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Foreign direct investment (FDI) in the United States

FDI in Figures

According to UNCTAD's 2022 World Investment Report, FDI flows to the U.S. rebounded strongly by 143.6%, from USD 151 billion in 2020 to USD 367 billion in 2021, mainly due to a surge in cross-border M&As. Reinvested earnings amounted to USD 200 billion in 2021, the highest level ever recorded. They were spread across many services industries, including information and communication, trade, transport and storage, finance and insurance and professional services. The U.S. FDI stock in 2021 reached USD 13,619 billion. Equity investments were up by 54%, and new greenfield project announcements also increased (+28%) to USD 86 billion. The country remained the world’s largest recipient of FDI (followed by China), thanks to its large consumer base, a predictable and transparent justice system, a productive workforce, a highly developed infrastructure and a business environment that fosters innovation. According to data from the U.S. International Trade Administration, FDI accounts for nearly 16% of U.S. business research and development (R&D) and directly supports almost 8 million jobs in the country. The main investing countries in the U.S. are Japan, Germany, Canada, the United Kingdom, Ireland and France. Most of these investments are in manufacturing, financial and insurance activities, and trade and maintenance. In 2021, California received the most investment, followed by Massachusetts and New York (BEA). The latest data available from OECD shows that in the first semester of 2022, FDI inflows to the U.S. decreased by USD 100 billion, amounting to around USD 74 billion in Q2 2022 (compared with nearly USD 124 billion in Q4 2021).

According to the latest The Economist’s Business Environment ranking, the United States is a top performer, occupying the 6th position out of 82 countries. The country remains the world's leading economic power, the largest international financial centre, and the third-largest country in the world in terms of population. The United States is one of the countries with the best regulatory performance in paying taxes. On the down side, there are the increasing inequalities and the polarised political landscape, as well as a high level of household debt. Furthermore, the Foreign Investment Risk Assessment Modernization Act (FIRRMA) significantly expanded the review authority of the Foreign Investment Commission (CFIUS) on the grounds of national security, a matter that has been seen as one of the major causes of the drop in Chinese investments towards the U.S. in recent years (as many Chinese investing companies are state-owned).

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 95,882387,780285,057
FDI Stock (million USD) 10,292,40313,056,38210,461,684
Number of Greenfield Investments* 1,6551,6912,075
Value of Greenfield Investments (million USD) 69,27595,635163,858

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors United States OECD Germany
Index of Transaction Transparency* 7.0 6.5 5.0
Index of Manager’s Responsibility** 9.0 5.3 5.0
Index of Shareholders’ Power*** 9.0 7.3 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in the United States

Strong Points

The United States' strong points include:

  • The United States offers the largest consumer market on earth with a GDP of $23 trillion and 333.9 million people.
  • The US has the first world economy, solid and performance in various sectors
  • A dominant position in R&D
  • A flexible and reactive employment market
  • A very good quality of national statistics
  • 70% of public debt held by Americans
  • The American workforce has a comparatively high level of qualifications and is considered to be one of the most productive and innovative in the world
  • The dollar is central to the world economic system
  • Notably thanks to the shale gas, the country is on his way to energetic autonomy  
  • The development of regional ‘clusters’ (collections of companies in the same activity sector in a geographic area) is very attractive to foreign investors
Weak Points

Weak points for FDI in the US:

  • The US market is very competitive. Consumers are accustomed to have many choices and are not necessarily brand loyalists
  • A high number of Americans are unemployed and outside the employment market
  • A decreasing productivity
  • High public debt
  • Polarised political landscape
  • Strong socio-economic disparities
  • Infrastructure network is partially in decay
  • A risk of explosion of the student loan bubble
  • Strong dollar increases the trade deficit
Government Measures to Motivate or Restrict FDI
The US is the world's largest recipient of foreign direct investment (FDI). The US government policies on taxation and regulation offer foreign investors wide freedom. Nevertheless investments controlled by foreign governments may be subject to restrictions.

Foreign investment is reviewed by the Committee on Foreign Investment in the United States (CFIUS) to consider national security risks that may be present in a foreign investment in a US business. In 2018, Congress passed, and the President signed into law,  the Foreign Investment Risk Review Modernisation Act (FIRRMA) which aims to modernise and reinforce the Committee of Foreign investments (CFIUS) in order to watch investments that may cause problems for the national security of the United States. FIRRMA was finally adopted in February 2020. Until the adoption of FIRRMA, there was no concept of a mandatory filing for any acquisition or investment (controlling or non-controlling). FIRRMA established the requirement of a mandatory filing for investments in 27 specific industries (pilot programme industries) involving so-called ‘critical technologies’, “critical infrastructure” and “sensitive personal data”.
In October 2017, Congress also adopted the United States Foreign Investment Review Act which will allow the Department of Commerce to examine the economic effects of certain foreign investments. Certain sectors are particularly targeted because they are regarded as strategic for the US. And FDI coming from certain countries is being more carefully screened. More information on these decrees is available here.

SelectUSA is a program led by the U.S. Department of Commerce that facilitates and promotes job-creating business investment into the United States. For more information about FDI incentives, click here.
Bilateral investment conventions signed by the United States
The U.S. is a signatory to 47 conventions. The UNCTAD website allows you to visualise and download the list of conventions signed by the United States.

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Latest Update: November 2023

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