Foreign direct investment in the United States: new investment in 2004.

Anderson, Thomas W.

OUTLAYS by foreign direct investors to acquire or to establish U.S. businesses rose for the second consecutive year to $79.8 billion in 2004, up 26 percent from a revised $63.6 billion in 2003 (table 1 and chart 1). Despite the increases, outlays in 2004 were still less than in 1998-2001, when new investment outlays were historically high, ranging from $147.1 billion to $335.6 billion.

Outlays were boosted by the stepped-up growth in the U.S. economy, and the increase was part of a broader resurgence of worldwide merger and acquisition activity. (1) Transactions of more than $5 billion continued to account for a sizable share of total outlays (table 2).

In 2004, outlays in "depository institutions (banking)" increased sharply, and outlays in other financial services industries continued to be large, as overseas banks and finance and insurance companies continued to seek access to the profitable and open U.S. financial market. Together, outlays in finance and in insurance accounted for almost half of total outlays in 2004 (chart 2). Outlays in manufacturing, especially in chemicals, also increased substantially. Outlays in information declined for the fifth consecutive year.

[GRAPHIC OMITTED]

Outlays by Canadian investors increased substantially and accounted for more than 40 percent of total outlays in 2004 (chart 2). Outlays from Europe increased only slightly; increases in outlays from the United Kingdom, Switzerland, and France were offset by decreases in outlays from Germany and other European countries. Outlays from Australia decreased. Outlays from Japan declined for the fourth consecutive year.

Spending in 2004

In 2004, as in previous years, outlays by foreign direct investors to acquire existing U.S. businesses (at $72.5 billion) were far larger than outlays to establish new U.S. businesses (at $7.3 billion). In addition, outlays by or through U.S. affiliates (at $46.3 billion) continued to be larger than outlays by foreign direct investors (at $33.5 billion). Of the $46.3 billion that was spent by U.S. affiliates, $30.0 billion came from their foreign parent companies. Thus, through their own outlays and the funds they supplied to existing U.S. affiliates, foreign parent companies funded a total of $63.6 billion, or 80 percent, of the total outlays of $79.8 billion. These foreign parent funds are included in the capital inflows for foreign direct investment in the United States, as recorded in the financial account of the U.S. international transactions accounts. (2)

Outlays in banking increased in 2004 to $14.1 billion, up sharply from $4.9 billion in 2003 (table 3). Outlays in "finance (except depository institutions) and insurance" rose slightly to $24.9 billion from $23.5 billion in 2003. Interest in manufacturing by foreign direct investors rebounded; expenditures were $17.2 billion, up from $10.8 billion in 2003. Within manufacturing, the largest increases were in chemicals, beverages and tobacco products, and computers and electronic products. Outlays in information continued to decline, dropping from $9.2 billion in 2003 to $3.1 billion in 2004.

Outlays by Canadian investors rose substantially to $32.4 billion, up from $9.2 billion in 2003 (table 4). Canadian outlays in "finance (except depository institutions) and insurance" were especially strong. Outlays from European investors rose only slightly to $39.4 billion. Outlays from investors in the United Kingdom increased from $20.4 billion to $24.2 billion and were especially strong in banking. Outlays from French and Swiss investors increased, and outlays from German investors decreased. Outlays from Japanese investors continued to decline from an already low level to $1.0 billion, down from a peak of $26.0 billion in 2000; outlays from Japan have been depressed in recent years by weakness in the Japanese economy and by a redirection of investor interest towards opportunities in China and other Asian countries. Outlays from Australia decreased from $9.0 billion to $2.9 billion.

Operating data of acquired or established U.S. businesses

In 2004, newly acquired or established businesses employed 193,000 people, up from 166,100 in 2003 (table 5). Manufacturing, with 48,300 employees, accounted for the largest share of employment.

In 2004, the total assets of newly acquired or established businesses were $313.0 billion, up from $219.1 billion in 2003. A majority of these assets were accounted for by "finance (except depository institutions) and insurance" with assets of $193.6 billion, and by banks, with assets of $60.9 billion.

Net income for newly acquired or established businesses was $3.6 billion, and total sales were $64.1 billion.

Revisions

The estimates of new foreign direct investment for 2004 are preliminary. The estimate of total outlays for 2003 has been revised up 5 percent from the preliminary estimate. (3) In addition, the estimates of the employment, total assets, sales, and net income by U.S. businesses acquired or established by foreign direct investors have been revised. The estimate of employment has been revised up 3 percent, the estimate of total assets has been revised down 6 percent, the estimate of sales has been revised up 1 percent, and the estimate of net income has been revised up 19 percent.

Technical Note

The estimates of new foreign direct investment, which cover U.S. business enterprises that were acquired or established by foreign direct investors during the year, are based on data reported in surveys conducted by the Bureau of Economic Analysis (BEA) and for the preliminary estimates for 2004, from BEA estimates for reports not yet received.

For the survey, a U.S. business enterprise is categorized as "established" if the foreign parent or its existing U.S. affiliate creates a new legal entity that is organized and that is operated as a new U.S. business enterprise or that directly purchases U.S. real estate? A U.S. business enterprise is categorized as "acquired" (1) if a foreign parent or its U.S. affiliate obtains a voting interest of 10 percent or more in the equity of an existing U.S. business enterprise and continues to operate the enterprise as a separate legal entity; (2) if a foreign parent or its affiliate purchases a business segment or an operating unit of an existing U.S. business and organizes it as a new separate legal entity; or (3) if an existing U.S. affiliate purchases a U.S. business, a segment of a U.S. business, or an operating unit of a U.S. business and merges it into its own operations.

