Bureau of Economic Analysis

Economics and Statistics Administration

J. Steven Landefeld, DirectorRosemary D. Marcuss, Deputy Director

U.S. Department of Commerce

Donald L. Evans, Secretary

Kathleen B. Cooper, Under Secretary

 for Economic Affairs

June 2001

 ECONOMICS

 AND STATISTICS ADMINISTRATION

Final Results

From the

1997 Benchmark 

Foreign

Direct

Investment

in the

United States
This volume presents the results of the 1997

Benchmark Survey of Foreign Direct Investment in the United States that was conducted by the U.S. Bureau of EconomicAnalysis (BEA). Benchmark surveys areBEA’s most comprehensive surveys—interms of both the number of companiescovered and the amount of informationgathered. The 1997 survey covered the foreign direct investment universe, which consists of all U.S. business enterprises owned10 percent or more, directly or indirectly, bya foreign person. The last benchmark survey covered 1992.

The survey collected detailed data on the

financial structure and operations of U.S.affiliates of foreign companies in 1997. Thedata include balance sheets, income statements, sales of goods and services, externalfinancial position, employment and compensation of employees, U.S. trade ingoods, research and development expenditures, and U.S. land owned or leased. Thesurvey also collected data on transactionsand positions between U.S. affiliates andtheir foreign parent companies that are the

source data of the official estimates of directinvestment that enter the U.S. national income and product accounts and the U.S. international position and internationaltransactions (or balance of payments) accounts. The data from the survey are disaggregated in a number of ways, including byindustry of U.S. affiliate, by country and industry of ultimate beneficial owner or foreign parent, and, for selected data, by State.

In the 1997 benchmark survey, a new industry classification system that is based on

the North American Industry Classification System (NAICS) was used to classifythe data of the affiliates; in previous surveys, the data were classified by industry using a system based on the StandardIndustrial Classification. The NAICS betterreflects new and emerging industries, industries involved in the production of advanced technologies, and the growth anddiversification of service industries.

The data from the benchmark survey will

be used as the primary basis for expandingto universe levels the data for nonbenchmark years that are collected in BEA’s quarterly and annual cutof

which cover all U.S. affiexemption level. The qulect sample data on baltransactions between Utheir foreign parents, anveys collect sample datstructure and operationFor both types of data, sample affiliates usually trapolating forward thebenchmark survey on thto-year movements in thaffiliates in the sample. Many of the items focollected in the 1997 benalso collected annually, bcollected only in benchmThese items include resement expenditures brokeof funding, the number ered by collective bargaand U.S. exports and improduct and by country origin.


The Bureau of Economic Analysis thanks the

staffs of the U.S. companies that responded tothe 1997 benchmark survey for their efforts incompleting and filing reports and for their cooperation with BEA during the processing andreview of the data.

Gerald A. Pollack, former Associate Director for International Economics, and Ralph

Kozlow, the current Associate Director, provided general guidance for the survey project.R. David Belli, Chief of the International Investment Division (IID), and Obie G. Whichard, Assistant Chief of IID, directed the designof the benchmark survey report forms, theconduct of the survey, and the analysis andpublication of the results.

The Direct Investment in the United States

Branch (DIUSB) under the direction of JamesL. Bomkamp, former Chief of DIUSB, andDavid H. Galler, the current Chief, was primarily responsible for conducting the survey. Joseph F. Cherry III, Chief of the Annual andBenchmark Surveys Section of DIUSB, supervised the editing and processing of the reports.

The following staff processed and edited the

survey: Juris E. Abolins, CheEmily D. Curry, Hien X. DanDeve, Nicole Donnegan, ChrN. Hale, Earl F. Holmes, LonnL. Lefkowitz, Stephanie A. Lewden, Betty K. Maddy, Isabel Demetria A. McCormick, Gremick, Sidney A. Moskowitz, Crone, Ronald L. Ross, WillClarence D. Smith, Marie P. Starnes, Diann L. Vann, Kimyand Dorrett E. Williams.

Juris E. Abolins coordinated 

of the results by DIUSB to enand accuracy. Lonnie HunteMaddy of DIUSB and Dale William J. Zeile of the Reseasisted in the review.

Deanna D. Ibarra, former 

formation Technology Branchcomputer programming for and tabulation. Karen E. Pofthe integrated control file of fvestment in the United Statesand Diane I. Young designe

	

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Acknowledgements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vMethodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–1

Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–2Concepts and Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–3

Direct investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–3Determination of residency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–4The U.S. affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–5The foreign owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–6

Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–7Fiscal Year Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–7Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–8Classification of Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–8

Industry classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–8Country classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M–11

Estimation and General Validity of the Data . . . . . . . . . . . . . . . . M–14

Contents

Number of U.S. Affiliates . . . . . . . . . . . . . . Financial and Operating Data . . . . . . . . . . 

Balance sheets and income statements . . . Gross product . . . . . . . . . . . . . . . . . . . . . . . Sales of goods and services . . . . . . . . . . . . . Employment and compensation of employProperty, plant, and equipment. . . . . . . . . U.S. trade in goods . . . . . . . . . . . . . . . . . . . Research and development. . . . . . . . . . . . . 

Direct Investment Position and Balance o

Foreign direct investment position in the UDirect investment capital inflows . . . . . . . Direct investment income . . . . . . . . . . . . 

Direct investment royalties and license feeOther direct investment services . . . . . . . 

The Numbering Scheme for the Tables . Availability of the Data . . . . . . . . . . . . . . . . 

FOREIGN DIRECT INVESTMENT IN THE UNITED STATES: 1997 BENCHMARK SURVEY
Part I. All U.S. Affiliates

A–1. Selected Financial and Operating Data of Affiliates,

by Industry of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A–2. Selected Financial and Operating Data of Affiliates, 

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

A–3. Selected Financial and Operating Data of Affiliates, by State. . . . . . . . . . . . 12A–4. Selected Balance of Payments Data, by Industry of Affiliate. . . . . . . . . . . . . 13A–5. Selected Balance of Payments Data, by Country of UBO . . . . . . . . . . . . . . . 14

Part II. Nonbank U.S. Affiliates

Financial and Operating DataGroup A. Selected DataA–1. Selected Financial and Operating Data of Affiliates, by Industry of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17A–2. Selected Financial and Operating Data of Affiliates,

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

A–6. Selected Financial and Operating Data of Affiliates,

by Industry of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

A–7. Selected Financial and Operating Data of Affiliates, 

by Country of UBO and Country of Foreign Parent. . . . . . . . . . . . . . . . . . . 23

A–8. Sales and Employment of Affiliates,

by Industry of Affiliate and Industry of Sales. . . . . . . . . . . . . . . . . . . . . . . . . 24

A–9. Number of Affiliates With Property, Plant, and Equipment 

or Employment, State by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Group B. Balance SheetB–1. Balance Sheet of Affiliates––Assets, Industry of Affiliate by Account . . . . . 28B–2. Balance Sheet of Affiliates––Liabilities and Owners’ Equity, 

Industry of Affiliate by Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

B–3. Balance Sheet of Affiliates––Assets, Country of UBO by Account. . . . . . . . 30B–4. Balance Sheet of Affiliates––Liabilities and Owners’ Equity, 

Country of UBO by Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

B–5. Total Assets of Affiliates, Industry of Affiliate by Country of UBO . . . . . . . 32B–6. Total Assets of Affiliates, Country of UBO by Industry of Affiliate . . . . . . . 33B–7. Total Assets of Affiliates, Industry of Affiliate by Industry of UBO . . . . . . . 34B–8. Total Assets of Affiliates, Country of UBO by Industry of UBO . . . . . . . . . 36B–9. Owners’ Equity of Affiliates, Industry of Affiliate by Country of UBO . . . . 37

Group C. Composition of External FinanciaC–1. External Financial Position of Affiliates, 

Selected Industry of Affiliate and Trans

C–2. External Financial Position of Affiliates T

Selected Industry of Affiliate and Transa

C–3. External Financial Position of Affiliates T

Selected Industry of Affiliate and Transa

C–4. External Financial Position of Affiliates T

Selected Industry of Affiliate and Transa

C–5. External Financial Position of Affiliates T

Netherlands, Selected Industry of Affilia

C–6. External Financial Position of Affiliates T

Selected Industry of Affiliate and Transa

C–7. External Financial Position of Affiliates T

Kingdom, Selected Industry of Affiliate 

C–8. External Financial Position of Affiliates T

Selected Industry of Affiliate and Transa

Group D. Property, Plant, and EquipmentD–1. Gross Property, Plant, and Equipment o

of Affiliate by Type and Where Carried 

D–2. Gross Property, Plant, and Equipment o

Country of UBO by Type and Where C

D–3. Gross Property, Plant, and Equipment o

Industry of Affiliate by Country of UBO 

D–4. Gross Book Value of Land, Industry of AD–5. Gross Plant and Equipment, Industry oD–6. Opening and Closing Balances, and Cha

Plant, and Equipment of Affiliates, by I

D–7. Opening and Closing Balances, and Cha

Plant, and Equipment of Affiliates, by C

D–8. Net Property, Plant, and Equipment of A

by Country of UBO . . . . . . . . . . . . . . . 

D–9. Gross Property, Plant, and Equipment o

Industry of Affiliate by Use . . . . . . . . . 

