2017, affiliates in these countries accounted for one-half of foreign affiliate employment.
  • MNE-associated U.S. exports of goods were $839.4 billion, representing 54.3 percent of total U.S. exports of goods. MNE-associated imports of goods were $973.0 billion, representing 41.6 percent of total U.S. imports of goods.7

The first section of this article examines worldwide activities of U.S. MNEs. The second and third sections examine the activities of U.S. parents and foreign affiliates.

Value added

In 2017, current-dollar value added of U.S. MNEs worldwide increased 2.0 percent to $5.3 trillion. The value added of U.S. parents decreased 0.3 percent to $3.9 trillion; in contrast, the value added of foreign affiliates increased 8.9 percent to $1.4 trillion (tables 1 and 2 and chart 1).

Table 1. Selected Statistics for U.S. Multinational Enterprises (MNEs), U.S. Parents, and Foreign Affiliates for Selected Years
  U.S. MNEs Parents Affiliates
Parents and all affiliates Parents and MOFAs Total MOFAs Other
Value added1
[Millions of dollars]
1994 n.a. 1,773,288 1,361,792 n.a. 411,496 n.a.
19992 n.a. 2,644,739 2,064,343 n.a. 580,396 n.a.
2004 n.a. 3,220,723 2,366,467 n.a. 854,256 n.a.
2009 n.a. 3,740,733 2,595,776 n.a. 1,144,957 n.a.
2014 n.a. 5,379,638 3,889,485 n.a. 1,490,153 n.a.
2016r n.a. 5,218,251 3,916,185 n.a. 1,302,066 n.a.
2017p n.a. 5,320,883 3,902,521 n.a. 1,418,362 n.a.
Percent change at annual rates
1994–2004 n.a. 6.1 5.7 n.a. 7.6 n.a.
2004–2009 n.a. 3.0 1.9 n.a. 6.0 n.a.
2009–2014 n.a. 7.5 8.4 n.a. 5.4 n.a.
2004–2014 n.a. 5.3 5.1 n.a. 5.7 n.a.
2014–2016 n.a. −1.5 0.3 n.a. −6.5 n.a.
2016–2017 n.a. 2.0 −0.3 n.a. 8.9 n.a.
Thousands of employees
1994 26,570.6 25,141.9 19,330.0 7,240.6 5,811.9 1,428.7
19992 33,397.6 31,913.4 23,985.3 9,412.3 7,928.1 1,484.2
2004 32,891.6 31,466.0 22,446.2 10,445.4 9,019.8 1,425.6
2009 35,962.0 33,726.6 22,932.7 13,029.3 10,793.9 2,235.4
2014 43,988.4 41,639.6 27,587.2 16,401.2 14,052.4 2,348.8
2016r 44,732.8 42,288.0 28,022.6 16,710.2 14,265.4 2,444.8
2017p 45,094.3 42,471.1 28,071.2 17,023.1 14,399.9 2,623.2
Percent change at annual rates
1994–2004 2.2 2.3 1.5 3.7 4.5 0.0
2004–2009 1.8 1.4 0.4 4.5 3.7 9.4
2009–2014 4.1 4.3 3.8 4.7 5.4 1.0
2004–2014 2.9 2.8 2.1 4.6 4.5 5.1
2014–2016 0.8 0.8 0.8 0.9 0.8 2.0
2016–2017 0.8 0.4 0.2 1.9 0.9 7.3
Capital expenditures3
[Millions of dollars]
1994 330,940 306,364 234,617 96,323 71,747 24,976
19992 562,705 531,399 416,795 145,910 114,604 31,306
2004 500,048 476,098 350,919 149,129 125,179 23,950
2009 653,208 598,862 431,796 221,412 167,066 54,346
2014 1,018,179 967,593 722,346 295,833 245,247 50,586
2016r n.a. 836,556 641,469 n.a. 195,087 n.a.
2017p n.a. 853,227 653,637 n.a. 199,590 n.a.
Percent change at annual rates
1994–2004 4.2 4.5 4.1 4.5 5.7 −0.4
2004–2009 5.5 4.7 4.2 8.2 5.9 17.8
2009–2014 9.3 10.1 10.8 6.0 8.0 −1.4
2004–2014 7.4 7.3 7.5 7.1 7.0 7.8
2014–2016 n.a. −7.0 −5.8 n.a. −10.8 n.a.
2016–2017 n.a. 2.0 1.9 n.a. 2.3 n.a.
R&D expenditures4