The estimates of new foreign direct investment do not cover the acquisition of additional equity in an existing U.S. affiliate, the acquisition of an existing U.S. affiliate by one foreign investor from another, or the expansion in the operations of an existing U.S. affiliate when no separate legal entity is created. Selloffs or other disinvestments are not netted against the new investments. (For more information, see the box "Data on Foreign Direct Investment in the United States")

A U.S. business that is acquired or established by a foreign direct investor or by an existing U.S. affiliate of a foreign investor and that has total assets of more than $3 million or owns 200 acres or more of U.S. land is required to file a full report with BEA. In addition, a U.S. business enterprise that is acquired by an existing U.S. affiliate of a foreign investor and merged into the operations of the affiliate must file a full report if the total cost of the acquisition exceeds $3 million or if the acquired enterprise owns 200 acres or more of U.S. land. To reduce the reporting burden, smaller U.S. businesses that have total assets of $3 million or less and that own fewer than 200 acres of U.S. land are permitted to file shorter, partial reports. (5)

BEA prepares estimates of the data items that are not collected on the partial reports and combines the estimates with the data it collects on the partial reports and the full reports. Because the businesses that file partial reports are so small, their estimated and reported values generally have a negligible impact on the published aggregates. For example, in 2003, the total assets of U.S. businesses that filed partial reports were $242.0 million, about a tenth of 1 percent of the total assets of all new investments.

Although the values for the partial reports are generally negligible, the number of partial reports is significant. For example, in 2003, BEA received 869 partial reports and 457 full reports. Furthermore, the number of businesses that are subject to partial reporting may be higher than the actual number of partial reports that BEA receives, because not all of the smaller U.S. businesses acquired or established by foreigners file reports. BEA makes every effort to contact all U.S. businesses that may have been newly acquired or established by foreigners, but it must concentrate its resources on ensuring compliance with reporting requirements by larger businesses.

Of the 457 full reports filed in 2003, 155 reported investments to acquire an existing U.S. business, and 302 reported investments to establish a new U.S. business. For 2004, BEA estimates that 552 businesses will have filed full reports by the time the revised estimates are published in 2006. (6)

The number of full reports by size of outlay is shown in the table below.

 2002 2003 (r) 2004 (p)

Total 559 457 552
 $5 billion or more 1 2 2
 $2 billion-$4999 billion 3 2 4
 $100 million-$1999 billion 79 73 93
 Less than $100 million 476 380 453

(p) Preliminary.

(r) Revised.

For 2004, the number of investments in the two largest classes represents the number of reports that were received. The number of investments in the two smallest class sizes includes an estimate of the number of late reports that will be received before the revised estimates are published.

Industry and country presentation

Beginning with the revised 2003 estimates, the industry classifications are based on the 2002 North American Industry Classification System. The system now includes several new industries in the information sector. In addition, BENs standard presentation of data by industry has been modified to better reflect the industry distribution of the affiliate data. The standard presentation of the data by country of ultimate beneficial owner (UBO) has also been updated to reflect changes in the pattern of foreign direct investment in the United States by country of UBO.

Table 1. Investment Outlays by Type of Investment and Investor,
1992-2004

[Millions of dollars]

 1992 1993 1994 1995

Total outlays 15,333 26,229 45,626 57,195
By type of investment:
 U.S. businesses acquired 10,616 21,761 38,753 47,179
 U.S. businesses established 4,718 4,468 6,873 10,016
By type of investor:
 Foreign direct investors 4,058 6,720 13,628 11,927
 U.S. affiliates 11,275 19,509 31,999 45,268

 1996 1997 1998 1999

Total outlays 79,929 69,708 215,256 274,956
By type of investment:
 U.S. businesses acquired 68,733 60,733 182,357 265,127
 U.S. businesses established 11,196 8,974 32,899 9,829
By type of investor:
 Foreign direct investors 32,230 13,899 120,828 120,878
 U.S. affiliates 47,699 55,809 94,428 154,078

 2003
 2000 2001 2002 (r)

Total outlays 335,629 147,109 54,519 63,591
By type of investment:
 U.S. businesses acquired 322,703 138,091 43,442 50,212
 U.S. businesses established 12,926 9,017 11,077 13,379
By type of investor:
 Foreign direct investors 105,151 23,134 13,650 27,866
 U.S. affiliates 230,478 123,975 40,869 35,725

 2004 (p)

Total outlays 79,820
By type of investment:
 U.S. businesses acquired 72,546
 U.S. businesses established 7,274
By type of investor:
 Foreign direct investors 33,529
 U.S. affiliates 46,291

(p) Preliminary.

(r) Revised.

