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Foreign Direct Investment in the United States: An Economic Analysis, Date: August 15, 2008 1 (August 15, 2008)

handle is hein.tera/crser0128 and id is 1 raw text is: Order Code RS21857 Updated August 15, 2008 CRS Repo for Congress Foreign Direct Investment in the United States: An Economic Analysis James K. Jackson Specialist in International Trade and Finance Foreign Affairs, Defense, and Trade Division Summary Foreign direct investment in the United States1 declined sharply after 2000, when a record $300 billion was invested in U.S. businesses and real estate. In 2007, according to Department of Commerce data, foreigners invested $237 billion. Foreign direct investments are highly sought after by many State and local governments that are struggling to create additional jobs in their localities. While some in Congress encourage such investment to offset the perceived negative economic effects of U.S. firms investing abroad, others are concerned about foreign acquisitions of U.S. firms that are considered essential to U.S. national and economic security. This report will be updated as events warrant. Recent Investments Foreigners invested $237 billion in U.S. businesses and real estate in 2007, according to data published by the Department of Commerce.2 As Figure 1 shows, this represents a slight decrease from the $241 billion invested in 2006. Investments by U.S. firms abroad increased by 38% in 2007 to $333 billion, up sharply from the $36 billion they invested abroad in 2005. The increase in foreign direct investment flows, mirrors a turn- around in global flows. According to the United Nations' World Investment Report, global foreign direct investment inflows increased by 27% in 2005 and 38% in 2006 after a slight increase in 2004 and three years of declining flows prior to 2004 that arose from 1 The United States defines foreign direct investment as the ownership or control, directly or indirectly, by one foreign person (individual, branch, partnership, association, government, etc.) of 10% or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise. 15 CFR § 806.15 (a)(1). 2 Sauers, Renee M. and Kristy L. Howell, U.S. International Transactions: First Quarter of 2008. Survey of Current Business, July 2008, p. 67. Direct investment data reported in the balance of payments differ from capital flow data reported elsewhere, because the balance of payments data have not been adjusted for current cost adjustments to earnings. Congressional Research Service The Library of Congress Prepared for Members and Committees of Congress

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