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Featured Indicator: Foreign Direct Investment

October 21, 2021 Jessica Tagliafierro

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The US Bureau of Economic Analysis (BEA) tracks information related to foreign direct investment (FDI) in the United States in terms of US affiliates of foreign companies. The BEA conducts mandatory surveys of US affiliates of foreign multinational enterprises to collect data needed to analyze the characteristics, performance, and economic impact of these firms.

Data related to the financial structure and operations of US affiliates of foreign parents is available on the BEA’s website.

What is the data telling us?

A variety of data is available, including FDI activity by industry and state. As of 2019, the most recent year for which data is available, US affiliates of foreign multinational enterprises had over $15.3 trillion in total assets and over 7.9 million total employees. This is a 33% increase in total assets and a 50% increase in total employees since 2009, indicating that employment at these firms is growing at a faster rate than total assets.Line Chart Title: Majority-Owned US Affiliates, Total Assets, and Employees, 2009-2019 The chart shows that the number of employees started off at just over 5,000 in 2009 and grew steadily to about 8,000 in 2019. Total assets started off at just under $12 million in 2009 and grew until 2014, when it dropped slightly through 2016. Then in 2017, it started growing again to a little over $15 million in 2019. Data Source: BEA

At the regional level, employment in US affiliates of foreign multinational enterprises is concentrated in the southeast with Florida, Georgia, and North Carolina accounting for the highest portions of total employment.

Column Table Title: Majority-Owned US Affiliates, Employment by Region (2019) Southeast: 1,978 Great Lakes: 1,351 Mideast: 1,321 Far West: 1,176 Southwest: 879 Plains: 497 New England: 478 Rocky Mountains: 210 Data Source: BEA

By industry, manufacturing accounts for the highest number of jobs nationally, at 36%. Retail trade is also a driver of employment at 12%. This is followed by wholesale trade (9%), professional, scientific, and technical services (6%), finance and insurance (5%), information (4%), and real estate (1%). The remainder (27%) is in other industries.

Regionally, finance and insurance is particularly prevalent in the mideast, real estate in the southeast, and information in the far west of the country.

Pie Chart Title: Majority-Owned US Affiliates, Employment by Industry (2019) Manufacturing: 36% Other Industries: 27% Retail Trade: 12% Wholesale Trade: 9% Professional, Scientific, and Technical Services: 6% Finance and Insurance: 5% Information: 4% Real Estate, Rental and Leasing: 1% Source: BEA

Stacked Column Chart Title: Majority Owned US Affiliates, Employment by Industry and Region (2019) Each piece of the stacked columns don't have specific numbers shown. The visual interpretation of the data follows: Manufacturing: The majority of employment is in the Southeast and Great Lakes. The Rocky Mountains and New England have the smallest share of employment. Wholesale Trade: The majority of employment is in the Southeast and Far West. The Rocky Mountains and New England have the smallest share of employment. Retail Trade: The majority of employment is in the Southeast, Far West, and Mideast. The Rocky Mountains and the Plains have the smallest share of employment. Information: The majority of employment is in the Mideast, Far West, and Southeast. The Rocky Mountains and New England have the smallest share of employment. Finance and Insurance: The majority of employment is in the Mideast. The Rocky Mountains and the Plains have the smallest share of employment. Real Estate and Rental and Leasing: The majority of employment is in the Southeast and Mideast. The Rocky Mountains the New England have the smallest share of employment. Professional, Scientific, and Technical Services: The majority of employment is in the Mideast and Far West. The Rocky Mountains and the Plains have the smallest share of employment. Other Industries: The majority of employment is in the Southeast and Far West. The Rocky Mountains and New England have the smallest share of employment. Data Source: BEA

Why is this important?

Understanding trends in foreign direct investment is important to economic developers because it brings many economic benefits to the region and community within which it occurs.

FDI increases the creation of capital within a community, thereby improving local supply chains, productivity, and increasing multiplier impacts. This article provides just a brief snapshot of the FDI data that is available through the BEA.

For more information, please visit the BEA website.

 

Image Source: Adobe Spark and Camoin Associates

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