07/03/2009

News / The State Department, Open Investment, and American Jobs

Foreign direct investment (FDI) is an important source of economic growth and job creation in the United States and around the globe.

In the past decade, the stock of U.S. direct investment abroad has more than tripled (increasing from $871 billion in 1997 to $2.8 trillion in 2007).

* In 2006, FDI directly or indirectly contributed to 8.91% of U.S. GDP ($1.17 trillion).

o Inbound FDI totaled $236.7 billion (1.8% of GDP).
o U.S. companies earned $352 billion from overseas direct investments and remitted $90.5 billion (0.69% of GDP) to U.S. parent firms in the form of dividends.
o 19% of U.S. exports ($203 billion, 1.54% of GDP) were shipped to foreign subsidiaries of U.S. firms.
o 20% of U.S. exports ($214 billion, 1.62% of GDP) were shipped from U.S. affiliates of foreign firms to their parents overseas.

* In 2006 U.S. affiliates of foreign companies employed 5.3 million Americans.
* U.S. affiliates of foreign firms spent $395.8 billion (3% of GDP) compensating U.S. employees and $34.3 billion (0.26% of GDP) on research and development.
* U.S. exports support millions of American jobs. About 19.9% of all jobs in America’s manufacturing sector depend on exports.

The United States has a significant stake, as both the world's largest source and recipient of foreign direct investment, in working with our economic partners both multilaterally and bilaterally to implement policies that facilitate global investment flows. The State Department encourages nondiscriminatory, open, and market-oriented environments for U.S. investment abroad through a wide range of bilateral and multilateral initiatives, including the Organization for Economic Cooperation and Development (OECD) Freedom of Investment project, the G-8 Heiligendamm process, the UN Conference on Trade and Development (UNCTAD), and the Asia-Pacific Economic Cooperation forum (APEC). The negotiation of bilateral investment treaties (BITs) establishes rules that protect the rights of American investors abroad and provide market access for future American investment.

An open investment climate helps ensure that American citizens continue to reap the benefits associated with inward investment. Through its role as a member of the Committee on Foreign Investment in the United States (CFIUS), the inter-agency panel which reviews the national security implications of certain cross-border mergers and acquisitions (M&As), the State Department, working with other CFIUS agencies, makes recommendations and develops consensus positions on such transactions, seeking to ensure protection of U.S. national security interests without imposing unnecessary burdens on foreign investment which is vital to U.S. prosperity. In 2008, CFIUS concluded action on more than 150 transactions, reflecting over $200 billion in inward U.S. investment. Mergers and acquisitions of existing U.S. firms accounted for the vast majority (92%) of new FDI outlays in 2007.

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