Inbound and Outbound U.S. Direct Investment With Leading Partner Countries Web version:

This article surveys trends in U.S. inbound and outbound foreign direct investment (FDI) during 2000-2005. The article examines the major country and regional destinations for U.S. direct investment abroad (USDIA), and foreign direct investment in the United States (FDIUS). After a brief survey of total inbound and outbound FDI, trends are examined by region and by the most significant developed and developing country investment partner countries. Throughout the paper, the analysis pays particular attention to the multinational corporations that are the source of most FDI, along with particularly important mergers, acquisitions, and greenfield investments. By far the largest U.S. FDI partner is Europe, particularly the United Kingdom, Germany, and the Netherlands. Canada ranks second in terms of its overall FDI relationship with the United States. One-third of cumulative USDIA, equal to $623 billion in 2005, is invested in holding companies in a small number of countries, primarily in Europe and the Caribbean, making it difficult to track the final country and industry destinations of this capital, and limiting an understanding of the effects of U.S. FDI. Mexico is by far the most important FDI partner country among developing countries, for both USDIA and FDIUS. 2 USDIA is the value of U.S. investors ’ equity in, and net outstanding loans to, their foreign affiliates. Direct investment is considered to be “investment in which a resident of one country obtains a lasting interest in, and a degree of influence over the management of, a business enterprise in another country. ” The U.S. statistical definition, and the global standard adopted by the IMF, define such an interest as the ownership or control by one foreign resident of 10 percent or more of the equity shares in a foreign company. Ownership interest of less than 10 percent is defined as portfolio investment, and not included in the statistic