Non-US Investment Heroes: Foreign Companies Betting on America

By / 8.7.2013

Foreign Direct Investment (FDI)—investment in the United States by foreign-based companies—has yet to recover to pre-recessionary levels. In 2011, FDI remained 25 percent below 2008 levels, and preliminary 2012 figures suggest an even further drop.

Indeed, almost 6 years after the Great Recession began, the United States continues to wallow in an investment drought. Such weak investment—both from U.S. and non-U.S. based companies—is almost certainly a key factor behind today’s slow-growth economy.

Investment is a critical part of any high-growth strategy. It is the building block for innovation and economic growth. Investment that increases U.S. production— of goods, services and data—creates high-skill, globally competitive jobs and raises incomes.

This report highlights several important facts about foreign investment that shed light on sectors of the U.S. economy. First, energy is one of the fastest growing areas for foreign investment in America, just as it is for U.S.-based company investment. Official data shows foreign direct investment in “petroleum”—oil and gas extraction, refining, and distribution—more than doubled from 2008 to 2011.

Second, our research shows the United States continues to be an important platform for non-U.S. motor vehicle manufacturers. Moderate investment by non-U.S. motor vehicle manufacturers to upgrade and expand existing production lines show the U.S. market continues to be an important part of their business model.

Third, relatively low investment by non-U.S. industrial manufacturers suggests the greatly heralded manufacturing renaissance may not be as robust as some believe. Our research shows companies in this sector engaged in relatively little U.S. investment activity, and in some cases previous U.S. investments were unsuccessful. Such lackluster investment should be considered by policymakers on federal and state levels designing pro-investment growth strategies that target manufacturing.

Finally, a lack of good data on investment from many non-U.S. based companies, particularly those outside of the energy sector, presents a challenge for designing effective U.S. investment policy. Not having access to quality information on the U.S. activities of large non-U.S. companies makes it difficult to why certain companies are investing while others are not.

For this report, PPI considered three categories of investment: energy, motor vehicle, and non-motor vehicle industrial manufacturing. We chose these categories because of their importance to facilitating broader growth in the U.S. economy. We calculated the U.S. capital expenditures for companies in each category in 2011 and 2012, using publicly available financial reports.

This report is part of our “Investment Heroes” series, and follows from our 2012 report “U.S. Investment Heroes: Who’s Betting on America’s Future?” that ranked U.S.-based companies by their 2011 U.S. capital expenditures.

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