According to UNCTAD'sWorld Investment Report 2023, FDI flows to the U.S. stood at USD 285 billion in 2022. Albeit a 26.5% decrease year-on-year (due to the halving of cross-border M&A values), the U.S. were still the biggest recipient of FDI worldwide. The decline in mergers and acquisitions directly influenced the equity portion of FDI, experiencing a 35% drop. Inflows notably decreased in the chemicals, computer and electronic products, and finance sectors. However, the information and communication industry maintained its status as the largest recipient, with a USD 51 billion influx, marking a 21% rise from 2021. For the year as a whole, a total of 2,075 greenfield investment announcements were made, the largest number globally. The U.S. FDI stock reached USD 10.46 trillion in 2022, around 41.1% of the country’s GDP. According to data from the U.S. International Trade Administration, the main investing countries in the U.S. are Japan (USD 721 billion), Canada (USD 607.2 billion), Germany (USD 498.6 billion), and the United Kingdom (USD 439 billion), with Europe as a whole accounting for USD 2.8 trillion. Foreign direct investment in the United States remains centred on the manufacturing sector, representing 42.4% of the total investment. Additionally, substantial investments are observed in finance and insurance (10.6%) as well as wholesale trade (9.7%). The latest data available from the OECD shows that in the first semester of 2023, FDI inflows to the U.S. totalled USD 189.5 billion, marking an 8.4% increase compared to the same period one year earlier.
Investing through FDI in the United States offers several advantages, including access to a large and diverse market, a stable political environment, advanced infrastructure, a skilled labour force, and robust legal protections for investors. Additionally, the U.S. has a culture of innovation and entrepreneurship, fostering opportunities for growth and development. However, there are also potential disadvantages to consider, including high operational costs, complex regulatory requirements, fierce competition, and potential cultural and communication challenges when operating in a diverse and dynamic market like the U.S. Additionally, political and policy changes can impact investment conditions and may introduce uncertainty for foreign investors. On 15 September 2022, President Joe Biden issued an Executive Order providing formal guidance to the Committee on Foreign Investment in the United States (CFIUS) on factors to be considered when conducting national security reviews of FDI. Executive Order 14083 “Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States” directs CFIUS to consider five specific factors: i) the transaction's effect on the resilience of critical U.S. supply chains; ii) the transaction's effect on U.S. technological leadership in specified industries; iii) investment trends that may have consequences for a given transaction's impact on national security; iv) cybersecurity risks; v) risks to U.S. persons' sensitive data.
The U.S. ranks 3rd among the 132 economies on theGlobal Innovation Index 2023,25th out of 184 countries on the2023 Index of Economic Freedom, and 24th in the latest Corruption Perception Index.
FAQs
The foreign direct investment in the United States position increased $216.8 billion to $5.25 trillion at the end of 2022 from $5.04 trillion at the end of 2021. The increase mainly reflected a $142.2 billion increase in the position from Europe, with the largest increases from the United Kingdom and Germany.
Which countries invest most in the USA? ›
Together, Japan, Germany, Canada and the United Kingdom provide more than half of all foreign direct investment in the United States.
Does the US allow foreign investment? ›
become a U.S. resident or U.S. citizen. Ultimately, there are not outright restrictions on foreign investors owning real estate, but instead conditions and limitations at the state level.
Why is foreign investment important in the US? ›
Invest in America. Foreign direct investment (FDI) plays a major role in the U.S. economy, both as a key driver of the economy and an important source of innovation, exports and jobs. The United States has always provided foreign investors a stable and welcoming market.
Do foreign investments threaten the American economy? ›
To the contrary, the data demonstrate that foreign investment helps the U.S. economy. Official government statistics, unadjusted for inflation, show that total foreign investment in the U.S passive and direct reached 1.7 t rillion last year.
Who is the biggest investor in the USA? ›
List of the Largest Investors with offices in United States
- GIC | $360B.
- The Carlyle Group | $201B.
- Goldman Sachs Merchant Banking Division | $150B.
- TPG Capital | $107B.
- IFM Investors | $101B.
- Bezos Expeditions | $100B.
- Silver Lake | $79B.
- Intermediate Capital Group | $50B.
U.S. largest sources of FDI 2022. In 2022, no country had a higher foreign direct investment (FDI) position in the United States than Japan, followed by the United Kingdom and Canada.
How much of the United States is owned by foreign investors? ›
According to the latest data from the U.S. Department of Agriculture, foreign investors and companies own over 40 million acres of U.S. agricultural land, which is about 1.8% of all land in the U.S. and 3.1% of all privately held agricultural land.
Why are foreigners buying U.S. assets? ›
Indeed, they may choose to purchase U.S. portfolio investments in order to benefit from the highly developed, liquid, and efficient U.S. financial markets, and from the strong corporate governance and institutions in the United States -- although both of these perceived strengths of the United States have shown some ...
Does the U.S. tax foreign investments? ›
Key Takeaways
When Americans buy stocks or bonds from foreign-based companies, any investment income (interest, dividends) and capital gains are subject to U.S. income tax and taxes levied by the company's home country.
The United States has been ranked as the top destination for foreign direct investment for the 12th consecutive year according to Kearney's Global Business Policy Council's 2024 Foreign Direct Investment (FDI) Confidence Index .
Why do U.S. companies invest overseas? ›
International investment means well-paying jobs for American workers in the United States. Investing in foreign markets provides U.S. companies with stable sources of income, new growth opportunities, and supports the expansion of employment at headquarter offices in the United States.
Is foreign investment a good thing? ›
FDI can foster and maintain economic growth, in both the recipient country and the country making the investment. On one hand, developing countries have encouraged FDI as a means of financing the construction of new infrastructure and the creation of jobs for their local workers.
Which country invests most in the USA? ›
According to data from the U.S. International Trade Administration, the main investing countries in the U.S. are Japan (USD 721 billion), Canada (USD 607.2 billion), Germany (USD 498.6 billion), and the United Kingdom (USD 439 billion), with Europe as a whole accounting for USD 2.8 trillion.
What is a disadvantage of foreign investment? ›
Moreover, FDI can also create dependency on foreign companies and technologies, hindering the development of local industries and limiting their competitiveness. This can lead to the domination of certain industries by foreign companies, further reducing the host country's control over its own economy.
What is the level of foreign investment in the United States? ›
The foreign direct investment in the United States position increased $216.8 billion to $5.25 trillion at the end of 2022 from $5.04 trillion at the end of 2021.
What country does the United States give the most money to? ›
In 2022, Ukraine surpassed Israel as the top U.S. aid recipient, taking in more than $12 billion after Russia launched its invasion in February of that year. That amounts to more than 25% of all aid designated for specific countries in 2022.
Which countries can invest in US stock market? ›
There is no citizenship requirement for owning stocks of American companies. While U.S. investment securities are regulated by U.S. law, there are no specific provisions that forbid individuals who are not citizens of the U.S. from participating in the U.S. stock market.
How much foreign money is invested in the US? ›
The foreign direct investment in the United States position increased $216.8 billion to $5.25 trillion at the end of 2022 from $5.04 trillion at the end of 2021.
How much has China invested in the USA? ›
U.S. foreign direct investment (FDI) in China (stock) was $126.1 billion in 2022, a 9.0 percent increase from 2021. U.S. direct investment in China is led by manufacturing, wholesale trade, and finance and insurance. China's FDI in the United States (stock) was $28.7 billion in 2022, down 7.2 percent from 2021.