Table 2. Distribution of Investment Outlays by Size, 1992-2004

[Percent]

 1992 1993 1994 1995 1996

Total outlays 100 100 100 100 100
 $5 billion or more 0 0 0 (D) 0
 $2 billion-$4.999 billion 0 (D) 27 18 29
 $100 million-$1.999 billion 42 51 51 48 55
 Less than $100 million 58 (D) 22 (D) 16

 1997 1998 1999 2000 2001

Total outlays 100 100 100 100 100
 $5 billion or more 0 55 55 48 30
 $2 billion-$4.999 billion 12 11 16 20 22
 $100 million-$1.999 billion 67 27 24 27 40
 Less than $100 million 21 7 5 5 9

 2002 2003 (r) 2004 (p)

Total outlays 100 100 100
 $5 billion or more (D) (D) (D)
 $2 billion-$4.999 billion 18 (D) 17
 $100 million-$1.999 billion 45 43 40
 Less than $100 million (D) 12 (D)

(p) Preliminary.

(r) Revised.

(D) Suppressed to avoid disclosure of data of individual companies.

Table 3. Investment Outlays by Industry of U.S. Business Enterprise,
2003-2004

[Millions of dollars]

 2003 (r) 2004 (p)

 All industries 63,591 79,820
Manufacturing 10,750 17,178
 Food 2,516 2,383
 Beverages and tobacco products (D) 3,777
 Petroleum and coal products (D) 0
 Chemicals 1,164 5,140
 Plastics and rubber products 498 (D)
 Nonmetallic mineral products (D) 127
 Primary metals 91 (D)
 Fabricated metal products 123 (D)
 Machinery 122 580
 Computers and electronic products 2,125 2,818
 Electrical equipment, appliances, and
 components 139 306
 Transportation equipment 225 425
 Other 462 539
Wholesale trade 1,086 951
Retail trade 941 3,055
Information 9,236 3,102
 Publishing industries 1,431 (D)
 Motion pictures and sound recording
 industries 278 0
 Telecommunications (D) (D)
 Other (D) 2,857
Depository institutions 4,864 14,095
Finance (except depository institutions)
 and insurance 23,511 24,904
Real estate and rental and leasing 2,817 4,823
Professional, scientific, and technical
 services 1,955 4,048
Other industries 8,429 7,664

(p) Preliminary.

(r) Revised.

(D) Suppressed to avoid disclosure of data of individual companies.

Table 4. Investment Outlays by Country of Ultimate Beneficial Owner,
2003-2004

[Millions of dollars]

 2003 (r) 2004 (p)

 All countries 63,591 79,820
Canada 9,157 32,376
Europe 39,024 39,424
 France 2,955 4,661
 Germany 8,830 5,020
 Netherlands 1,077 253
 Switzerland 649 3,523
 United Kingdom 20,373 24,166
 Other Europe 5,140 1,801
Latin America and Other Western Hemisphere 1,607 1,418
 South and Central America 182 (D)
 Other Western Hemisphere 1,425 (D)
Africa (D) (D)
Middle East 1,738 (D)
Asia and Pacific 11,469 4,800
 Australia 9,032 2,885
 Japan 1,544 986
 Other Asia and Pacific 893 929
United States (1) (D) (D)

(p) Preliminary.

(r) Revised.

(D) Suppressed to avoid disclosure of data of individual companies.

(1.) The United States is the country of ultimate beneficial owner for
businesses newly acquired or established by foreign investors that are
ultimately owned by persons located in the United States (see the box
"Key Terms").

NOTE. For investments in which more than one investor participated,
each investor and each investor's outlays are classified by the country
of each individual ultimate beneficial owner.

Table 5. Selected Operating Data of U.S. Business Enterprises Acquired
or Established, by Industry of U.S. Business Enterprise, 2003-2004

 2003 (r)

 Millions of dollars

 Total assets Sales Net income

 All industries 219,072 54,549 2,037
Manufacturing 12,105 9,530 76
Wholesale trade 1,388 3,478 2
Retail trade 1,551 6,399 (D)
Information 20,813 11,387 -767
Depository institutions 42,541 2,933 602
Finance (except depository
 institutions) and insurance 115,576 11,201 2,043
Real estate and rental and
 leasing 3,829 539 79
Professional, scientific, and
 technical services 2,130 1,709 (D)
Other industries 19,138 7,372 229

 2003 (r)

 Thousands
 of Hectares of
 employees land (1)

 All industries 166.1 47,711
Manufacturing 34.9 1,456
Wholesale trade 4.2 166
Retail trade 30.0 (D)
Information 14.0 (D)
Depository institutions 11.8 (D)
Finance (except depository
 institutions) and insurance 31.6 79
Real estate and rental and
 leasing 1.0 4,344
Professional, scientific, and
 technical services 8.0 164
Other industries 30.4 40,404

 2004 (p)

 Millions of dollars

 Total assets Sales Net income

 All industries 313,042 64,077 3,560
Manufacturing 29,191 20,695 899
Wholesale trade (D) 1,904 24
Retail trade (D) (D) (D)
Information 3,058 (D) -67
Depository institutions 60,886 3,960 (D)
Finance (except depository
 institutions) and insurance 193,612 20,461 1,505
Real estate and rental and
 leasing 6,766 791 62
Professional, scientific, and
 technical services 4,208 2,387 (D)
Other industries 9,713 4,252 275

 2004 (p)

 Thousands
 of Hectares of
 employees land (1)

 All industries 193.0 227,323
Manufacturing 48.3 4,568
Wholesale trade I 23
Retail trade K (D)
Information 1.70 0
Depository institutions 13.6 71
Finance (except depository
 institutions) and insurance 23.4 139
Real estate and rental and
 leasing H 3,659
Professional, scientific, and
 technical services 14.2 (D)
Other industries 38.5 218,816

(p) Preliminary.