[Millions of dollars]
1994 n.a. 103,451 91,574 n.a. 11,877 n.a.
19992 n.a. 144,435 126,291 n.a. 18,144 n.a.
2004 n.a. 190,029 164,189 n.a. 25,840 n.a.
2009 n.a. 246,502 207,297 n.a. 39,205 n.a.
2014 n.a. 330,755 275,477 n.a. 55,278 n.a.
2016r n.a. 343,699 289,392 n.a. 54,307 n.a.
2017p n.a. 354,919 298,321 n.a. 56,598 n.a.
Percent change at annual rates
1994–2004 n.a. 6.3 6.0 n.a. 8.1 n.a.
2004–2009 n.a. 5.3 4.8 n.a. 8.7 n.a.
2009–2014 n.a. 6.1 5.9 n.a. 7.1 n.a.
2004–2014 n.a. 5.7 5.3 n.a. 7.9 n.a.
2014–2016 n.a. 1.9 2.5 n.a. −0.9 n.a.
2016–2017 n.a. 3.3 3.1 n.a. 4.2 n.a.
p
Preliminary
r
Revised
MOFA
Majority-owned foreign affiliate
n.a.
Not available
Table 2. Selected Statistics for U.S. MNEs, by Industry of U.S. Parent, 2016 and 2017—Continues
  Millions of dollars
Value added Capital expenditures R&D expenditures Compensation of employees
2016 2017 2016 2017 2016 2017 2016 2017
All industries 5,218,251 5,320,883 836,556 853,227 343,699 354,919 2,800,132 2,865,616
Of which:                
Mining 93,051 118,465 47,721 53,764 867 994 40,197 41,325
Manufacturing 2,058,407 2,086,529 298,997 300,242 235,043 242,081 996,172 1,009,021
Wholesale trade 283,158 280,996 53,585 50,467 9,299 8,423 149,949 158,420
Retail trade 440,016 444,873 51,247 54,254 2,218 2,405 220,162 222,609
Information 568,248 585,278 104,657 114,946 54,327 57,695 257,320 269,535
Finance and insurance 669,319 666,091 77,050 80,727 2,338 2,624 448,603 462,264
Professional, scientific, and technical services 338,756 339,415 15,164 17,042 28,400 29,129 239,541 242,952
Other industries 767,297 799,235 188,136 181,783 11,208 11,567 448,189 459,489
Table 2. Selected Statistics for U.S. MNEs, by Industry of U.S. Parent, 2016 and 2017—Table ends
  Thousands of employees 2016–2017 percent change
2016 2017 Value added Capital expenditures R&D expenditures Compensation of employees Employment
All industries 42,288.0 42,471.1 2.0 2.0 3.3 2.3 0.4
Of which:              
Mining 396.2 405.1 27.3 12.7 14.6 2.8 2.2
Manufacturing 13,296.0 13,319.8 1.4 0.4 3.0 1.3 0.2
Wholesale trade 2,307.6 2,465.1 −0.8 −5.8 −9.4 5.6 6.8
Retail trade 7,346.6 7,290.0 1.1 5.9 8.4 1.1 −0.8
Information 2,813.0 2,873.6 3.0 9.8 6.2 4.7 2.2
Finance and insurance 4,015.5 4,053.6 −0.5 4.8 12.2 3.0 0.9
Professional, scientific, and technical services 2,801.6 2,807.0 0.2 12.4 2.6 1.4 0.2
Other industries 9,311.4 9,257.0 4.2 −3.4 3.2 2.5 −0.6

Employment

In 2017, employment by U.S. MNEs worldwide increased 0.4 percent to 42.5 million workers, reflecting increases in both the United States and abroad. Employment by U.S. parents increased 0.2 percent to 28.1 million, while employment by foreign affiliates increased 0.9 percent to 14.4 million (table 1).

By industry, the increase in employment was mainly in wholesale trade. By area, about one-half of the increase in employment by foreign affiliates was in Europe, with most of the remainder of the increase in Latin America and Other Western Hemisphere and in Canada.