D–10. Gross Property, Plant, and Equipment 

Country of UBO by Use . . . . . . . . . . . 
PART II. NONBANK U.S. AFFILIATES

D–11. Gross Property, Plant, and Equipment of Affiliates, State by Use . . . . . . . 56D–12. Gross Property, Plant, and Equipment of Affiliates,

State by Industry of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

D–13. Gross Property, Plant, and Equipment of Affiliates, 

State by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

D–14. Gross Property, Plant, and Equipment of Affiliates,

State by Industry of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

D–15. Commercial Property of Affiliates, Industry of Affiliate

by Country of UBO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

D–16. Commercial Property of Affiliates, State by Industry of Affiliate . . . . . . . 61D–17. Commercial Property of Affiliates, State by Country of UBO . . . . . . . . . . 62D–18. Number of Affiliates With Property, Plant, and Equipment,

 State by Property, Plant, and Equipment Size Class. . . . . . . . . . . . . . . . . . 63

D–19. Number of Affiliates With Property, Plant, and Equipment,

State by Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

D–20. Property, Plant, and Equipment Expenditures by Affiliates,

Industry of Affiliate by Type of Expenditure . . . . . . . . . . . . . . . . . . . . . . . . 65

D–21. Property, Plant, and Equipment Expenditures by Affiliates,

Country of UBO by Type of Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . 66

D–22. Property, Plant, and Equipment Expenditures by Affiliates,

Industry of Affiliate by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

D–23. Expenditures for New Plant and Equipment by Affiliates,

Industry of Affiliate by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

D–24. Land Owned and Mineral Rights Owned or Leased by Affiliates,

by Industry of Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

D–25. Land Owned and Mineral Rights Owned or Leased by Affiliates,

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Group E. Income StatementE–1. Income Statement of Affiliates, Industry of Affiliate by Account . . . . . . . . . 71E–2. Income Statement of Affiliates, Country of UBO by Account . . . . . . . . . . . 72E–3. Sales by Affiliates, Industry of Affiliate by Country of UBO. . . . . . . . . . . . . 73E–4. Sales by Affiliates, Country of UBO by Industry of Affiliate. . . . . . . . . . . . . 74E–5. Sales by Affiliates, Industry of Affiliate by Industry of UBO. . . . . . . . . . . . . 75E–6. Sales by Affiliates, Country of UBO by Industry of UBO . . . . . . . . . . . . . . . 77E–7. Sales by Affiliates, Industry of Sales by Industry of Affiliate . . . . . . . . . . . . . 78E–8. Sales by Affiliates, Industry of Sales by Country of UBO . . . . . . . . . . . . . . . 82

E–9. Sales by Affiliates, Country of UBO bE–10. U.S. Income Taxes of Affiliates, Indu

by Country of UBO . . . . . . . . . . . . . 

E–11. Net Income of Affiliates, Industry oE–12. Sales of Goods and Services by AffilE–13. Sales of Goods and Services by AffilE–14. Sales of Goods by Affiliates, IndustrE–15. Sales of Services by Affiliates, Indust

Group F. Gross ProductF–1. Gross Product of Affiliates, Industry F–2. Gross Product of Affiliates, Industry F–3. Gross Product of Affiliates, Country oF–4. Gross Product of Affiliates, Industry F–5. Gross Product of Affiliates, Country F–6. Profit-Type Return of Affiliates, Indu

by Country of UBO . . . . . . . . . . . . . . 

Group G. Employment and CompensatiG–1. Employment and Compensation of E

Industry of Affiliate . . . . . . . . . . . . . . 

G–2. Employment and Compensation of E

by Country of UBO . . . . . . . . . . . . . . 

G–3. Employment of Affiliates, Industry oG–4. Employment of Affiliates, Country oG–5. Employment of Affiliates, Industry oG–6. Employment of Affiliates, Country oG–7. Employment of Affiliates, State by InG–8. Employment of Affiliates, State by CG–9. Employment of Affiliates, State by InG–10. Employment of Affiliates, Industry G–11. Employment of Affiliates, Industry G–12. Employment of Affiliates, Country G–13. Manufacturing Employment of AffG–14. Affiliates’ Employment Covered by 

ments, Industry of Affiliate by Cou

G–15. Research and Development Employ

Affiliate by Country of UBO . . . . . . 
PART II. NONBANK U.S. AFFILIATES

G

–16. Compensation of Employees of Affiliates, Industry of Affiliate

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

G

–17. Wages and Salaries of Affiliates, Industry of Affiliate

by Country of UBO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

G

–18. Number of Affiliates With Employment, State

by Employment Size Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Group H. U.S. Trade in GoodsH

–1. U.S. Trade in Goods of Affiliates, Industry of Affiliate by Transactor . . . . 119

H

–2. U.S. Trade in Goods of Affiliates, Country of UBO by Transactor . . . . . . 120

H

–3. U.S. Exports of Goods Shipped by Affiliates, Industry of Affiliate

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

H

–4. U.S. Exports of Goods Shipped by Affiliates to the Foreign

Parent Group, Industry of Affiliate by Country of UBO . . . . . . . . . . . . . . 122

H

–5. U.S. Exports of Goods Shipped by Affiliates to Foreigners Other Than

the Foreign Parent Group, Industry of Affiliate by Country of UBO . . . . 123

H

–6. U.S. Imports of Goods Shipped to Affiliates, Industry

of Affiliate by Country of UBO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

H

–7. U.S. Imports of Goods Shipped to Affiliates by the Foreign Parent

Group, Industry of Affiliate by Country of UBO . . . . . . . . . . . . . . . . . . . . 125

H

–8. U.S. Imports of Goods Shipped to Affiliates by Foreigners Other Than

the Foreign Parent Group, Industry of Affiliate by Country of UBO . . . . 126

H

–9. U.S. Trade in Goods of Affiliates, Product by Transactor . . . . . . . . . . . . . . 127

H

–10. U.S. Exports of Goods Shipped by Affiliates, Industry

 of Affiliate by Product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

H

–11. U.S. Exports of Goods Shipped by Affiliates, Country

of UBO by Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

H

–12. U.S. Exports of Goods Shipped by Affiliates to the Foreign Parent

Group, Industry of Affiliate by Product . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

H

–13. U.S. Exports of Goods Shipped by Affiliates to the Foreign Parent

Group, Country of UBO by Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

H

–14. U.S. Exports of Goods Shipped by Affiliates to Foreigners Other Than

the Foreign Parent Group, Industry of Affiliate by Product. . . . . . . . . . . 132

H

–15. U.S. Exports of Goods Shipped by Affiliates to Foreigners Other Than

the Foreign Parent Group, Country of UBO by Product . . . . . . . . . . . . . 133

H

–16. U.S. Imports of Goods Shipped to Affiliates, Industry

of Affiliate by Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

H

–17. U.S. Imports of Goods Shipped to A

of UBO by Product . . . . . . . . . . . . . 

H

–18. U.S. Imports of Goods Shipped to A

Group, Industry of Affiliate by Prod

H

–19. U.S. Imports of Goods Shipped to A

Group, Country of UBO by Produc

H

–20. U.S. Imports of Goods Shipped to A

the Foreign Parent Group, Industry 

H

–21. U.S. Imports of Goods Shipped to A

the Foreign Parent Group, Country 

H

–22. U.S. Trade in Goods of Affiliates, C

or Origin by Transactor . . . . . . . . . . 

H

–23. U.S. Exports of Goods Shipped by A

Destination by Industry of Affiliate 

H

–24. U.S. Exports of Goods Shipped by A

of Destination by Country of UBO 

H

–25. U.S. Exports of Goods Shipped by A

Group, Country of Destination by I

H

–26. U.S. Exports of Goods Shipped by A

Group, Country of Destination by C

H–27. U.S. Exports of Goods Shipped by Af

Foreign Parent Group, Country of D

H

–28. U.S. Exports of Goods Shipped by Af

the Foreign Parent Group, Country o

H

–29. U.S. Imports of Goods Shipped to A

 by Industry of Affiliate . . . . . . . . . . 

H

–30. U.S. Imports of Goods Shipped to A

 by Country of UBO. . . . . . . . . . . . . 