(r) Revised.

(D) Suppressed to avoid disclosure of data of individual companies.

(1.) One hectare equals 2.471 acres. Thus, for all industries, acres of
land owned in 2003 were 117,894, and in 2004, they were 561,715.

NOTES. For newly acquired businesses, the data cover the most recent
financial reporting year preceding acquisition. For newly established
businesses, the data are projections for the first full year of
operations.

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 6. Investment Outlays by Type of Investment and Investor, by
Industry of U.S. Business Enterprise, 2003-2004

[Millions of dollars]

 2003 (r)

 By type of
 investment

 U.S.
 businesses
 Total acquired

 All industries 63,591 50,212
Manufacturing 10,750 8,698
 Food 2,516 2,516
 Beverages and tobacco products (D) (D)
 Textiles, apparel, and leather products (D) (D)
 Paper (D) (D)
 Printing and related support activities (D) (D)
 Petroleum and coal products (D) (D)
 Chemicals 1,164 (D)
 Plastics and rubber products 498 (D)
 Nonmetallic mineral products (D) (D)
 Primary and fabricated metals 214 214
 Machinery 122 122
 Computers and electronic products 2,125 (D)
 Electrical equipment, appliances, and
 components 139 139
 Transportation equipment 225 225
 Other 462 (D)
Wholesale trade 1,086 738
 Motor vehicles and motor vehicle parts and
 supplies (D) (D)
 Electrical goods (D) (D)
 Petroleum and petroleum products (D) 0
 Other 773 723
Retail trade 941 (D)
Information 9,236 9,099
 Publishing industries 1,431 1,427
 Motion picture and sound recording
 industries 278 (D)
 Telecommunications (D) (D)
 Other (D) (D)
Depository institutions 4,864 (D)
Finance (except depository institutions) and
 insurance 23,511 16,925
 Finance, except depository institutions 22,525 (D)
 Insurance carriers and related activities 987 (D)
Real estate and rental and leasing 2,817 (D)
 Real estate (D) (D)
 Rental and leasing (except real estate) (D) (D)
Professional, scientific, and technical
 services 1,955 (D)
Other industries 8,429 8,065
 Agriculture, forestry, fishing, and
 hunting (D) (D)
 Mining 926 (D)
 Utilities 5,401 (D)
 Construction 427 (D)
 Transportation and warehousing 1,251 (D)
 Management of nonbank companies and
 enterprises (D) 0
 Administration, support, and waste
 management (D) (D)
 Health care and social assistance (D) (D)
 Accommodation and food services 89 (D)
 Miscellaneous services 95 (D)

 2003 (r)

 By type
 By type of of
 investment investor

 U.S. Foreign
 businesses direct
 established investors

 All industries 13,379 27,866
Manufacturing 2,053 1,490
 Food 0 (D)
 Beverages and tobacco products (D) (D)
 Textiles, apparel, and leather products (D) (D)
 Paper 0 0
 Printing and related support activities 0 0
 Petroleum and coal products 0 0
 Chemicals (D) 303
 Plastics and rubber products (D) (D)
 Nonmetallic mineral products (D) (D)
 Primary and fabricated metals 0 (D)
 Machinery 0 (D)
 Computers and electronic products (D) 240
 Electrical equipment, appliances, and
 components 0 (D)
 Transportation equipment 0 5
 Other (D) (D)
Wholesale trade 348 (D)
 Motor vehicles and motor vehicle parts and
 supplies (D) (D)
 Electrical goods 0 (D)
 Petroleum and petroleum products (D) (D)
 Other 49 141
Retail trade (D) 17
Information 137 148
 Publishing industries 4 (D)
 Motion picture and sound recording
 industries (D) (D)
 Telecommunications (D) (D)
 Other (D) (D)
Depository institutions (D) (D)
Finance (except depository institutions) and
 insurance 6,587 20,456
 Finance, except depository institutions (D) (D)
 Insurance carriers and related activities (D) (D)
Real estate and rental and leasing (D) 709
 Real estate (D) (D)
 Rental and leasing (except real estate) (D) (D)
Professional, scientific, and technical
 services (D) 724
Other industries 364 502
 Agriculture, forestry, fishing, and
 hunting 0 (D)
 Mining (D) (D)
 Utilities (D) (D)
 Construction (D) (D)
 Transportation and warehousing (D) (D)
 Management of nonbank companies and
 enterprises (D) (D)
 Administration, support, and waste
 management (D) (D)
 Health care and social assistance (D) (D)
 Accommodation and food services (D) (D)
 Miscellaneous services (D) (D)

 2003 (r)