Capital expenditures

Capital expenditures by U.S. MNEs increased 2.0 percent to $853.2 billion in 2017. Capital expenditures by U.S. parents increased 1.9 percent to $653.6 billion, and capital expenditures by foreign affiliates increased 2.3 percent to $199.6 billion (table 1).

By industry, the increase in U.S. MNEs’ capital expenditures was concentrated in information and in mining.

By area, the increase in capital expenditures by foreign affiliates was concentrated in Europe and in Asia and Pacific. By country, the largest increase occurred in Mexico.

U.S. trade in goods

U.S. MNEs continued to account for a large share of U.S. trade in goods. As global firms, MNEs often serve foreign markets through both U.S. exports and through sales by foreign affiliates. Likewise, they often serve the U.S. market through local production and through U.S. imports from foreign affiliates and unaffiliated foreign persons. The exports and imports are sometimes part of their global production processes in which different stages of production take place at home and abroad.8 In this section, trade between U.S. parents and their foreign affiliates (both majority and minority owned) is referred to as “intra-MNE trade.” Trade between U.S. parents and foreigners other than their own foreign affiliates and trade between foreign affiliates and U.S. residents other than their own parents is referred to as “MNE trade with others.” MNE-associated trade in goods consists of all U.S. exports and U.S. imports of goods that involve U.S. parents or their foreign affiliates.

In 2017, MNE-associated exports of goods increased $13.1 billion, or 1.6 percent, to $839.4 billion (table 3). By comparison, total U.S. exports of goods increased 6.5 percent to $1.5 trillion. As a result of these different growth rates, the MNE-associated share of total U.S. exports of goods decreased to 54.3 percent in 2017 from 56.9 percent in 2016.

Table 3. U.S. Trade in Goods Associated with U.S. MNEs, 2016 and 2017
[Millions of dollars]
  2016 2017
Total MNE-associated U.S. exports 826,288 839,405
Intra-MNE trade 320,789 337,900
Shipped by U.S. parents to MOFAs 243,263 256,350
Shipped by U.S. parents to other foreign affiliates1 77,526 81,550
MNE trade with others 505,499 501,505
Shipped by U.S. parents to other foreigners 461,143 454,621
Of which:    
Shipped by U.S. parents to foreign parent groups2 68,276 63,233
Shipped to foreign affiliates by other U.S. persons 44,356 46,884
To MOFAs 44,356 46,884
To other foreign affiliates3 n.a. n.a.
Total MNE-associated U.S. imports 942,327 973,002
Intra-MNE trade 355,691 376,963
Shipped by MOFAs to U.S. parents 283,952 305,693
Shipped by other foreign affiliates to U.S. parents1 71,739 71,270
MNE trade with others 586,636 596,039
Shipped by other foreigners to U.S. parents 538,616 544,352
Of which:    
Shipped by foreign parent groups to U.S. parents2 228,528 229,528
Shipped by foreign affiliates to other U.S. persons 48,020 51,687
By MOFAs 48,020 51,687
By other foreign affiliates3 n.a. n.a.
Addenda
All U.S. exports of goods4 1,451,460 1,546,473
MNE-associated U.S. exports as a percentage of total 56.9 54.3
Intra-MNE exports as a percentage of total 22.1 21.8
All U.S. imports of goods4 2,186,786 2,339,884
MNE-associated U.S. imports as a percentage of total 43.1 41.6
Intra-MNE imports as a percentage of total 16.3 16.1
MOFA
Majority-owned foreign affiliate
n.a.
Not available

The $13.1 billion increase mostly reflected a $17.1 billion, or 5.3 percent, increase in intra-MNE trade, which was partly offset by a $4.0 billion, or 0.8 percent, decrease in MNE trade with others. By industry of the affiliate, chemical manufacturing and motor vehicles, bodies and trailers, and parts manufacturing accounted for the largest increase in intra-MNE trade.

In 2017, MNE-associated imports of goods increased $30.7 billion, or 3.3 percent, to $973.0 billion. By comparison, total U.S. imports of goods increased 7.0 percent to $2.3 trillion. As a result of these different growth rates, the MNE-associated share of total U.S. imports of goods decreased to 41.6 percent in 2017 from 43.1 percent in 2016.