H

–31. U.S. Imports of Goods Shipped to A

Group, Country of Origin by Indus

H

–32. U.S. Imports of Goods Shipped to A

Group, Country of Origin by Coun

H–33. U.S. Imports of Goods Shipped to Af

the Foreign Parent Group, Country 

H

–34. U.S. Imports of Goods Shipped to A

the Foreign Parent Group, Country 

H

–35. U.S. Imports of Goods Shipped to A

Transactor and Intended Use . . . . . 
PART II. NONBANK U.S. AFFILIATES

H

–36. U.S. Imports of Goods Shipped to Affiliates, Country of UBO by

Transactor and Intended Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

H

–37. U.S. Imports of Goods Shipped to Affiliates––Goods for Further

Manufacture, Industry of Affiliate by Country of UBO . . . . . . . . . . . . . . 155

Group I. Interest, Dividends, Taxes Other Than Income Taxes, and Research and Development ExpendituresI–1. Interest, Dividends or Remitted Profits, and Taxes Other Than

Income and Payroll Taxes, of Affiliates, by Industry of Affiliate . . . . . . . . . 156

I–2. Interest, Dividends or Remitted Profits, and Taxes Other Than

Income and Payroll Taxes, of Affiliates, by Country of UBO . . . . . . . . . . . . 157

I–3. Taxes Other Than Income and Payroll Taxes Paid by Affiliates,

 Industry of Affiliate by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

I–4. Research and Development Funded by and Performed by Affiliates,

by Industry of Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

I–5. Research and Development Funded and Performed by Affiliates,

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

I–6. Research and Development Performed by Affiliates,

Industry of Affiliate by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

Group J. Selected Data for Majority-Owned AffiliatesJ–1. Selected Financial and Operating Data of Majority-Owned

and Other Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162

J–2. Selected Financial and Operating Data of Majority-Owned

Affiliates, by Industry of Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

J–3. Selected Financial and Operating Data of Majority-Owned Affiliates, 

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

J–4. Sales and Employment of Majority-Owned Affiliates, 

by Industry of Affiliate and Industry of Sales . . . . . . . . . . . . . . . . . . . . . . . . 165

J–5. Total Assets of Majority-Owned Affiliates, Industry of Affiliate

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

J–6. Sales of Majority-Owned Affiliates, Industry of Affiliate

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

J–7. Gross Product of Majority-Owned Affiliates, Industry of Affiliate

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168

J–8. Employment of Majority-Owned Affiliates, Industry of Affiliate

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

J–9. Employment and Manufacturing Em

Affiliates, by State . . . . . . . . . . . . . . . . . 

J–10. U.S. Trade in Goods of Majority-Ow

of Affiliate by Transactor . . . . . . . . . . 

J–11. U.S. Trade in Goods of Majority-Ow

of UBO by Transactor . . . . . . . . . . . . 

J–12. U.S. Trade in Goods of Majority-Ow

Destination or Origin by Transactor 

J–13. Research and Development Perform

Industry of Affiliate by Country of U

Group K. Selected Data for Affiliates ClaK

–1. Selected Financial and Operating Da

 by SIC-Based Industry of Affiliate . . 

K

–2. Total Assets of Affiliates, SIC-Based I

 by Country of UBO . . . . . . . . . . . . . . 

K

–3. Sales of Affiliates, SIC-Based Industr

K

–4. Gross Product of Affiliates, SIC-Base

by Country of UBO . . . . . . . . . . . . . . 

K

–5. Employment of Affiliates, SIC-Based 

by Country of UBO . . . . . . . . . . . . . . 

Group L. Selected Data for Majority-OwIndustryL

–1. Selected Financial and Operating Dat

by SIC-Based Industry of Affiliate. . . 

Direct Investment Position and BalanGroup M. Foreign Direct Investment PosHistorical-Cost BasisM

–1. Foreign Direct Investment Position i

Historical-Cost Basis, Industry of Af

M

–2. Foreign Direct Investment Position i

Historical-Cost Basis, Country of UB

M

–3. Foreign Direct Investment Position i

Historical-Cost Basis, Industry of Af
Group N. Change in the Foreign Direct Investment Position in the United 

StatesN

–1. Change in the Foreign Direct Investment Position in the United States

on a Historical-Cost Basis, Industry of Affiliate by Account . . . . . . . . . . . 184

N

–2. Change in the Foreign Direct Investment Position in the United States

on a Historical-Cost Basis, Country of UBO by Account . . . . . . . . . . . . . 185

N

–3. Direct Investment Capital Inflows, Industry of Affiliate 

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

Group O. Direct Investment IncomeO

–1. Direct Investment Income, Industry of Affiliate by Component. . . . . . . . 187

O

–2. Direct Investment Income, Country of UBO by Component . . . . . . . . . . 188

O

–3. Direct Investment Income, Industry of Affiliate 

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

Group P. Direct Investment Royalties and License Fees and Charges for Other ServicesP

–1. Direct Investment Royalties and License Fees and Charges for Other

Services, Payments and Receipts by Affiliates, by Industry of Affiliate . . . 190

P

–2. Direct Investment Royalties and License Fees and Charges for Other

 Services, Payments and Receipts by Affiliates, by Country of UBO . . . . . 191

P

–3. Service Charges, Payments and Receipts by U.S. Affiliates, Major

Industry of Affiliate, and Major Area of UBO by Type . . . . . . . . . . . . . . . . 192

Group Q. Selected Balance of Payments Data for Majority-Owned AffiliatesQ

–1. Selected Balance of Payments Data for Majority-Owned Affiliates, 

by Major Industry of Affiliate and by Major Area of UBO . . . . . . . . . . . . 193

Part III. Bank U.S. Affiliates

A–2. Selected Financial and Operating Data of Affiliates, 

by Country of UBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

A–3. Selected Financial and Operating Data of Affiliates, by State. . . . . . . . . . . 198

A–5. Selected Balance of Payments Data, by Country of UBO . . . . . . . . . . . . . . 199

SIC Standard Industrial ClassificationUBO Ultimate beneficial owner

These tables present data that are disaggre

Part I. All U.S. AffiliatesA–3. Selected Financial and Operating DaPart II. Nonbank U.S. AffiliatesA–9. Number of Affiliates With Property, 

ment, State by Country of UBO . . . . 

D

–11. Gross Property, Plant, and Equipm

D

–12. Gross Property, Plant, and Equipm

by Industry of Affiliate. . . . . . . . . . . 

D

–13. Gross Property, Plant, and Equipm

by Country of UBO . . . . . . . . . . . . . 

D

–14. Gross Property, Plant, and Equipm

by Industry of UBO . . . . . . . . . . . . . 

D

–16. Commercial Property of Affiliates, 

D

–17. Commercial Property of Affiliates, 

D

–18. Number of Affiliates with Property, 

by Property, Plant, and Equipment 

D

–19. Number of Affiliates with Property, 

State by Use. . . . . . . . . . . . . . . . . . . . 

G

–7. Employment of Affiliates, State by In

G

–8. Employment of Affiliates, State by C

G

–9. Employment of Affiliates, State by In

G

–13. Manufacturing Employment of Aff

G

–18. Number of Affiliates With Employm

by Employment Size Class. . . . . . . . 

J–9. Employment and Manufacturing Em

Affiliates, by State. . . . . . . . . . . . . . . . . 

Part III. Bank U.S. AffiliatesA–3. Selected Financial and Operating Da
	



 M–1

HE 1997 Benchmark Survey of Foreign Direct

Investment in the United States was conducted

by the Bureau of Economic Analysis (BEA) to

obtain complete and accurate data on foreign direct

investment in the United States in 1997. Reporting

in the survey was mandatory under the International Investment and Trade in Services Survey Act.1

This publication presents the final results of the

benchmark survey in 170 tables that contain nearly

all the data collected. Two related types of data for

U.S. affiliates of foreign companies are presented:

(1) Financial and operating data, and (2) direct investment position and balance of payments data.

The financial and operating data provide a variety

of indicators of the overall operations of U.S. affiliates, including balance sheets and income statements; gross product; sales of goods and services;

external financial position; taxes; property, plant,

and equipment; employment and compensation of

employees; U.S. trade in goods; research and development activities; and U.S. land owned and leased.

The direct investment position and balance of

payments data cover transactions and positions between U.S. affiliates and their foreign parent groups.

These data are the source of the official estimates of

direct investment that enter the U.S. national income and product accounts and the U.S. international investment position and international transactions (or balance of payments) accounts. Balance

of payments data include data on direct investment

capital and income flows between U.S. affiliates and

their foreign parent groups and on receipts and payments of royalties, license fees, and charges for other

services between U.S. affiliates and their foreign

parent groups.

Data are presented for three groups of U.S. affiliates of foreign companies: (1) All affiliates, (2) nonbank affiliates, and (3) bank affiliates.2

 Most of the

1. Public Law 472, 94th Cong., 90 Stat. 2059, 22 U.S.C. 3101–3108, as

amended.

tables cover nonbank affiliates; bank affiliates,

which report extensive data to other U.S. Government agencies, were required to report only a limited amount of data in the benchmark survey. Most

of the tables for each group cover all the U.S. affiliates in the group irrespective of the degree of foreign ownership. For nonbank affiliates, however, tables covering only majority-owned affiliates also are

provided for selected data items.

A variety of table formats are used: Some tables

present data for several related items, each of which

is disaggregated by industry, country, or State; other

tables present data for a single item disaggregated by

industry cross-classified by country, by country

cross-classified by industry, or by State cross-classified by country.

The data in this publication revise and supersede

the preliminary estimates that appeared in Foreign

Direct Investment in the United States: Preliminary

Results from the 1997 Benchmark Survey and, in

more summary form, in the article “Foreign Direct

Investment in the United States: Preliminary Results

from the 1997 Benchmark Survey” in the August

1999 issue of the SURVEY OF CURRENT BUSINESS.

3

The financial and operating data for nonbank affiliates presented in this publication are comparable

with BEA’s universe estimates for previous benchmark years—the most recent being 1992.4 Estimates

for nonbenchmark years from BEA’s annual surveys

provide similar information, but are less detailed.

2. In this publication, the term “bank affiliates” is used to describe all

the affiliates that are classified under the BEA international surveys

industry category “depository credit intermediation,” which includes

bank holding companies, credit unions, and savings institutions as well

as commercial banks.