 By type of
 investor 2004
 (p)
 U.S.
 affiliates Total

 All industries 35,725 79,820
Manufacturing 9,261 17,178
 Food (D) 2,383
 Beverages and tobacco products (D) 3,777
 Textiles, apparel, and leather products (D) (D)
 Paper (D) (D)
 Printing and related support activities (D) (D)
 Petroleum and coal products (D) 0
 Chemicals 861 5,140
 Plastics and rubber products (D) (D)
 Nonmetallic mineral products (D) 127
 Primary and fabricated metals (D) 941
 Machinery (D) 580
 Computers and electronic products 1,884 2,818
 Electrical equipment, appliances, and
 components (D) 306
 Transportation equipment 220 425
 Other (D) 539
Wholesale trade (D) 951
 Motor vehicles and motor vehicle parts and
 supplies (D) (D)
 Electrical goods (D) 0
 Petroleum and petroleum products (D) 0
 Other 632 (D)
Retail trade 925 3,055
Information 9,088 3,102
 Publishing industries (D) (D)
 Motion picture and sound recording
 industries (D) 0
 Telecommunications (D) (D)
 Other (D) 2,857
Depository institutions (D) 14,095
Finance (except depository institutions) and
 insurance 3,055 24,904
 Finance, except depository institutions (D) 5,802
 Insurance carriers and related activities (D) 19,102
Real estate and rental and leasing 2,109 4,823
 Real estate (D) (D)
 Rental and leasing (except real estate) (D) (D)
Professional, scientific, and technical
 services 1,232 4,048
Other industries 7,927 7,664
 Agriculture, forestry, fishing, and
 hunting (D) 233
 Mining (D) 4,172
 Utilities (D) 433
 Construction (D) 158
 Transportation and warehousing (D) 2,127
 Management of nonbank companies and
 enterprises (D) 0
 Administration, support, and waste
 management (D) (D)
 Health care and social assistance (D) (D)
 Accommodation and food services (D) (D)
 Miscellaneous services (D) 398

 2004 (p)

 By type of investment

 U.S. U.S.
 businesses businesses
 acquired established

 All industries 72,546 7,274
Manufacturing 17,155 23
 Food 2,383 0
 Beverages and tobacco products 3,777 0
 Textiles, apparel, and leather products (D) 0
 Paper (D) 0
 Printing and related support activities 0 (D)
 Petroleum and coal products 0 0
 Chemicals (D) (D)
 Plastics and rubber products (D) 0
 Nonmetallic mineral products 122 5
 Primary and fabricated metals (D) (D)
 Machinery 580 0
 Computers and electronic products 2,818 0
 Electrical equipment, appliances, and
 components 306 0
 Transportation equipment 425 0
 Other 536 4
Wholesale trade (D) (D)
 Motor vehicles and motor vehicle parts and
 supplies (D) (D)
 Electrical goods 0 0
 Petroleum and petroleum products 0 0
 Other (D) (D)
Retail trade (D) (D)
Information (D) (D)
 Publishing industries (D) 0
 Motion picture and sound recording
 industries 0 0
 Telecommunications (D) (D)
 Other 2,857 0
Depository institutions (D) (D)
Finance (except depository institutions) and
 insurance 20,452 4,452
 Finance, except depository institutions 1,600 4,203
 Insurance carriers and related activities 18,853 249
Real estate and rental and leasing 2,599 2,225
 Real estate (D) 2,225
 Rental and leasing (except real estate) (D) 0
Professional, scientific, and technical
 services (D) (D)
Other industries 7,158 506
 Agriculture, forestry, fishing, and
 hunting 214 19
 Mining 4,093 79
 Utilities (D) (D)
 Construction (D) (D)
 Transportation and warehousing 2,127 0
 Management of nonbank companies and
 enterprises 0 0
 Administration, support, and waste
 management (D) 0
 Health care and social assistance (D) 0
 Accommodation and food services 0 (D)
 Miscellaneous services (D) (D)

 2004 (p)

 By type of investor

 Foreign
 direct U.S.
 investors affiliates

 All industries 33,529 46,291
Manufacturing 5,377 11,801
 Food (D) (D)
 Beverages and tobacco products (D) (D)
 Textiles, apparel, and leather products 0 (D)
 Paper (D) (D)
 Printing and related support activities (D) 0
 Petroleum and coal products 0 0
 Chemicals 3,613 1,527
 Plastics and rubber products (D) (D)
 Nonmetallic mineral products (D) (D)
 Primary and fabricated metals (D) (D)
 Machinery 0 580
 Computers and electronic products 1,448 1,369
 Electrical equipment, appliances, and
 components 0 306
 Transportation equipment (D) (D)
 Other 93 447
Wholesale trade (D) (D)
 Motor vehicles and motor vehicle parts and
 supplies (D) (D)
 Electrical goods 0 0
 Petroleum and petroleum products 0 0
 Other 561 (D)
Retail trade (D) (D)
Information 411 2,691
 Publishing industries (D) (D)
 Motion picture and sound recording
 industries 0 0
 Telecommunications (D) (D)
 Other 208 2,650
Depository institutions 0 14,095
Finance (except depository institutions) and
 insurance 20,571 4,333
 Finance, except depository institutions 4,330 1,473
 Insurance carriers and related activities 16,241 2,861
Real estate and rental and leasing 2,368 2,455
 Real estate (D) 2,455
 Rental and leasing (except real estate) (D) 0
Professional, scientific, and technical
 services 2,740 1,307
Other industries 1,149 6,515
 Agriculture, forestry, fishing, and
 hunting 220 13
 Mining 662 3,510
 Utilities 0 433
 Construction (D) (D)
 Transportation and warehousing (D) (D)
 Management of nonbank companies and
 enterprises 0 0
 Administration, support, and waste
 management 0 (D)
 Health care and social assistance 0 (D)
 Accommodation and food services (D) 0
 Miscellaneous services (D) (D)

(p) Preliminary.