The $30.7 billion increase in MNE-associated U.S. imports of goods reflected increases in both intra-MNE trade ($21.3 billion or 6.0 percent) and MNE trade with others ($9.4 billion or 1.6 percent). The largest increases in intra-MNE trade were imports by U.S. parents in manufacturing, particularly in petroleum and coal products, and in motor vehicles, bodies and trailers, and parts.

Research and development

R&D expenditures by U.S. MNEs increased 3.3 percent to $354.9 billion in 2017 (tables 1 and 2).9 R&D expenditures by U.S. parents increased 3.1 percent to $298.3 billion, and R&D expenditures by foreign affiliates increased 4.2 percent to $56.6 billion.

By industry, nearly one-half of the increase in U.S. MNEs’ R&D expenditures was accounted for by U.S. parents in chemical manufacturing and in computers and electronic products manufacturing. By area, R&D expenditures of the affiliates increased in every major geographic area (table 5).

Value added

Current-dollar value added of U.S. parents decreased $13.7 billion, or 0.3 percent, to $3.9 trillion in 2017 (table 1 and chart 1), compared with a 4.4 percent increase in value added of all U.S. private companies (table 4).

Table 4. Selected Statistics for U.S. Parents and for All U.S. Companies, by Industry, 2016 and 2017—Continues
  Millions of dollars
Value added1 Capital expenditures2 R&D expenditures3 Employee compensation4
2016 2017 2016 2017 2016 2017 2016 2017
U.S. parents
All industries 3,916,185 3,902,521 641,469 653,637 289,392 298,321 2,199,969 2,250,885
Mining 67,767 87,765 39,236 45,082 797 927 30,160 31,574
Manufacturing 1,383,961 1,347,216 194,146 193,325 195,423 201,102 725,735 733,402
Wholesale trade 239,201 228,305 46,595 42,287 7,521 6,803 124,455 130,356
Retail trade 384,197 383,285 44,577 48,188 2,198 2,364 192,727 193,907
Information 476,727 484,209 92,932 99,217 48,403 51,782 218,577 228,956
Finance and insurance 504,820 491,219 63,773 66,034 1,514 1,590 367,713 377,940
Professional, scientific, and technical services 243,195 241,137 10,854 12,207 24,170 24,547 174,033 177,905
Other industries 616,317 639,385 149,357 147,296 9,366 9,205 366,570 376,846
  All U.S. companies
All private industries 16,319,400 17,031,700 1,479,439 1,581,840 374,685 n.a. 8,079,913 8,478,268
Mining 216,200 268,600 92,641 132,563 3,296 n.a. 75,440 77,472
Manufacturing 2,085,200 2,179,600 243,595 248,304 250,553 n.a. 1,014,006 1,056,160
Wholesale trade 1,136,600 1,174,100 43,768 43,371 452 n.a. 511,689 533,130
Retail trade 1,052,000 1,087,100 86,931 91,828 n.a. n.a. 588,234 606,945
Information 998,100 1,050,800 142,911 158,584 70,748 n.a. 328,674 348,765
Finance and insurance 1,432,700 1,465,900 161,653 167,468 7,331 n.a. 734,481 788,255
Professional, scientific, and technical services 1,381,100 1,450,000 31,728 37,545 37,595 n.a. 936,437 984,769
Other industries 8,017,500 8,355,600 676,212 702,177 n.a. n.a. 3,890,952 4,082,772
Table 4. Selected Statistics for U.S. Parents and for All U.S. Companies, by Industry, 2016 and 2017—Table ends
  Thousands of employees5 2016-2017 Percent Change
2016 2017 Value added Capital expenditures R&D expenditures Employee Compensation Employment
U.S. parents
All industries 28,022.6 28,071.2 −0.3 1.9 3.1 2.3 0.2
Mining 261.4 272.2 29.5 14.9 16.3 4.7 4.1
Manufacturing 7,359.9 7,350.8 −2.7 −0.4 2.9 1.1 −0.1
Wholesale trade 1,683.3 1,738.8 −4.6 −9.2 −9.5 4.7 3.3
Retail trade 5,891.7 5,812.3 −0.2 8.1 7.6 0.6 −1.3
Information 2,164.0 2,222.2 1.6 6.8 7.0 4.7 2.7
Finance and insurance 2,859.9 2,844.3 −2.7 3.5 5.0 2.8 −0.5
Professional, scientific, and technical services 1,619.1 1,618.8 −0.8 12.5 1.6 2.2 0.0
Other industries 6,183.3 6,211.9 3.7 −1.4 −1.7 2.8 0.5
  All U.S. companies
All private industries 125,610 127,419 4.4 6.9 n.a. 4.9 1.4
Mining 611 621 24.2 43.1 n.a. 2.7 1.6
Manufacturing 12,335 12,450 4.5 1.9 n.a. 4.2 0.9
Wholesale trade 5,899 5,936 3.3 −0.9 n.a. 4.2 0.6
Retail trade 15,964 15,990 3.3 5.6 n.a. 3.2 0.2
Information 2,817 2,820 5.3 11.0 n.a. 6.1 0.1
Finance and insurance 6,152 6,275 2.3 3.6 n.a. 7.3 2.0
Professional, scientific, and technical services 8,932 9,081 5.0 18.3 n.a. 5.2 1.7
Other industries 72,900 74,246 4.2 3.8 n.a. 4.9 1.8
n.a.
Not available