3. For most key data items, the revisions to the totals for nonbank

affiliates ranged from –4 percent to +4 percent.

4. See Foreign Direct Investment in the United States: 1992 Benchmark

Survey, Final Results, Foreign Direct Investment in the United States: 1987

Benchmark Survey, Final Results, and Foreign Direct Investment in the

United States, 1980. (Summary data from the 1980 benchmark survey

were subsequently republished, with minor corrections, in Foreign

Direct Investment in the United States: Operations of U.S. Affiliates,

1977–80.)

T


 	 !"#$%$&'

M–2

Table 1.—Selected Financial and Operating Data of Nonbank U.S. Affiliates

of Foreign Companies, 1977–97

Billions of dollars

Thousands of

employees

Billions of dollars

Total

assets

Gross

property,

plant,

and

equipment

Sales Net

income

Gross

product

Compensation of

employees

U.S. exports of

goods

shipped

by affiliates

U.S. imports of

goods

shipped

to affiliates

1977 ............... 143.5 66.8 194.0 4.0 35.2 18.8 1,218.7 24.9 43.9

1978 ............... 181.2 80.7 241.5 4.8 42.9 24.2 1,429.9 32.2 56.6

1979 ............... 228.6 101.2 327.9 7.3 55.4 31.7 1,753.2 44.3 63.0

1980 ............... 291.3 127.8 412.4 8.8 70.9 40.0 2,033.9 52.2 75.8

1981 ............... 407.0 188.0 510.2 11.2 98.8 54.8 2,416.6 64.1 82.3

1982 ............... 476.4 225.2 518.1 3.8 103.5 61.5 2,448.1 60.2 84.3

1983 ............... 531.7 244.0 536.6 5.6 111.5 66.8 2,546.5 53.9 81.5

1984 ............... 602.5 269.5 593.6 9.6 128.8 73.2 2,714.3 58.2 100.5

1985 ............... 741.1 295.2 633.0 5.4 134.9 79.9 2,862.2 56.4 113.3

1986 ............... 838.0 320.2 672.0 2.5 142.1 86.5 2,937.9 49.6 125.7

1987 ............... 943.7 353.3 744.6 7.8 157.9 96.0 3,224.3 48.1 143.5

1988 ............... 1,200.8 418.1 886.4 12.0 190.4 119.6 3,844.2 69.5 155.5

1989 ............... 1,431.3 489.5 1,056.6 9.3 223.4 144.2 4,511.5 86.3 171.8

1990 ............... 1,550.2 578.4 1,175.9 –4.5 239.3 163.6 4,734.5 92.3 182.9

1991 ............... 1,752.6 640.1 1,185.9 –11.0 257.6 176.0 4,871.9 96.9 178.7

1992 ............... 1,825.2 660.8 1,232.0 –21.3 266.3 182.1 4,715.4 103.9 184.5

1993 ............... 2,065.8 705.7 1,329.4 –4.4 285.7 193.0 4,765.6 106.6 200.6

1994 ............... 2,206.7 754.4 1,443.5 8.1 313.0 200.6 4,840.5 120.7 232.4

1995 ............... 2,388.7 769.5 1,544.6 15.5 322.6 206.4 4,941.8 135.2 250.8

1996 ............... 2,681.7 825.7 1,667.6 24.4 358.1 220.6 5,105.0 140.9 268.7

1997 ............... 3,071.5 877.6 1,726.3 40.9 389.4 233.5 5,201.9 141.3 264.9

Percent change from preceding year

1978 ............... 26.3 20.8 24.5 22.1 21.9 29.0 17.3 29.4 28.9

1979 ............... 26.1 25.4 35.7 50.8 29.1 30.8 22.6 37.8 11.4

1980 ............... 27.5 26.3 25.8 20.0 27.9 26.4 16.0 17.7 20.2

1981 ............... 39.7 47.0 23.7 28.3 39.4 36.8 18.8 22.7 8.5

1982 ............... 17.1 19.8 1.5 –65.9 4.7 12.2 1.3 –6.0 2.5

1983 ............... 11.6 8.3 3.6 45.8 7.7 8.7 4.0 –10.6 –3.4

1984 ............... 13.3 10.4 10.6 72.0 15.5 9.5 6.6 8.0 23.4

1985 ............... 23.0 9.5 6.6 –43.8 4.7 9.3 5.4 –3.1 12.8

1986 ............... 13.1 8.5 6.2 –54.5 5.4 8.2 2.6 –12.1 10.9

1987 ............... 12.6 10.3 10.8 218.1 11.1 11.0 9.7 –3.0 14.2

1988 ............... 27.3 18.3 19.0 54.1 20.6 24.6 19.2 44.6 8.4

1989 ............... 19.2 17.1 19.2 –22.9 17.4 20.5 17.4 24.1 10.5

1990 ............... 8.3 18.2 11.3 n.m. 7.1 13.5 4.9 6.9 6.5

1991 ............... 13.1 10.7 .9 n.m. 7.7 7.6 2.9 5.0 –2.3

1992 ............... 4.1 3.2 3.9 n.m. 3.4 3.5 –3.2 7.2 3.2

1993 ............... 13.2 6.8 7.9 n.m. 7.3 6.0 1.1 2.6 8.7

1994 ............... 6.8 6.9 8.6 n.m. 9.5 3.9 1.6 13.2 15.8

1995 ............... 8.2 2.0 7.0 90.5 3.1 2.9 2.1 12.0 7.9

1996 ............... 12.3 7.3 8.0 57.4 11.0 6.9 3.3 4.2 7.1

1997 ............... 14.5 6.3 3.5 67.9 8.8 5.8 1.9 .3 –1.4

n.m. Not meaningful.

Table 1 presents selected financial and operating data

for nonbank affiliates from the 1997 benchmark survey and from the previous benchmark and annual surveys. For information about how to obtain the earlier

benchmark data and annual survey estimates, see the

section “Availability of the Data.”

To aid in comparisons among the estimates for the

various years, see the section “The Numbering Scheme

for the Financial and Operating Data Tables for Nonbank Affiliates in 1977–97.” This section provides

cross-references between the table numbers used in

this publication and those used in the earlier publications. The table-numbering scheme of this publication

also will be used in publications for 1998 forward.

Certain tables in this publication—most notably,

most of the tables for majority-owned affiliates—do

not have counterparts in the earlier publications.

Other tables have counterparts in the earlier benchmark survey publications but not in the annual survey

publications, because they cover items that are not collected in the annual surveys. For example, the benchmark surveys collect direct investment position and balance of

payments data in addition to the financial and operating data collected in the

annual surveys for nonbenchmark

years. In addition, some items in the financial and operating data for U.S. affiliates—such as the number of employees

covered by collective bargaining agreements and U.S. exports and imports of

goods by product and by country of destination or origin—are collected only in

benchmark surveys.

In a few instances, an item collected

in the benchmark survey was combined

with one or more other items in the annual surveys. Thus, two items that are

shown in a table in this publication may

be shown as only one item in the corresponding table in the annual survey

publications.

The data in this publication are based

on data collected at the enterprise—or

company—level. Data presented on the

establishment—or plant—level are also

available for selected years as a result of

a project to link BEA’s enterprise data on

foreign direct investment in the United

States with more detailed Census Bureau establishment data for all U.S.

companies.5

	


The benchmark survey covered every U.S. business enterprise that was a U.S. affiliate of a foreign person. A

U.S. affiliate is a U.S. business enterprise in which a

5. Publications that present the establishment data are available for

1987–92 (see the section on data availability). The 1987 and 1992 publications cover establishments in both manufacturing and nonmanufacturing

industries; the 1988–91 publications cover establishments in manufacturing industries only. A forthcoming publication will present establishment

data for both manufacturing and nonmanufacturing industries in 1997.
	 !"#$%$&'

M–3



foreign person owns or controls, directly or indirectly,

at least 10 percent of the voting securities if the enterprise is incorporated or an equivalent interest if the enterprise is unincorporated.

The financial and operating data cover every U.S.

business enterprise that was a U.S. affiliate at the end of

its 1997 fiscal year. In addition, the direct investment

position and balance of payments data cover U.S. businesses that were U.S. affiliates some time during their

1997 fiscal year but that were not affiliates at the end of

the year, because the foreign parents’ interest in them

had been liquidated or sold. The U.S. affiliates that

were liquidated or sold during the year are covered so

that the coverage of the direct investment position and

balance of payments data in this publication is consistent with that of the U.S. international investment position and international transactions accounts.6

 Because these former affiliates were not required to

report in the benchmark survey, estimates for them

were based on information from other BEA surveys.

As a result of this difference in coverage, some balance of payments data items may not be fully comparable with their counterparts in the financial and operating data. For example, the total for net income

shown in the financial and operating data excludes the

net income of these former affiliates, but the foreign

parents’ share of this income is included in the balance

of payments measure of income on foreign direct investment in the United States.

U.S. affiliates with total assets, sales, or net income

(or loss) greater than $3 million were required to complete a benchmark survey report for 1997. Affiliates

that did not meet these criteria were exempt from reporting, but they had to file an exemption form with

information on their total assets, sales, and net income. In the benchmark surveys for 1980, 1987, and

1992, the exemption level for reporting was $1 million.

The exemption level for 1997 was raised to $3 million

in order to reduce the reporting burden of small enterprises.