(r) Revised.

(D) Suppressed to avoid disclosure of data of individual companies.

Table 7.1. Investment Outlays, Country of Ultimate Beneficial Owner by
Industry of U.S. Business Enterprise, 2003

[Millions of dollars]

 All
 industries Manufacturing

 (1) (2)

 All countries 63,591 10,750
Canada 9,157 2,859
Europe 39,024 6,609
 Of which:
 Belgium 594 403
 France 2,955 (D)
 Germany 8,830 721
 Ireland 2,893 (D)
 Netherlands 1,077 (D)
 Switzerland 649 (D)
 United Kingdom 20,373 2,467
Latin America and Other Western Hemisphere 1,607 (D)
 South and Central America 182 (D)
 Other Western Hemisphere 1,425 (D)
 Of which:
 United Kingdom Islands, Caribbean 713 (D)
Africa (D) 0
Middle East 1,738 (D)
 Of which:
 Israel (D) (D)
Asia and Pacific 11,469 945
 Of which:
 Australia 9,032 (D)
 China (D) (D)
 Hong Kong 623 (D)
 Japan 1,544 825
United States (1) (D) (D)
Addenda:
 European Union (15) (2) 37,779 6,211
 OPEC (3) 162 (D)

 Wholesale
 trade Retail trade

 (3) (4)

 All countries 1,086 941
Canada 22 (D)
Europe 728 45
 Of which:
 Belgium (D) (D)
 France (D) 0
 Germany 14 (D)
 Ireland 0 (D)
 Netherlands (D) 0
 Switzerland (D) (D)
 United Kingdom 130 (D)
Latin America and Other Western Hemisphere 43 (D)
 South and Central America (D) (D)
 Other Western Hemisphere (D) (D)
 Of which:
 United Kingdom Islands, Caribbean 11 (D)
Africa (D) 0
Middle East (D) (D)
 Of which:
 Israel 0 (D)
Asia and Pacific 282 (D)
 Of which:
 Australia (D) (D)
 China 0 0
 Hong Kong (D) (D)
 Japan 155 (D)
United States (1) (D) (D)
Addenda:
 European Union (15) (2) 500 (D)
 OPEC (3) (D) 0

 Depository
 Information institutions

 (5) (6)

 All countries 9,236 4,864
Canada 805 (D)
Europe (D) 4,282
 Of which:
 Belgium 0 0
 France (D) 0
 Germany (D) (D)
 Ireland (D) (D)
 Netherlands (D) 0
 Switzerland (D) 0
 United Kingdom 554 (D)
Latin America and Other Western Hemisphere (D) (D)
 South and Central America (D) (D)
 Other Western Hemisphere (D) 0
 Of which:
 United Kingdom Islands, Caribbean (D) 0
Africa (D) 0
Middle East (D) 0
 Of which:
 Israel 0 0
Asia and Pacific (D) (D)
 Of which:
 Australia (D) 0
 China (D) 0
 Hong Kong 0 0
 Japan 131 (D)
United States (1) (D) (D)
Addenda:
 European Union (15) (2) 1,438 4,282
 OPEC (3) (D) 0

 Finance
 (except Real
 depository estate
 institutions) and
 and rental and
 insurance leasing

 (7) (8)

 All countries 23,511 2,817
Canada 2,351 563
Europe (D) 727
 Of which:
 Belgium (D) (D)
 France (D) (D)
 Germany (D) 540
 Ireland (D) (D)
 Netherlands (D) (D)
 Switzerland (D) (D)
 United Kingdom (D) 117
Latin America and Other Western Hemisphere 696 (D)
 South and Central America (D) (D)
 Other Western Hemisphere (D) (D)
 Of which:
 United Kingdom Islands, Caribbean (D) (D)
Africa 0 0
Middle East (D) (D)
 Of which:
 Israel (D) 0
Asia and Pacific 1,834 1,073
 Of which:
 Australia 1,759 594
 China (D) (D)
 Hong Kong (D) (D)
 Japan (D) 28
United States (1) (D) 0
Addenda:
 European Union (15) (2) (D) 698
 OPEC (3) (D) 126

 Professional,
 scientific,
 and technical Other
 services industries

 (9) (10)

 All countries 1,955 8,429
Canada 244 1,282
Europe 1,356 6,774
 Of which:
 Belgium (D) (D)
 France (D) (D)
 Germany 20 (D)
 Ireland (D) (D)
 Netherlands 527 (D)
 Switzerland 3 (D)
 United Kingdom 659 255
Latin America and Other Western Hemisphere (D) (D)
 South and Central America (D) (D)
 Other Western Hemisphere (D) (D)
 Of which:
 United Kingdom Islands, Caribbean (D) 0
Africa (D) 0
Middle East (D) (D)
 Of which:
 Israel (D) (D)
Asia and Pacific 343 107
 Of which:
 Australia (D) (D)
 China (D) (D)
 Hong Kong (D) (D)
 Japan 227 7
United States (1) (D) (D)
Addenda:
 European Union (15) (2) 1,352 6,369
 OPEC (3) (D) (D)

D Suppressed to avoid disclosure of data of individual companies.