For U.S. parents, the largest decreases in value added were concentrated in pharmaceutical manufacturing and transportation equipment manufacturing. The largest decrease in nonmanufacturing industries was a $13.6 billion decrease in finance and insurance, of which 82 percent of the decrease was accounted for by parents in depository credit intermediation (banking). These decreases in U.S. parents’ value added were partly offset by an increase in value added in petroleum-related manufacturing and mining industries, partly as a result of a 24.6 percent increase in oil prices.

Employment

Employment by U.S. parents increased 0.2 percent in 2017 to 28.1 million workers, compared with a 1.4 percent increase in employment by all U.S. private companies (tables 1 and 4). Employment by U.S. parents in manufacturing decreased 0.1 percent, compared with a 0.9 percent increase by all U.S. private companies in manufacturing (table 4).

Capital expenditures

Capital expenditures by U.S. parents increased 1.9 percent in 2017 to $653.6 billion, compared with a 6.9 percent increase in capital expenditures by all U.S. private companies (tables 1 and 4). About four-fifths of the increase in capital expenditures for U.S. parents was accounted for by petroleum-related industries.

Research and development

R&D expenditures by U.S. parents increased 3.1 percent in 2017 to $298.3 billion (tables 1 and 4). Nearly two-thirds of the increase was in manufacturing, primarily in pharmaceuticals and medicines and in computers and electronic products.

U.S. parents’ share of operations of all U.S. companies. U.S. parent companies tend to be large firms that are global leaders in their industries and therefore account for a large share of U.S. production. In 2017, U.S. parents accounted for 22.9 percent of value added for all U.S. companies (table 4). They also accounted for large shares of the inputs to production used by all U.S. companies—41.3 percent of capital expenditures, 22.0 percent of U.S. employment, and 26.5 percent of employee compensation. The higher share of employee compensation compared with the share of employees may reflect U.S. parents’ need to pay compensation commensurate with a more highly skilled workforce. The importance of employee skill and innovation to parent firms is evident in the U.S. parents’ 77.2 percent share of R&D expenditures by all U.S. companies in 2016.10

Value added

Current-dollar value added of foreign affiliates increased 8.9 percent to $1.4 trillion in 2017 (tables 1 and 5 and chart 1) after decreasing 4.2 percent in 2016.

Value added of foreign affiliates increased in all major industry categories. The largest increases were in manufacturing and in mining. The increases in manufacturing were concentrated in computers and electronic products and in food.

Value added of foreign affiliates increased in every major geographic area (table 5 and chart 1). The largest increase was in Europe, where the value added of foreign affiliates increased $47.8 billion, or 7.2 percent.