For the 1997 benchmark survey, exemption claims

were filed by 5,906 affiliates, compared with 10,090 affiliates that were required to report. In terms of value,

6. Because these affiliates were sold or liquidated during 1997, they are

excluded from the investment position at yearend 1997. However, some

tables present data on the position at yearend 1996, when these affiliates

were still included in the foreign direct investment universe and, hence, in

the estimates.

however, the data for exempt affiliates were minuscule:

Together, they accounted for less than 0.2 percent of

the total assets, sales, and net income of all affiliates

(table 2).7

In contrast to BEA’s past benchmark survey and annual publications, the data presented in this publication include estimates for exempt affiliates as well as

data for U.S. affiliates that were required to complete a

benchmark survey report. Because the data for exempt

affiliates are minuscule, this change has virtually no effect on comparability with the published data for earlier years.





This section discusses the basic concepts and definitions used in the 1997 benchmark survey.

	


Direct investment implies that a person in one country

has a lasting interest in, and a degree of influence over

the management of, a business enterprise in another

country. For the United States, in accordance with international guidelines, ownership or control of 10 percent or more of an enterprise’s voting securities, or the

equivalent, is considered evidence of such a lasting interest or degree of influence over management.8

 Thus,

foreign direct investment in the United States is ownership or control, direct or indirect, by one foreign

person of 10 percent or more of the voting securities of

an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise. Only foreign investment in the United States that

7. Because of limited resources, BEA cannot verify that exemption forms

were filed by all affiliates that were below the threshold for submitting

benchmark survey reports. However, because of their small size, the effect

of any noncompliance by exempt affiliates on the benchmark survey data in

terms of value is likely to be negligible.

8. See International Monetary Fund (IMF), Balance of Payments Manual,

5th ed. (Washington, DC: IMF, 1993); and Organisation for Economic Cooperation and Development (OECD), OECD Benchmark Definition of Foreign Direct Investment, 3rd ed. (Paris: OECD, 1996).

Table 2.—Total Assets, Sales, and Net Income of U.S. Affiliates

by Their Reporting Requirement in the Benchmark Survey

Millions of dollars Percent

Total

assets Sales Net income

Total

assets Sales Net income

All affiliates.......................

Required to report.........

Exempt from reporting..

4,405,019

4,401,547

3,473

1,850,446

1,848,667

1,779

44,839

44,926

–87

100.0

99.9

.1

100.0

99.9

.1

100.0

100.2

–.2
 	 !"#$%$&'

M–4

is direct investment was covered by the 1997 benchmark survey.

Direct investment in a U.S. business enterprise can

result from direct or indirect ownership by a foreign

person. In direct ownership, the foreign person itself

holds the ownership interest in the U.S. business enterprise. In indirect ownership, one or more tiers of ownership exist between the U.S. business enterprise and

the foreign person. For example, a U.S. business enterprise may be directly owned by another U.S. business

enterprise that is, in turn, owned by the foreign person. A foreign person’s percentage of indirect voting

ownership in a given U.S. business enterprise is equal

to the direct-voting-ownership percentage of the foreign person in the first U.S. business enterprise in the

ownership chain, times the first enterprise’s direct-voting-ownership percentage in the second U.S. business

enterprise in the chain, times the corresponding percentages for all intervening enterprises in the chain,

times the last intervening enterprise’s direct-votingownership percentage in the given U.S. business enterprise. If more than one ownership chain exists, the percentages of direct and indirect ownership in all chains

are summed to determine the foreign person’s ownership percentage.

Direct investment refers to ownership by a single

person, not to the combined ownership by all the persons in a country. A “person” is broadly defined to include any individual, branch, partnership, associated

group, association, estate, trust, corporation, or other

organization (whether or not organized under the laws

of any State) and any government (including a foreign

government, the U.S. Government, a State or local

government, or any corporation, financial institution,

or other entity or instrumentality thereof, including a

government-sponsored agency).

An associated group is treated in this definition as a

single person. An associated group consists of two or

more persons who exercise their voting privileges in a

concerted manner—by the appearance of their actions,

by agreement, or by an understanding—in order to influence the management of a business enterprise. The

following are deemed associated groups: (1) Members

of the same family, (2) a business enterprise and one or

more of its officers or directors, (3) members of a syndicate or joint venture, and (4) a corporation and its

domestic subsidiaries. Thus, direct investment is considered to exist as long as the combined ownership interest of all members of the group is at least 10 percent,

even if no one member owns 10 percent or more. The

definition assumes, in effect, that the members’ influence over management is comparable to that of a single person with the same ownership interest.

Investment by a foreign person of less than 10 percent in a U.S. business enterprise is not considered direct investment, even if another foreign person—of the

same country or of another country—has an interest

of at least 10 percent in the enterprise. Thus, if one foreign person owns 11 percent and another owns 9 percent, the 11-percent interest is included, but the 9-percent interest is excluded. However, if two or more

foreign persons each hold an interest of at least 10 percent, each such interest is included.

		


For purposes of the benchmark survey (and BEA’s

other direct investment surveys), the “United States”

means the 50 States, the District of Columbia, the

Commonwealth of Puerto Rico, and all U.S. territories

and possessions. U.S. offshore oil and gas sites are also

considered to be in the United States.

“Foreign” means that which is situated outside the

United States or which belongs to, or is characteristic

of, a country other than the United States.

The country of residence, rather than the country of

citizenship, of a person is used to determine whether a

direct investor or the business enterprise owned by a

direct investor is U.S. or foreign. A U.S. person is any

person who resides in, or is subject to the jurisdiction

of, the United States, and a foreign person is any person who resides outside the United States or who is

subject to the jurisdiction of a country other than the

United States.

A person is considered a resident of, or subject to

the jurisdiction of, the country in which the person is

located if the person resides or expects to reside in it

for 1 year or more. Under this rule, individuals who reside or expect to reside outside their country of citizenship for less than 1 year are considered residents of

their country of citizenship, whereas individuals who

reside or expect to reside outside their country of citizenship for 1 year or more are considered residents of

the country in which they are residing.

There are two exceptions to this rule. First, individuals (and their immediate families) who either own or

are employed by a business enterprise in their country

of citizenship and who are residing outside of that

country for 1 year or more in order to conduct business for the enterprise are considered residents of their

country of citizenship if they intend to return within a
	 !"#$%$&'

M–5



reasonable period of time. Second, individuals who reside outside their country of citizenship because they

are government employees (such as diplomats, consular officials, members of the armed forces, and their

immediate families) are considered residents of their

country of citizenship regardless of their length of stay

elsewhere.



A U.S. affiliate is a U.S. business enterprise in which

there is foreign direct investment. The affiliate is called

a U.S. affiliate to denote that it is located in the United

States.

A business enterprise is any organization, association, branch, venture, or the ownership of real estate

that exists for profit-making purposes or to otherwise

secure economic advantage. Therefore, by definition, a

business enterprise excludes the ownership of real estate exclusively for personal use; a residence that is

leased to others by an owner who intends to reoccupy

it is considered real estate held for personal use and not

a business enterprise.

A business enterprise, and therefore an affiliate, may

be either incorporated or unincorporated. Unincorporated affiliates primarily take the form of branches and

partnerships. They may also include directly held commercial property.

A U.S. affiliate that is a branch consists of operations

or activities in the United States that a foreign person

conducts in its own name rather than through an entity separately incorporated in the United States. By

definition, a branch is wholly owned.

In general, the U.S. operations or activities of a foreign person are considered to be a U.S. affiliate if they

are legally or functionally separable from the foreign

operations or activities of the foreign person. In most

cases, it is clear whether the U.S. operations or activities constitute a U.S. affiliate. If an operation or activity

is incorporated in the United States—as most are—it is

always considered a U.S. affiliate. The situation is not

always so clear with unincorporated U.S. operations or

activities. Most are legally or functionally separable

from those of the foreign person and thus are considered U.S. affiliates, but some are not clearly separable,

and the determination of whether they constitute U.S.

affiliates is made on a case-by-case basis, depending on

the weight of evidence.

The following characteristics would indicate that

the unincorporated operation or activity probably is a

U.S. affiliate:

1. It pays U.S. income taxes.

2. It has a substantial physical presence in the United

States, as evidenced by plant and equipment or

employees that are permanently located in the

United States.

3. It has separate financial records that allow the

preparation of financial statements, including a

balance sheet and income statement. (A mere

record of disbursements to, or receipts from, the

U.S. operation or activity would not constitute a

“financial statement” for this purpose.)

4. It takes title to the goods it sells and receives revenues from the sale, or it receives funds from customers for its own account for services it performs.

The following characteristics would indicate that

the unincorporated operation or activity probably is

not a U.S. affiliate:

1. It pays no U.S. income taxes.

2. It has limited physical assets or few employees permanently located in the United States.

3. It has no separate financial records that allow the

preparation of financial statements.

4. It conducts business in the United States only for

the foreign person’s account, not for its own account.

5. It engages only in sales promotion or public relations activities.

6. Its expenses are paid by the foreign person.

Consistent with these guidelines, the U.S. stations,

ticket offices, and terminal or port facilities of a foreign

airline or ship operator that provide services only to

the airline’s or ship operator’s operations are not considered U.S. affiliates, because most of the revenues,

such as passenger fares and freight charges, collected

by these facilities are generated by the travel and transportation services rendered by the airline or ship operator of which they are a part, not by the activities of

these facilities. However, if the facilities provide services to unaffiliated persons, they are considered U.S.

affiliates.

