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Data Shows Foreign Direct Investment in the US Remained Strong in 2023

April 5, 2024 Angela Hallowell

Colorful rolls of paper currency from many different countries.International companies invested over $133 billion in nearly 2,000 capital investment projects in the United States last year, pouring money into local economies nationwide. Almost 80% of these projects represented new investments, while about 20% represented expansions or co-locations.

Inflation and rising geopolitical tensions threatened the global economy in 2023. However, while total foreign direct investment (FDI) into the US economy fell by around 22% year over year, the total number of investment projects remained relatively constant.This chart shows trends in U.S. inbound foreign direct investment from 2018 through 2023, measured by the number of investment projects and total capital expenditures. The horizontal axis lists the years 2018, 2019, 2020, 2021, 2022, and 2023. Capital expenditures are measured in billions of dollars on the left vertical axis, ranging from 0 to 180 billion dollars. The number of projects is shown on the right vertical axis, ranging from 0 to 2,500 projects. Projects are represented by dark blue vertical bars, and capital expenditures are represented by a green line. In 2018, there are approximately 2,100 inbound FDI projects. Capital expenditures are about 85 billion dollars. In 2019, the number of projects increases slightly to around 2,150. Capital expenditures also rise modestly to approximately 95 billion dollars. In 2020, inbound FDI projects decline to roughly 1,800. Capital expenditures fall more sharply to about 70 billion dollars, marking the lowest level in the period shown. In 2021, the number of projects decreases further to approximately 1,600. Capital expenditures rebound to around 110 billion dollars. In 2022, inbound FDI projects increase to about 2,100, returning to levels similar to 2018 and 2019. Capital expenditures peak during the period at approximately 170 billion dollars. In 2023, the number of projects declines slightly to around 1,900. Capital expenditures decrease from the prior year but remain elevated at approximately 135 billion dollars. Overall, the chart shows that inbound FDI projects declined during 2020 and 2021 before recovering in 2022 and easing slightly in 2023. Capital expenditures dropped sharply in 2020, rebounded strongly in 2021, peaked in 2022, and then moderated in 2023, remaining well above pre-2021 levels. Source: fDi Markets.

South Korean Companies Made Major Investments in the US

FDI came from 68 countries in 2023, but a handful stand out as the most prominent sources. The top five countries alone — the United Kingdom, Switzerland, Germany, Canada, and Japan — account for 51% of all projects announced in 2023. However, when you look at dollars invested, South Korea was by far the biggest source of FDI last year, with companies investing over $21.3 billion into the US economy.

Significant investments made by South Korean companies in 2023 were focused on battery manufacturing for electric vehicles (EVs), including the following:

Renewable Energy and Environmental Technology are Driving Foreign Direct Investment

Given these major investments in the battery/EV sector, it is no surprise that renewable energy and environmental technology projects received the greatest total investments in 2023. Overall, investments in the Environmental Technologies cluster accounted for around $45.5 billion of inbound FDI into the US in 2023, a third of the total investment by dollar value.

The top five subsectors by total capital expenditures are all directly connected to renewable energy:

  1. Batteries
  2. Solar Electric Power
  3. Other Miscellaneous Electrical Equipment and Components
  4. Other Renewable Electric Power Generation
  5. Wind Electric Power

These top five subsectors made up 42% of the total value of international investments last year, over $55.3 billion.This table summarizes the top five foreign direct investment (FDI) subsectors in the United States in 2023, ranked by total capital expenditures. For each subsector, the table lists the number of projects, total capital expenditures, average capital expenditure per project, and the number of companies involved. Dollar amounts are shown in billions or millions of dollars, as noted. Batteries is the largest subsector by total capital expenditures. In 2023, this subsector recorded 24 projects with total capital expenditures of 18.3 billion dollars. The average capital expenditure per project was 761.5 million dollars. A total of 23 companies were involved. Solar electric power is the second-largest subsector. It recorded 46 projects with total capital expenditures of 12.2 billion dollars. The average capital expenditure per project was 264.5 million dollars. There were 24 companies involved. All other electrical equipment and components ranks third. This subsector recorded 57 projects, the highest number among the top five subsectors. Total capital expenditures were 11.8 billion dollars, with an average capital expenditure of 206.2 million dollars per project. A total of 49 companies participated. Other electric power generation, categorized as renewable energy, ranks fourth. This subsector recorded 17 projects with total capital expenditures of 7.4 billion dollars. The average capital expenditure per project was 434.9 million dollars. There were 12 companies involved. Wind electric power ranks fifth. It recorded 5 projects with total capital expenditures of 5.7 billion dollars. This subsector had the highest average capital expenditure per project among the top five, at 1,144.9 million dollars. A total of 5 companies were involved. The final row of the table provides totals across all FDI subsectors, not just the top five. Across all subsectors in 2023, there were 1,972 projects with total capital expenditures of 133.1 billion dollars. The average capital expenditure per project across all subsectors was 67.5 million dollars. In total, 1,547 companies were involved in inbound FDI projects. Source: fDi Markets.

The South and Midwest are Key Destinations for Foreign Direct Investment

Southern and midwestern states drew significant volumes of FDI last year. Overall, Texas attracted the most foreign investment in 2023, with over $20.5 billion of capital expenditures (capex) across 237 projects. When you adjust for Gross Regional Product (GRP), New Mexico, South Carolina, and Indiana attract the most FDI.

Major Foreign Direct Investments in 2023

The following are examples of major foreign investments in the United States in 2023, not including the South Korean investments already listed above:

The latest data is clear: Interest by foreign companies in investing in new or expanded sites in the US remains very strong. This presents an excellent opportunity for economic development organizations seeking new business investment and jobs in their regions to get on these companies’ radars.

Business attraction and marketing efforts can target specific countries and industries and highlight the unique assets and benefits your region offers, such as available land, ease of permitting, business friendly permitting processes, access to a skilled workforce, proximity to major transportation and shipping hubs, and quality of life.

Are you interested in developing an international business investment strategy targeting particular industries? Or are you ready to develop and execute an FDI-focused business attraction and lead generation plan for your community? Camoin Associates can help.

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