Table 5. Selected Statistics for Majority-Owned Foreign Affiliates by Major Area and by Major Industry of Affiliate, 2016 and 2017—Continues
  Millions of dollars
Value added Capital expenditures R&D expenditures Compensation of employees
2016 2017 2016 2017 2016 2017 2016 2017
All countries, all industries 1,302,066 1,418,362 195,087 199,590 54,307 56,598 600,163 614,731
By area
Canada 119,377 131,276 25,147 21,948 3,443 3,513 60,655 62,721
Europe 667,248 715,037 78,922 83,399 32,556 32,877 304,741 309,922
Latin America and Other Western Hemisphere 137,714 157,857 29,614 30,578 1,917 2,234 64,167 66,782
Africa 25,839 27,648 7,789 6,889 114 116 7,459 7,294
Middle East 21,404 24,601 3,372 3,233 2,668 2,832 10,912 11,898
Asia and Pacific 330,484 361,942 50,245 53,544 13,610 15,026 152,228 156,114
By industry of affiliate
Mining 80,247 104,421 45,530 41,011 271 316 18,564 18,649
Manufacturing 551,349 600,694 63,275 68,684 30,937 31,613 218,992 223,582
Wholesale trade 157,594 160,338 10,568 9,565 5,087 4,878 56,877 57,857
Retail trade 78,758 82,124 7,808 6,696 45 42 31,774 33,112
Information 83,983 89,064 12,593 14,183 5,166 5,469 36,842 37,289
Finance and insurance 88,572 100,951 7,255 7,303 197 219 64,808 66,588
Professional, scientific, and technical services 130,302 146,708 6,224 6,735 12,256 13,518 84,477 85,249
Other industries 131,262 134,061 41,834 45,412 348 542 87,830 92,405
Table 5. Selected Statistics for Majority-Owned Foreign Affiliates by Major Area and by Major Industry of Affiliate, 2016 and 2017—Table ends
  Thousands of employees 2016–2017 percent change
2016 2017 Value added Capital expenditures R&D expenditures Compensation of employees Employment
All countries, all industries 14,265.4 14,399.9 8.9 2.3 4.2 2.4 0.9
By area
Canada 1,201.9 1,227.1 10.0 −12.7 2.0 3.4 2.1
Europe 4,729.5 4,797.0 7.2 5.7 1.0 1.7 1.4
Latin America and Other Western Hemisphere 2,805.8 2,839.3 14.6 3.3 16.5 4.1 1.2
Africa 255.4 252.0 7.0 −11.6 1.8 −2.2 −1.3
Middle East 136.4 140.5 14.9 −4.1 6.1 9.0 3.0
Asia and Pacific 5,136.4 5,143.8 9.5 6.6 10.4 2.6 0.1
By industry of affiliate
Mining 236.1 242.5 30.1 −9.9 16.6 0.5 2.7
Manufacturing 5,406.4 5,440.6 8.9 8.5 2.2 2.1 0.6
Wholesale trade 935.5 983.3 1.7 −9.5 −4.1 1.7 5.1
Retail trade 1,579.1 1,629.1 4.3 −14.2 −6.7 4.2 3.2
Information 633.1 613.0 6.1 12.6 5.9 1.2 −3.2
Finance and insurance 711.1 732.4 14.0 0.7 11.2 2.7 3.0
Professional, scientific, and technical services 1,466.2 1,492.9 12.6 8.2 10.3 0.9 1.8
Other industries 3,297.9 3,266.1 2.1 8.6 55.7 5.2 −1.0

By industry, the largest increase in Europe was in manufacturing ($17.6 billion), mainly food ($8.6 billion) and computers and electronic products ($4.5 billion).

By country, the largest increases in Europe were in the United Kingdom ($16.6 billion) and in the Netherlands ($13.1 billion).

In Asia and Pacific, the value added of foreign affiliates increased $31.5 billion, or 9.5 percent. By industry, the largest increase occurred in computers and electronic products manufacturing ($11.1 billion). By country, the largest increases were in Australia ($6.9 billion), China ($5.1 billion), and India ($5.1 billion).

In Latin America and Other Western Hemisphere, the value added of foreign affiliates increased $20.1 billion, or 14.6 percent. By industry, the largest increases were in manufacturing and in mining. By country, the largest increase was in Mexico ($5.6 billion).

In Canada, the value added of foreign affiliates increased $11.9 billion, or 10.0 percent. The increase was largely accounted for by affiliates in manufacturing ($6.9 billion), particularly in food, in transportation equipment, and in mining ($4.2 billion).

In the Middle East, the value added of foreign affiliates increased $3.2 billion, or 14.9 percent. By industry, the largest increase was in mining. By country, the increases were concentrated in the United Arab Emirates and Israel.