Each U.S. affiliate was required to report on a fully

consolidated domestic (U.S.) basis. The full consolidation includes all other U.S. affiliates of the foreign parent in which the affiliate directly or indirectly owned

more than 50 percent of the outstanding voting interests. The consolidation excludes all other U.S. business

enterprises and all foreign business enterprises owned

by the U.S. affiliate.

There were three exceptions to this general consolidation rule. First, a given U.S. affiliate may have been

excluded from full consolidation because of the lack of
 	 !"#$%$&'

M–6

effective control. Second, a U.S. affiliate in which a direct ownership interest was held by one foreign person

and an indirect ownership interest was held by another

foreign person was not permitted to be consolidated in

the report of another U.S. affiliate; this rule ensured

that data on transactions and positions of both owners

could be obtained from the affiliate. Third, a bank U.S.

affiliate that directly or indirectly owned an interest of

more than 50 percent in one or more U.S. affiliates in

nonbanking industries was not permitted to file a single consolidated report; instead, any affiliates in banking were consolidated with it in a report for bank affiliates, and all their U.S. affiliates in nonbanking

industries were consolidated in a report for nonbank

affiliates.

		


The existence of direct investment in a U.S. affiliate is

determined solely on the basis of the voting shares (or

the equivalent) held by its foreign parent. To more

completely describe the foreign ownership of a U.S. affiliate, however, reference must be made to two additional entities—the foreign parent group and the

ultimate beneficial owner (UBO). All three concepts are

necessary to identify fully the owners of U.S. affiliates.

The foreign parent of a U.S. affiliate must be identified

to establish that foreign direct investment does in fact

exist. The UBO of each U.S. affiliate is identified to determine the person that ultimately owns or controls

and, therefore, ultimately derives the benefits from

owning or controlling the U.S. affiliate.9

 Members of

the foreign parent group are identified to distinguish

foreign persons that are affiliated with a U.S. affiliate

from those that are not.

The affiliate’s transactions with all these persons are

included in the investment income, services, and financial accounts of the U.S. international transactions

accounts, and the direct investment positions in the affiliate that are held by all members of the foreign parent group, not just by its foreign parent, are included

in the foreign direct investment position in the United

States.10

9. UBO’s that are individuals were not required to be identified by name;

however, their countries of location were required.

10. Another type of transaction—trade in goods between affiliates and

members of their foreign parent groups—is also included in the U.S. international transactions accounts, but it is not shown separately. Separate data

on such trade, however, were obtained in the benchmark survey as part of

the U.S.-affiliate financial and operating data; see the section “Financial and

Operating Data.”

A given U.S. affiliate may have more than one ownership chain above it, if it is owned at least 10 percent

by more than one foreign person. In such cases, the affiliate may have more than one foreign parent, UBO,

and foreign parent group.

A foreign parent is the first person outside the

United States in a U.S. affiliate’s ownership chain that

has a direct investment interest in the affiliate. By this

definition, the foreign parent consists only of the first

person outside the United States in the affiliate’s ownership chain; all other affiliated foreign persons are excluded.

The ultimate beneficial owner (UBO) of a U.S. affiliate is that person, proceeding up the affiliate’s ownership chain beginning with and including the foreign

parent, that is not owned more than 50 percent by another person. The UBO excludes other affiliated persons. If the foreign parent is not owned more than 50

percent by another person, the foreign parent and the

UBO are the same. Unlike the foreign parent, the UBO

may be either a U.S. person or a foreign person

(though most are foreign).

Both the foreign parent and the UBO are “persons.”

Thus, they may be business enterprises; religious, charitable, or other nonprofit organizations; individuals;

governments; estates or trusts; associated groups; and

so forth. In the case of a foreign estate, the estate, not

its beneficiary, is considered the foreign parent or

UBO. For the investments of a foreign trust, either the

creator or the beneficiary of the trust may be considered the foreign parent or UBO, depending on the circumstances. The creator is considered the foreign parent or UBO if the creator is a corporation or other

organization that designates its own shareholders or

members as beneficiaries or if there is a reversionary

interest—that is, the interest in the trust may later be

returned to the creator. In all other cases, the beneficiary of the trust is considered the foreign parent or

UBO.

A foreign parent group consists of (1) the foreign

parent, (2) any foreign person, proceeding up the foreign parent’s ownership chain, that owns more than 50

percent of the person below it, up to and including the

UBO, and (3) any foreign person, proceeding down

the ownership chain(s) of each of these members, that

is owned more than 50 percent by the person above it.
	 !"#$%$&'

M–7



Table 3.—Selected Data of U.S. Affiliates by Fiscal Year Ending Date

Total

Fiscal year ending date

January 1 to

March 31

April 1 to

June 30

July 1 to

September 30

October 1 to

December 31

Addendum:

December 31

All affiliates:

Total assets (millions of dollars) ................................................................... 4,405,019 649,559 108,822 153,079 3,493,559 3,307,742

Sales (millions of dollars) ............................................................................. 1,850,446 313,756 76,143 112,112 1,348,435 1,270,049

Net income (millions of dollars) .................................................................... 44,839 3,141 –259 1,973 39,985 39,217

Compensation of employees (millions of dollars) ........................................ 240,578 30,772 10,368 16,840 182,599 170,472

Thousands of employees .............................................................................. 5,310.6 775.8 248.4 476.0 3,810.4 3,377.7

Exports of goods (millions of dollars) ........................................................... ...................... ........................ ........................ ........................ ........................ ........................

Imports of goods (millions of dollars) ........................................................... ...................... ........................ ........................ ........................ ........................ ........................

Foreign direct investment position in the United States (millions of

dollars) ....................................................................................................... 676,498 75,368 34,282 42,255 524,593 504,924

Direct investment income (millions of dollars) ............................................. 38,466 2,940 42 3,405 32,079 31,254

Nonbank affiliates:

Total assets (millions of dollars) ................................................................... 3,071,483 319,102 101,543 117,381 2,533,458 2,425,847

Sales (millions of dollars) ............................................................................. 1,726,344 269,309 75,658 108,874 1,272,503 1,200,641

Net income (millions of dollars) .................................................................... 40,924 2,688 –280 1,675 36,841 36,234

Compensation of employees (millions of dollars) ........................................ 233,482 30,186 10,330 16,424 176,543 164,673

Thousands of employees .............................................................................. 5,201.9 769.5 247.8 466.4 3,718.2 3,287.5

Exports of goods (millions of dollars) ........................................................... 141,305 26,220 5,185 8,921 100,980 98,280

Imports of goods (millions of dollars) ........................................................... 264,924 66,918 4,859 21,328 171,820 167,735

Foreign direct investment position in the United States (millions of

dollars) ....................................................................................................... 636,933 74,254 34,032 38,889 489,758 470,444

Direct investment income (millions of dollars) ............................................. 34,917 2,124 22 3,122 29,650 28,951

Bank affiliates:

Total assets (millions of dollars) ................................................................... 1,333,536 330,457 7,279 35,698 960,102 881,895

Sales (millions of dollars) ............................................................................. 124,102 44,447 484 3,238 75,933 69,407

Net income (millions of dollars) .................................................................... 3,916 453 21 298 3,143 2,984

Compensation of employees (millions of dollars) ........................................ 7,095 586 38 416 6,056 5,799

Thousands of employees .............................................................................. 108.6 6.3 .6 9.6 92.2 90.2

Exports of goods (millions of dollars) ........................................................... ...................... ........................ ........................ ........................ ........................ ........................ Imports of goods (millions of dollars) ........................................................... ...................... ........................ ........................ ........................ ........................ ........................

Foreign direct investment position in the United States (millions of

dollars) ....................................................................................................... 39,565 1,114 250 3,366 34,835 34,480

Direct investment income (millions of dollars) ............................................. 3,549 817 20 283 2,429 2,303

Note.—See the ‘‘Notes to the Tables’’ on page 3.


	


In most cases, data in the 1997 benchmark survey were

required to be reported as they would have been for

stockholders’ reports rather than for tax or other purposes. Thus, U.S. generally accepted accounting principles (GAAP) were followed unless otherwise indicated

by the survey instructions. The survey instructions departed from GAAP in cases where the departure would

result in data that were conceptually or analytically

more useful or appropriate for direct investment purposes. One major departure from GAAP was the use of

unique consolidation rules (see the preceding discussion of consolidated reporting for “The U.S. affiliate”

in the section “Concepts and Definitions”).


	 	


Data for U.S. affiliates were required to be filed on a

fiscal year basis. An affiliate’s 1997 fiscal year was defined to be the affiliate’s financial reporting year that

ended in calendar year 1997.

The fiscal year data from the benchmark survey that

are presented in this publication are not identical to

the calendar year estimates of transactions between

U.S. affiliates and their foreign parents that appear in

the U.S. international transactions accounts or to the

calendar yearend estimates of the foreign direct investment position in the United States. The benchmark

survey data must be adjusted to a calendar year basis

before they are entered into the foreign direct investment position and the international transactions accounts.