(1.) The United States is the country of ultimate beneficial owner for
businesses newly acquired or established by foreign investors that are
ultimately owned by persons located in the United States (see the box
"Key Terms").

(2.) The European Union (15) comprises Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain, Sweden, and the United Kingdom.

(3.) OPEC is the Organization of Petroleum Exporting Countries. Its
members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria,
Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

NOTES. Data for 2003 are revised. For investments in which more than
one investor participated, each investor and each investor's outlays
are classified by the country of each individual ultimate beneficial
owner.

This table presents the major regions, the European Union, OPEC, and
the following countries: Australia, Canada, China, France, Germany,
Hong Kong, Japan, the Netherlands, Switzerland, the United Kingdom, and
the United States. In addition, it presents any country whose total
outlays for 2003 were greater than $500 million.

Table 7.2. Investment Outlays, Country of Ultimate Beneficial Owner by
Industry of U.S. Business Enterprise, 2004

[Millions of dollars]

 All
 industries Manufacturing

 (1) (2)

 All countries 79,820 17,178
Canada 32,378 1,395
Europe 39,424 13,664
 Of which:
 France 4,661 1,083
 Germany 5,020 4,158
 Netherlands 253 167
 Switzerland 3,523 770
 United Kingdom 24,166 6,273
Latin America and Other Western Hemisphere 1,418 (D)
 South and Central America (D) (D)
 Other Western Hemisphere (D) 0
Africa (D) 0
Middle East (D) 0
 Of which:
 United Arab Emirates (D) 0
Asia and Pacific 4,800 (D)
 Of which:
 Australia 2,885 297
 China (D) 0
 Hong Kong 115 (D)
 Japan 986 524
 Singapore (D) 0
United States (1) (D) (D)
Addenda:
 European Union (25) (2) 35,264 12,549
 OPEC (3) 852 0

 Wholesale
 trade Retail trade

 (3) (4)

 All countries 951 3,055
Canada 478 (D)
Europe 457 489
 Of which:
 France (D) 0
 Germany (D) 0
 Netherlands 0 0
 Switzerland 0 (D)
 United Kingdom 234 0
Latin America and Other Western Hemisphere 0 0
 South and Central America 0 0
 Other Western Hemisphere 0 0
Africa (D) 0
Middle East 0 0
 Of which:
 United Arab Emirates 0 0
Asia and Pacific (D) (D)
 Of which:
 Australia 0 0
 China (D) 0
 Hong Kong 0 0
 Japan (D) (D)
 Singapore 0 0
United States (1) 0 0
Addenda:
 European Union (25) (2) 457 208
 OPEC (3) 0 0

 Depository
 Information institutions

 (5) (6)

 All countries 3,102 14,095
Canada 570 (D)
Europe 1,198 13,458
 Of which:
 France (D) (D)
 Germany 0 0
 Netherlands (D) 0
 Switzerland (D) 0
 United Kingdom 1,154 (D)
Latin America and Other Western Hemisphere 0 0
 South and Central America 0 0
 Other Western Hemisphere 0 0
Africa 0 0
Middle East 100 0
 Of which:
 United Arab Emirates 0 0
Asia and Pacific (D) (D)
 Of which:
 Australia (D) 0
 China 0 0
 Hong Kong (D) 0
 Japan 52 (D)
 Singapore 0 0
United States (1) (D) 0
Addenda:
 European Union (25) (2) 1,190 13,458
 OPEC (3) (D) 0

 Finance
 (except Real
 depository estate
 institutions) and
 and rental and
 insurance leasing

 (7) (8)

 All countries 24,904 4,823
Canada 17,525 806
Europe 5,709 2,811
 Of which:
 France 1,838 (D)
 Germany 0 634
 Netherlands (D) 78
 Switzerland (D) (D)
 United Kingdom 2,819 592
Latin America and Other Western Hemisphere (D) 0
 South and Central America (D) 0
 Other Western Hemisphere (D) 0
Africa 0 0
Middle East (D) 635
 Of which:
 United Arab Emirates 0 (D)
Asia and Pacific 1,176 372
 Of which:
 Australia 988 (D)
 China 0 0
 Hong Kong (D) 0
 Japan (D) 14
 Singapore 0 0
United States (1) (D) 0
Addenda:
 European Union (25) (2) 4,661 1,362
 OPEC (3) (D) 835

 Professional,
 scientific,
 and technical Other
 services industries

 (9) (10)

 All countries 4,048 7,664
Canada 1,897 6,720
Europe 1,237 402
 Of which:
 France (D) 0
 Germany 0 (D)
 Netherlands 0 0
 Switzerland 8 227
 United Kingdom (D) (D)
Latin America and Other Western Hemisphere 0 0
 South and Central America 0 0
 Other Western Hemisphere 0 0
Africa 0 0
Middle East 0 (D)
 Of which:
 United Arab Emirates 0 (D)
Asia and Pacific 914 (D)
 Of which:
 Australia (D) (D)
 China (D) 0
 Hong Kong 0 0
 Japan 0 (D)
 Singapore (D) 0
United States (1) 0 385
Addenda:
 European Union (25) (2) 1,204 175
 OPEC (3) 0 (D)

D Suppressed to avoid disclosure of data of individual companies.