In Africa, the value added of foreign affiliates increased $1.8 billion, or 7.0 percent. By industry, the increase was largest in mining, particularly oil and gas extraction. By country, most of the increase was in Nigeria.

Employment

Employment by foreign affiliates increased 0.9 percent to 14.4 million workers in 2017 (tables 1 and 5).

The 0.9 percent increase in employment contrasts with the 8.9 percent increase in value added of foreign affiliates. Value added per employee increased by 7.9 percent, from $91,274 in 2016 to $98,498 in 2017.11 This increase was largely attributable to increases in value added per employee in specific industries rather than a shift in foreign affiliate operations toward industries with high value added per employee.12

A decomposition of the change in value added per employee into the three components (across industry, within industry, and an interaction effect) reveals that the increase in value added per employee in 2017 was largely driven by within-industry increases, where the increases were concentrated in manufacturing (mostly in computers and electronic products and in food), and mining (primarily oil and gas extraction) industries that were consistent with a rise in oil prices.

By industry, the increase in affiliate employment was concentrated in wholesale trade and in retail trade.

By area, the largest increase in employment was in Europe, followed by Latin America and Other Western Hemisphere and Canada. By country, more than one-half of the increase was from affiliates in India; employment in several other countries in the Asia and Pacific area decreased, particularly in the Philippines and China.

Affiliate employment was largest in “global” cities in 2017 (table 6). Global cities are characterized by a high degree of interconnectedness, a cosmopolitan environment, and a high level of advanced producer services.13, 14 The eight cities with the largest employment by foreign affiliates (Shanghai, London, Sao Paulo, Bangalore, Chennai, Tokyo, Mississauga, and Mexico City) accounted for about 12.6 percent of total employment by foreign affiliates.

Table 6. Employment of Affiliates by Major Cities for Selected Countries,1 2016 and 2017
[Thousands of employees]
City Country 2016 2017
Shanghai China 309.0 374.5
London United Kingdom 301.6 343.2
Sao Paulo Brazil 303.1 297.8
Bangalore India 240.8 242.4
Chennai India 238.9 239.2
Tokyo Japan2 217.0 217.5
Mississauga Canada 197.8 214.4
Mexico City Mexico 188.6 212.3

Capital expenditures

Capital expenditures by foreign affiliates increased 2.3 percent in 2017 to $199.6 billion (tables 1 and 5). The increase in capital expenditures was concentrated in basic chemical manufacturing and in real estate.

Capital expenditures increased in most major geographic areas, with the largest increases in Europe and in Asia and Pacific. By country, the largest increases occurred in Mexico ($2.4 billion), India ($1.4 billion), and Luxembourg ($1.2 billion).

Research and development

R&D expenditures by foreign affiliates increased 4.2 percent in 2017 to $56.6 billion (tables 1 and 5). As was the case in 2016, R&D expenditures were concentrated in a small number of host countries. Ten countries—Germany, the United Kingdom, Switzerland, China, India, Canada, Ireland, Japan, Israel, and France—accounted for nearly three-fourths of total R&D expenditures by foreign affiliates in 2017. Just three of these countries—Germany, the United Kingdom, and Switzerland—together accounted for more than one-third of R&D expenditures by foreign affiliates.

By industry, R&D expenditures by foreign affiliates increased in all major industry groups except in wholesale trade and in retail trade (table 4). The largest increase was in professional, scientific, and technical services ($1.2 billion), of which nearly half of the increase was accounted for by R&D expenditures in scientific R&D services.

By area, the largest increase was in Asia and Pacific ($1.4 billion).

 