The extent of the noncomparability between the

benchmark survey data presented here and the direct

investment estimates presented in the foreign direct investment position and the international transactions

accounts depends on the number and size of the U.S.

affiliates whose fiscal years do not correspond to the

calendar year. Selected data for affiliates classified

by the affiliates’ fiscal year ending date are shown in table 3. As indicated in the addendum to the table, affiliates whose fiscal year exactly corresponded to the calendar year 1997 accounted for most of the foreign

direct investment position and direct investment income for all affiliates.
 	 !"#$%$&'

M–8

Unlike the direct investment position and balance of

payments data, financial and operating data in all BEA

surveys are consistently collected and published on a

fiscal year basis.



Under the International Investment and Trade in Services Survey Act, the direct investment data collected

by BEA from individual respondents are confidential;

thus, they cannot be published in such a manner “that

the person to whom the information relates can be

specifically identified.” For this publication, each cell in

a table was tested to determine whether the data it contained should be suppressed (not be shown) for confidentiality reasons. A “(D)” in a cell indicates that the

data were suppressed to avoid the disclosure of information on an individual company. For employment

data, a letter representing a size range is entered in lieu

of a “(D).”

The act further specifies that the data must be used

for statistical and analytical purposes only; the use of

an individual company’s data for tax, investigative, or

regulatory purposes is prohibited. Access to the data is

limited to officials and employees (including consultants and contractors and their employees) of government agencies designated by the President to perform

functions under the act. In addition, as amended by

the Foreign Direct Investment and International Financial Data Improvements Act of 1990, the act grants

access to certain other government agencies for limited

statistical purposes. For example, access is granted to

the Bureau of the Census for the purpose of linking

BEA’s enterprise-, or company-, level data for foreign

direct investment to the Census Bureau’s establishment-, or plant-, level data for all U.S. companies to

obtain more detailed data by industry and by State for

the foreign-owned enterprises that report to BEA.

Private individuals may obtain access to the data

only in the capacity of experts, consultants, or contractors whose services are procured by BEA, usually on a

temporary or intermittent basis, for purposes of carrying out projects under the Survey Act—for example, to

perform research on foreign direct investment. These

people are subject to the same confidentiality requirements as regular employees of BEA or other government agencies performing functions under the act.





Both the financial and operating data and the direct

investment position and balance of payments data

from the benchmark survey can be classified by industry of affiliate, by country and industry of UBO, and by

country and industry of foreign parent. In addition,

the direct investment position and balance of payments data can be classified by country of each member of the foreign parent group.

!
	



The 1997 benchmark survey marks the introduction of

a new International Survey Industry (ISI) classification

system for classifying data on U.S. affiliates by industry. The new ISI classification system is based on the

1997 North American Industry Classification System

(NAICS), the new industry classification system of the

United States, Canada, and Mexico.11 In the United

States, the 1997 NAICS supplants the 1987 Standard

Industrial Classification (SIC), which was the basis for

the old ISI classification system.12 Among other improvements, NAICS better reflects new and emerging

industries, industries involved in the production of advanced technologies, and service industries.

Many of the NAICS industries correspond directly

to SIC industries; similarly, many of the NAICS-based

ISI industries correspond directly to SIC-based ISI industries. However, many of these industries have been

rearranged among the higher level groups in which

they appear. In addition, the NAICS includes several

new, higher level groups. At the highest level of aggregation, the 20 industry groups—termed “sectors”—in

the NAICS replace the 10 industry divisions in the SIC.

Several of the NAICS (and NAICS-based ISI) sectors

do not correspond directly to these SIC (and SICbased ISI) industry divisions. For example, the new

“information” sector consists of industry groups from

several SIC industry divisions.13

11. Office of Management and Budget, North American Industry Classification System: United States, 1997 (Lanham, MD: Bernan Press, 1998).

Information on NAICS can be accessed on the Internet at <www.census.gov/epcd/www/naics.html>.

12. See Office of Management of Budget, Standard Industrial Classification Manual, 1987 (Washington, DC: U.S. Government Printing Office,

1987).

13. Specifically, the information sector includes the following industries:

Publishing, which is included in the SIC manufacturing industry division;

“motion picture and sound recording industries” and “information and

data processing services,” which are included in the SIC services division;

and broadcasting and communications, which are included in the SIC

transportation, communication, and public utilities division.

For additional information on the differences between the NAICS and the

SIC classifications (and therefore between the new NAICS-based and old

SIC-based ISI classifications), see “NAICS: United States, 1997”and “Bridge

Between NAICS and SIC”on the Census Bureau’s Web site at <www.census.gov/epcd/www/econ97.html>.
	 !"#$%$&'

M–9



In the new NAICS-based ISI classification system,

there are 197 industries, compared with 137 industries

in the old SIC-based ISI system. For the most part, the

new ISI classifications are equivalent to NAICS fourdigit industries; at its most detailed level, NAICS classifies industries at a six-digit level. The ISI classification

system is less detailed than either NAICS or the SIC because it is designed for classifying enterprises rather

than establishments (or plants). Because many direct

investment enterprises are active in several industries,

it is not meaningful to classify all their data in a single

industry if that industry is defined too narrowly. A list

and a description of the NAICS-based ISI codes (and

their relationship to NAICS) are presented in the Guide

to Industry and Foreign Trade Classifications for International Surveys (see appendix B).14

Each U.S. affiliate was classified by industry on the

basis of its sales (or of its total income, for holding

companies) in a three-step procedure. First, a given

U.S. affiliate was classified in the sector that accounted

for the largest percentage of its sales.15 Second, within

the sector, the U.S. affiliate was classified in the threedigit subsector in which its sales were largest; a threedigit subsector consists of all four-digit industries that

have the same first three digits in their four-digit ISI

code. Third, within its three-digit subsector, the U.S.

affiliate was classified in the four-digit industry in

which its sales were largest. This procedure ensured

that the U.S. affiliate was not assigned to a four-digit

industry outside either its sector or its three-digit subsector.16.

Table A–1 presents selected financial and operating

data for U.S. affiliates classified by industry of affiliate;

each four-digit industry is shown separately and is

grouped by the sector and subsector to which it belongs. (Table A–1 is presented both for all affiliates and

for nonbank affiliates.) Primarily because of confidentiality requirements, many of these four-digit industries are not shown in the other tables in this publication. However, each industry that is included, but not

identified, in an industry group shown in the other tables may be ascertained by referring to table A–1.

14. The Guide is also available on BEA’s Web site at <www.bea.doc.gov/

bea/surveys/be799.pdf>.

15. The sectors used were agriculture, forestry, fishing, and hunting; mining; utilities; construction; manufacturing; wholesale trade; retail trade;

transportation and warehousing; information; finance and insurance; real

estate and rental and leasing; professional, scientific, and technical services;

management of companies and enterprises; administrative and support,

waste management, and remediation services; educational services; health

care and social assistance; arts, entertainment, and recreation; accommodations and food services; and other services.

In contrast to publications on U.S.-affiliate operations for earlier years, the various petroleum-related

industries are no longer grouped in the industry group

“petroleum.” Instead, these industries are spread

among the NAICS-based ISI sectors; for example, oil

and gas extraction is now included in mining, petroleum refining is in manufacturing, and gasoline stations are in retail trade. For earlier years, petroleum is

shown as a separate major industry group because petroleum-related activities accounted for a major portion of all direct investment activity; however, the relative importance of these activities has declined

significantly in recent years, reducing the need for a

separate group. Accordingly, the industry presentation

of the data for U.S. affiliates has been changed to bring

it into conformity with that used for most other data

on the U.S. economy.

To help assess the impact of the changes both in industry classification and in the treatment of petroleum-related industries, table groups K and L in part II

of this publication present selected data classified by

industry using SIC-based industries, the basis used for

the benchmark survey and annual publications covering 1992–96.

Each U.S. affiliate was classified in a single industry—the primary industry of the affiliate. As a result,

any affiliate activities that take place in secondary industries are classified as activities in the primary industry. Because the benchmark survey data were collected on an enterprise basis, the reports for many

affiliates reflect substantial activities in secondary industries. Information on the distribution of activities

within each firm was obtained in the benchmark sur16. The following example illustrates the three-stage classification procedure. Suppose an affiliate’s sales were distributed as follows:

Industry code Percentage of total sales

where industry codes 3341, 3342, 3344, and 3353 are in the manufacturing

sector and code 4216 is in the wholesale trade sector. Because 55 percent of

the affiliate’s sales were in manufacturing and only 45 percent were in

wholesale trade, the affiliate’s sector is manufacturing. Because the largest

share of its sales within manufacturing is in the three-digit subsector 334

(computers and electronic products, which includes industry codes 3341,

3342, and 3344), the affiliate’s three-digit subsector is 334. Finally, because

its sales within subsector 334 were largest in industry 3344, the affiliate’s

four-digit industry is 3344 (semiconductors and other electronic components). Thus, the affiliate was assigned to industry 3344, even though its

sales in that industry were smaller than its sales in either industry 4216 or

industry 3353.

3341..............................

3342..............................

3344..............................

3353..............................

4216..............................

