Chronicling 100 Years of the U.S. Economy

August 2021
Volume 101, Number 8

New Foreign Direct Investment in the United States in 2020

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The Bureau of Economic Analysis (BEA) recently released statistics on 2020 new foreign direct investment in the United States. These statistics provide information on the acquisition and establishment of U.S. business enterprises by foreign investors and on the expansion of existing U.S. affiliates of foreign companies to establish new production facilities. These annual statistics provide information on the amount and characteristics of new investments in the United States by foreign investors and are obtained from a mandatory survey of foreign-owned U.S. businesses conducted by BEA.

  • Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $120.7 billion (preliminary) in 2020.
  • Expenditures decreased 45.4 percent from $221.2 billion (revised) in 2019 and were below the annual average of $314.4 billion for 2014–2019.
  • As in previous years, acquisitions of existing businesses accounted for a large majority of total expenditures.
  • In 2020, expenditures for acquisitions were $116.3 billion, expenditures to establish new U.S. businesses were $1.9 billion, and expenditures to expand existing foreign-owned businesses were $2.4 billion.
  • Planned total expenditures, which include both first-year and planned future expenditures for investments initiated in 2020, were $135.8 billion.
  • By region of UBO, European investors were the largest source of new foreign direct investment expenditures in 2018–2020.
  • By region, Europe had the largest change in new foreign direct investment expenditures between 2019 and 2020, a decrease of $33.1 billion.
  • Europe contributed over two-thirds of new investment expenditures in 2020.
  • By country of UBO, Germany was the largest investing country, with expenditures of $20.5 billion in 2020.
  • Investments by German investors accounted for 17 percent of new foreign direct investment expenditures.
  • Canada ($15.2 billion) was the second-largest investing country, followed by Switzerland ($13.8 billion).
  • Expenditures for new foreign direct investment were largest in manufacturing, at $63.3 billion, accounting for 52.4 percent of total expenditures in 2020.
  • Within manufacturing, expenditures were largest in chemical manufacturing ($26.9 billion), primarily in pharmaceuticals and medicines.
  • Computers and electronic products manufacturing ($14.8 billion) and telecommunications ($12.6 billion) round out the top three.
  • Chemical manufacturing was also the top industry for new foreign direct investment expenditures in 2018 and 2019.
  • By U.S. state, Texas received the largest share of first-year investment, with expenditures of $18.6 billion.
  • California ($17.8 billion) and New Jersey ($14.1 billion) were the second- and third-largest recipient states, respectively, in 2020.
  • Combined, these three states received 41.9 percent of first-year expenditures in 2020.
  • In 2020, 48 states, Puerto Rico, and the District of Columbia received new foreign direct investment.
  • First-year greenfield investment expenditures—expenditures to either establish a new U.S. business or to expand an existing foreign-owned U.S. business—were $4.4 billion in 2020.
  • Planned total expenditures (first-year and planned future) for establishments and expansions initiated in 2020 were $19.5 billion.
  • Greenfield projects can take multiple years to complete. Over half of total planned expenditures for these projects are incurred in years beyond the one in which the investment was initiated.
  • For establishments initiated in 2020, planned total expenditures were $13.4 billion, of which $11.5 billion will be incurred in future years.
  • For expansions initiated in 2020, planned total expenditures were $6.1 billion, of which $3.7 billion will be incurred in future years.
  • In 2020, employment at newly acquired, established, or expanded foreign-owned U.S. businesses was 197,500.
  • Current employment of newly acquired U.S. business enterprises was 194,000.
  • By country of UBO, Canada accounted for the largest number of current employees (112,400), followed by the United Kingdom (10,100), and the United Kingdom Islands in the Caribbean, which include the British Virgin Islands and Cayman Islands (7,400).
  • Total planned employment, which includes the current employment of acquired enterprises, the planned employment of newly established business enterprises when fully operational, and the planned employment associated with expansions, was 206,500.
  • When complete, greenfield investments initiated in 2020 by foreign direct investors plan to employ 12,500.
  • Greenfield investments by European investors in 2020 had the highest planned employment (5,100) upon completion.
  • Establishments initiated in 2020 by foreign investors plan to employ 6,000 when fully operational.
  • When complete, establishments in the manufacturing sector plan to employ 4,000.
  • Expansions of existing foreign-owned businesses initiated in 2020 plan to employ 6,500 when complete.
  • The highest planned total employment for expansions is in the retail trade sector (2,600), specifically food and beverage stores.
  • Thirty-eight states and the District of Columbia had planned employment from greenfield investments initiated in 2020.
  • Establishments and expansions initiated in Arizona, California, Florida, North Carolina, and Ohio plan to employ over 1,000 people in each state when complete.