(1.) The United States is the country of ultimate beneficial owner for
businesses newly acquired or established by foreign investors that are
ultimately owned by persons located in the United States (see the box
"Key Terms").

(2.) The European Union (25) comprises the European Union (15) whose
member countries are listed in footnote 2 of table 7.1 and the 10
countries--Cyprus, the Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovakia, and Slovenia--that joined the Union
in May 2004. Outlays include all investments made in 2004, even it the
transactions occurred before the entry of the country into the European
Union.

(3.) OPEC is the Organization of Petroleum Exporting Countries. Its
members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria,
Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

NOTES. Data for 2003 are revised. For investments in which more than
one investor participated, each investor and each investor's outlays
are classified by the country of each individual ultimate beneficial
owner.

This table presents the major regions, the European Union, OPEC, and
the following countries: Australia, Canada, China, France, Germany,
Hong Kong, Japan, the Netherlands, Switzerland, the United Kingdom, and
the United States. In addition, it presents any country whose total
outlays for 2003 were greater than $500 million.

Key Terms

Foreign direct investment in the United States is ownership or control, directly or indirectly, by one foreign person of 10 percent or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise.

A U.S. affiliate is a U.S. business in which there is foreign direct investment.

A person is any individual, corporation, branch, partnership, associated group, association, estate, trust, or other organization, and any government (including any corporation, institution, or other entity or instrumentality of a government).

A foreign person is a person that resides outside the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, and all U.S. territories and possessions.

The ultimate beneficial owner (UBO) 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 foreign parent is the first foreign person in the affiliate's ownership chain. Unlike the foreign parent, the UBO of an affiliate may be located in the United States. The UBO of each U.S. affiliate is identified to ascertain the person that ultimately owns or controls the U.S. affiliate and that therefore ultimately derives the benefits from ownership or control.

Data on Foreign Direct Investment in the United States

In addition to the data on new foreign direct investments presented in this article, BEA collects and publishes two other broad sets of data on foreign direct investment in the United States: Financial and operating data of U.S. affiliates and balance-of-payments and direct-investment-position data.

Financial and operating data of U.S. affiliates are published at both the enterprise level and the establishment level. Detailed enterprise-level financial and operating data were most recently published in "Operations of U.S. Affiliates of Foreign Companies: Preliminary Results from the 2002 Benchmark Survey" in the August 2004 SURVEY OF CURRENT BUSINESS; the article includes a description of the three types of data. Summary estimates for 2003 are presented in the April 19, 2005, news release "Summary Estimates for Multinational Companies: Employment, Sales, and Capital Expenditures for 2003,' which is available on the BEA's Web site. Financial and operating data at the establishment level are available for selected years as a result of a project that links BEA's enterprise data for U.S. affiliates with the establishment data for all U.S. companies from the Bureau of the Census. The most recent data are published in Foreign Direct Investment in the United States: Establishment Data for 1997, which is available on BEA's Web site.

The balance-of-payments and direct-investment-position data were published in "The International Investment Position of the United States at Yearend 2003" and "Direct Investment Positions for 2003: Country and Industry Detail" in the July 2004 issue of the SURVEY, in "Foreign Direct Investment in the United States: Detail for Historical Cost Position and Related Capital and Income Flows, 2003" in the September 2004 issue, and in "U.S. International Transactions, 2004" in the April 2005 issue. Revised and updated data will be published in the July and September 2005 issues.

(1.) According to data from Thomson Financial Services, the total volume of worldwide mergers and acquisitions increased more than 40 percent in 2004.

(2.) Capital inflows, unlike the data on investment outlays in this article, include financing of both existing and new U.S. affiliates. For preliminary estimates of these flows for 2004, see Christopher L. Bach, "U.S. International Transactions, 2004," SURVEY OF CURRENT BUSINESS 85 (April 2005): 24-68; revised estimates will be published in the July SURVEY.

(3.) Thomas W. Anderson, "Foreign Direct Investment in the United States: New Investment in 2003" SURVEY 84 (June 2004): 59-66.

(4.) The number of new U.S. businesses established is not the same as the number of "greenfield" investments, which typically refers to the construction of new plants or other business facilities. First, direct purchases of U.S. real estate--which often involve purchases of existing office buildings, hotels, retail stores, shopping centers, or other property--are included in the "established" measure but are not considered "greenfield" investments. Second, new plants that are built by existing U.S. affiliates are considered "greenfield" investments, but they are included in these data as "established" businesses only if they are set up as separate legal entities.

(5.) Survey forms for both the full reports (BE-13) and the partial reports (BE-13, supplement C) are available on BEA's Web site at <www.bea.gov/ bea/surveys/fdiusurv.htm>.

(6.) Each year, BEA receives survey reports after the preliminary estimates are published. To make the preliminary estimates as accurate as possible, BEA augments the reported data with estimates for late reports. An estimate of each of the data items covered by the survey is prepared, and these estimates cover both full and partial reports. BEA also estimates the number of full reports, but it does not estimate the number of partial reports, because this number fluctuates considerably from year to year.

The data presented in this article are from BEA's survey of new foreign direct investment in the United States that was conducted under the supervision of Dorrett E. Williams, with contributions by Constance T. Deve, Edward J. Kozerka, Ronald L. McNeil, and Daniel K. Wakjira. Karen E. Poffel and Neeta B. Kapoor programmed the tables.