July 26, 2021
The U.S. direct investment abroad position or cumulative level of investment rose $244.9 billion to $6.15 trillion at the end of 2020 from $5.91 trillion at the end of 2019, according to statistics released by the Bureau of Economic Analysis (BEA). The increase was attributable to a $158.8 billion rise in the position in Europe, primarily in the United Kingdom and the Netherlands. Notably, holding company affiliates owned by U.S. manufacturers contributed the most to the increase.
At the end of 2020, foreign direct investment in the United States, showed there was an increase of $187.2 billion to $4.63 trillion from $4.44 trillion at the conclusion of 2019. Thus, resulting in a $119.2 billion increase in the position from Europe, primarily Germany. Affiliates in manufacturing, finance and insurance, and wholesale trade had the largest increases.
U.S. direct investment abroad
Multinational enterprises (MNEs) from the United States invest in virtually every country, although their investment in affiliates in five countries accounted for more than half of the overall position by the end of 2020. The United Kingdom had the highest level of US direct investment abroad ($890.1 billion), followed by the Netherlands ($844.0 billion) and Luxembourg ($759.4 billion). The top five were Canada ($422.2 billion) and Ireland ($390.3 billion).
Investment in holding companies was highly concentrated in the industry of the directly-owned foreign affiliate, accounting for over half of the overall position in 2020. Most holding company affiliates, which are owned by U.S. parents in a variety of industries, own other foreign affiliates in a number of industries. Manufacturing MNEs accounted for 51.6% of the position by industry of the US parent, followed by MNEs in banking and insurance (13.9%).
In 2020, U.S. MNEs received $452.0 billion from their total foreign investment, a 13.0 percent decline from 2019. Dividends and repatriation profits fell by $124.6 billion, or 30.7%.
Foreign direct investment in the United States
At the end of 2020, five countries accounted for more than half of the total position based on the country of the foreign parent. With a position of $647.7 billion at the end of 2020, Japan remained the top investment country. Five countries accounted for more than half of the overall position depending on the country of the foreign parent at the end of 2020. Japan remained the top investment country, with a position of $647.7 billion at the end of 2020.
Japan ($679.0 billion) and Canada ($569.8 billion) remained the top investment countries by country of ultimate beneficial owner (UBO) at the end of 2020. Germany ($564.3 billion) jumped one spot from 2019 to take third place, with the United Kingdom ($480.8 billion) falling to fourth. France ($315.0 billion) moved up one position from 2019 to reach the top five investment countries at the end of 2020. According to the UBO, investment from the Netherlands and Luxembourg was significantly lower than investment from the nation of foreign parent, indicating that most of the investment from foreign parents in these countries was ultimately owned by investors in other countries.
Foreign direct investment in the United States was concentrated in the manufacturing sector, accounting for 40.3 percent of the total. There was also significant investment in banking and insurance (12.2%), as well as wholesale commerce (11.1%).
Foreign MNEs received $151.8 billion in total income from their cumulative investment in the United States in 2020, a 24.1% decline from 2019.
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