  1. Statistics on oil prices are from the U.S. Energy Information Administration.
  2. The 10 major foreign affiliate host countries are the United Kingdom, Canada, Ireland, Germany, China, the Netherlands, Switzerland, France, Mexico, and Singapore. Current-dollar values of GDP are from the World Bank.
  3. For more information about the statistics on U.S. direct investment abroad collected by BEA, see chapter 12 of U.S. International Economic Accounts: Concepts and Methods.
  4. For information on inward direct investment, see Sarah Stutzman, “Activities of U.S. Affiliates of Foreign Multinational Enterprises in 2016,” Survey of Current Business 98 (December 2018).
  5. These two sets of statistics partly overlap because some U.S. companies are both foreign owned and own foreign affiliates; these U.S companies are included in both the inward and outward statistics on the activities of MNEs. U.S. MNEs that are ultimately foreign owned account for around 10 percent of the employment and value added of all U.S. parents and for approximately 5 percent of the employment and value added of majority-owned foreign affiliates.
  6. Income group classifications are from the World Bank.
  7. The U.S. MNE shares of U.S. exports and imports of goods are computed using data from the Census Bureau.
  8. For more information, see Maria Borga and William J. Zeile, “International Fragmentation of Production and the Intrafirm Trade of U.S. Multinational Companies,” BEA Working Paper WP2004–02 (2004).
  9. Total R&D expenditures cover employee compensation expenses (including stock-based compensation), materials and supplies, depreciation expense, computer software, utilities, travel, professional dues, taxes, insurance, maintenance and repair, and allocated company overhead. The R&D expenditures data are collected in the BEA Annual Survey of U.S. Direct Investment Abroad (BE–11) on the same basis as those in the Census Bureau Business R&D and Innovation Survey (BRDIS) covering all U.S. companies.
  10. The 2017 R&D expenditures data for all U.S. companies will be available from the Business Research and Development Survey (BRDS) of the National Science Foundation (NSF) in September 2019. For the release date, see the NSF website.
  11. Changes in value added per employee are not intended to measure actual changes in worker productivity, because these estimates are not adjusted for changes in prices or exchange rates.
  12. Changes in value added per employee can be decomposed into changes resulting from a reallocation of production across industries, changes occurring within industries, and an interaction effect. For details on how differences in ratios like the year-to-year changes in value added per employee can be decomposed into the three components, see Raymond J. Mataloni Jr., “An Examination of the Low Rates of Return of Foreign-Owned U.S. Companies,” Survey 80 (March 2000).
  13. Anthony Goerzen, Christian G. Asmussen, and Bo B. Nielsen, "Global cities and multinational enterprise location strategy," Journal of International Business Studies 44 (June 2013): 427–450.
  14. For more information about the list of global cities, see the Globalization and World Cities Research Network website.

 

Table 7.1. Selected Statistics for U.S. Parents by Industry of U.S. Parent, 2016

*
Between zero and +/- $500,000, or fewer than 50 employees
D
Suppressed to avoid disclosure of data of individual companies

Note. The following ranges are given in employment cells that are suppressed: 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.

Table 7.2. Selected Statistics for U.S. Parents by Industry of U.S. Parent, 2017

*
Between zero and +/- $500,000, or fewer than 50 employees
D
Suppressed to avoid disclosure of data of individual companies

Note. The following ranges are given in employment cells that are suppressed: 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.

Table 8. Selected Statistics for Foreign Affiliates by Country of Affiliate, 2016 and 2017

*
Between zero and +/- $500,000, or fewer than 50 employees
D
Suppressed to avoid disclosure of data on individual companies

Note. 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.

Table 9.1. Selected Statistics for Majority-Owned Foreign Affiliates by Country of Affiliate, 2016

Note. The following ranges are given in employment cells that are suppressed: 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.

Table 9.2. Selected Statistics for Majority-Owned Foreign Affiliates by Country of Affiliate, 2017

Note. The following ranges are given in employment cells that are suppressed: 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.

Table 10.1 Employment of Majority-Owned Foreign Affiliates, Country by Industry of Affiliate, 2016
[Thousands of employees]

*
Fewer than 50 employees

Note. 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.

Table 10.2 Employment of Majority-Owned Foreign Affiliates, Country by Industry of Affiliate, 2017
[Thousands of employees]

*
Fewer than 50 employees

Note. 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.

Table 11.1 Value Added of Majority-Owned Foreign Affiliates, Country by Industry of Affiliate, 2016
[Millions of dollars]

*
Between zero and +/- $500,000, or fewer than 50 employees
D
Suppressed to avoid disclosure of data on individual companies

Table 11.2 Value Added of Majority-Owned Foreign Affiliates, Country by Industry of Affiliate, 2017
[Millions of dollars]

*
Between zero and +/- $500,000, or fewer than 50 employees
D
Suppressed to avoid disclosure of data on individual companies