5

10

15 









30

25 













55

45
 	 !"#$%$&'

M–10

Table 4.—Industry Distribution of Sales by Large Affiliates Classified in Manufacturing

Sales rank

Number of four-digit industries in which affiliate

has sales 1

Percentage of affiliate sales accounted for by: Addendum:

Percentage of

affiliate sales

accounted for

by four-digit

industries

other than

those in which

the affiliate is

classified 2

All industries Manufacturing

industries

Other

industries

All industries 2

Manufacturing industries

Non-manufacturing

industries 2 Total

Four-digit

industry in

which the

affiliate is

classified

Other

100 largest affiliates ............................................................ 5.4 3.7 1.7 100.0 85.7 64.7 21.0 14.3 35.3

1–20 ..................................................................................... 6.6 4.5 2.2 100.0 80.0 54.0 26.0 20.0 46.0

21–40 ................................................................................... 6.2 4.3 1.9 100.0 85.3 61.2 24.1 14.7 38.8

41–60 ................................................................................... 4.2 2.9 1.3 100.0 90.3 73.0 17.3 9.7 27.0

61–80 ................................................................................... 5.0 3.4 1.7 100.0 86.0 66.5 19.6 14.0 33.5

81–100 ................................................................................. 4.9 3.3 1.6 100.0 86.9 68.8 18.1 13.1 31.2

Addendum:

All large manufacturing affiliates with sales 3 ................ 2.5 1.9 .6 100.0 92.0 82.0 10.0 8.0 18.0

1. On the benchmark survey form, large affiliates (those with assets, sales, or net income greater than $100

million) were requried to specify their sales in the 10 industries in which their sales were largest. To the extent

that some affiliates had sales in more than 10 industries, there may be a slight downward bias in the average

number of industries shown for a given group.

2. For affiliates that had sales in more than 10 industries, includes sales in industries that were not identified

on the benchmark survey form.

3. Consists of the 861 large affiliates classified in manufacturing that had positive sales.

vey for two key items—sales and employment. Each

U.S. affiliate above a minimum size threshold was required to distribute its sales and its employment

among the four-digit industries in which it had sales.17

The data classified by industry of sales confirm that

many affiliates had activities in more than one industry. In particular, the largest affiliates tended to report

substantial sales in a number of secondary industries,

including industries outside of the sector in which the

affiliate was classified. Table 4 illustrates the degree to

which sales by large affiliates classified in manufacturing are diversified across industries; it indicates that

the 100 largest manufacturing affiliates (which together account for 58 percent of the total sales of all affiliates classified in manufacturing) on average had

sales in 5 industries, and that 35 percent of these affiliates’ sales were accounted for by four-digit industries

other than the one in which the affiliate was classified.18 The table also shows that 2 of the 5 industries in

which the average affiliate had sales are outside manufacturing; on average, sales outside manufacturing accounted for 14 percent of the affiliates’ total sales.

In addition, table 4 shows that industry diversification tends to increase with affiliate size. For example,

in an examination of the 20 largest affiliates, the average number of industries in which affiliates had sales

17. Specifically, large U.S. affiliates (those with total assets, sales, or net income greater than $100 million) had to specify their sales and employment

in the 10 industries in which their sales were largest; medium-sized affiliates

(those with assets, sales or net income greater than $30 million but not

greater than $100 million) had to specify their sales and employment in the

4 industries in which their sales were largest. Affiliate sales and

employment in all other industries are shown in the “unspecified” row in

tables A–8, E–7, E–8, G–10, and G–11.

18. For 32 of these 100 affiliates, the industry in which the affiliate is classified accounts for less than half of the affiliate’s total sales.

increases to 7 industries, and the average share of sales

accounted for by industries other than the industry in

which the affiliate was classified increases to 46 percent. Similar patterns of industry diversification are

displayed by large affiliates classified in industries outside manufacturing, particularly by affiliates in wholesale trade.

As table 4 implies, the distribution of data by industry of affiliate differs from the distribution that would

result if each of the affiliates’ activities were classified

by industry. In table A–8 of part II, nonbank U.S. affiliates’ sales and employment by industry of sales are

compared with their sales and employment by industry of affiliate. (Data by industry of sales cross-classified by industry of affiliate are shown in table E–7 for

sales and table G–10 for employment.)

The distribution of affiliate data by industry of sales

roughly approximates the distribution that would result if the data were reported and classified by industry

of establishment because an affiliate that has an establishment in an industry usually also has sales in that

industry. However, if two establishments of an affiliate

are in different industries and if one of the establishments provides all of its output to the other one, the

affiliate will not have sales in the industry of the first

establishment.19 Thus, the data by industry of sales approximate data by industry of establishment, but data

by industry of establishment provide more precise and

19. For example, if an affiliate operates both a metal mine and a metal

manufacturing plant and if the entire output of the mine is used by the

manufacturing plant, all of the affiliate’s sales will be in metal manufacturing, and none will be in metal mining. When the mining employees are distributed by industry of sales, they are classified in manufacturing. In

contrast, when they are distributed by industry of establishment, they are

classified in mining.
	 !"#$%$&'

M–11



Table 5.—Selected Financial and Operating Data of U.S. Affiliates, by

Industry of Foreign Parent

Millions of dollars

Thousands of

employees Total

assets

Gross

property,

plant,

and

equipment

Sales

Compensation

of employees

All industries ................................ 4,405,019 886,077 1,850,446 240,578 5,310.6

Government and government-related

entities .................................................. 7,217 5,870 3,265 283 5.2

Government and government-owned

enterprises ....................................... 6,655 5,496 (D) 283 5.2

Pension funds—government run ......... 562 374 (D) 1 (*)

Individuals, estates, and trusts ................ 37,542 21,894 32,040 5,212 226.0

Pension funds—privately run ............... 3,374 2,663 1,072 41 .7

Estates, trusts, and nonprofit

organizations .................................... 11,267 7,476 17,030 2,753 108.2

Individuals ............................................ 22,901 11,755 13,938 2,418 117.1

Manufacturing ........................................... 577,989 276,176 650,364 88,404 1,747.4

Food ..................................................... 20,542 11,349 30,785 4,059 94.7

Beverages and tobacco ....................... 19,830 3,389 8,487 1,102 18.6

Petroleum ............................................. 12,129 11,299 12,920 1,040 18.2

Chemicals ............................................. 123,724 53,951 96,498 17,025 263.2

Pharmaceuticals and medicines ..... 38,069 9,029 24,821 4,939 78.7

Other ................................................ 85,656 44,922 71,677 12,087 184.5

Nonmetallic mineral products .............. 15,540 11,977 13,162 2,478 50.8

Primary and fabricated metals ............ 49,411 30,950 53,463 7,994 162.2

Machinery ............................................. 28,868 8,239 31,742 4,878 110.4

Computer and electronic products ...... 63,551 21,929 83,602 12,224 217.0

Electrical equipment, appliances and

components ..................................... 54,319 21,787 83,266 9,915 191.2

Transportation equipment .................... 109,290 57,472 146,928 11,091 222.4

Motor vehicles and parts ................ 98,988 54,734 137,464 9,384 181.2

Other ................................................ 10,302 2,738 9,464 1,707 41.1

Other manufacturing ............................ 80,786 43,833 89,511 16,599 398.7

Wholesale and retail trade ....................... 111,989 37,254 227,039 15,280 585.2

Information ................................................ 22,727 9,902 14,815 4,224 90.5

Depository institutions and bank holding

companies ............................................ 1,902,400 14,988 175,088 13,694 152.6

Finance (except depository institutions)

and insurance ...................................... 681,557 31,157 108,395 13,099 188.3

Real estate ............................................... 63,637 53,632 10,596 1,303 30.5

Professional, scientific, and technical

services ................................................ 6,688 1,559 5,129 2,205 33.6

Other industries ........................................ 993,272 433,645 623,714 96,873 2,251.2

Agriculture, forestry, fishing and

hunting ............................................. 4,394 2,494 5,732 423 10.7

Mining ................................................... 49,251 39,408 39,798 3,940 62.8

Utilities .................................................. 58,573 50,875 40,270 6,614 138.1

Construction ......................................... 14,767 8,160 19,005 3,231 64.4

Transportation and warehousing ......... 31,895 23,731 36,151 5,588 97.0

Holding companies .............................. 810,368 298,514 464,730 70,210 1,638.0

Other services ...................................... 24,023 10,462 18,028 6,867 240.2

NOTE.—See the ‘‘Notes to the Tables’’ on page 3.

more detailed information of the activities of the affiliates. In addition, establishment data can be related directly to measures of economic activity by all establishments in the United States. Partly for these reasons,

BEA plans to publish establishment data for U.S. affiliates for 1997 as part of a project that links the enterprise data from the benchmark survey to the establishment data from the Census Bureau’s 1997 economic

census.20

The foreign parent and UBO of each affiliate

were also classified by industry; however, because

a breakdown was not obtained for each industry

in which the parent or UBO had sales, the categories used were much less detailed than those used

for affiliates. In the benchmark survey, an affiliate

had to assign its parent and UBO to 1 of 31 broad

NAICS-based categories. These categories are

shown in table 5, which presents selected data for

affiliates classified by industry of foreign parent.

Selected data for nonbank affiliates classified by

industry of UBO are presented in table A–6 in

part II. (Data by industry of affiliate cross-classified by industry of UBO are shown in tables B–7,

E–5, F–4, and G–5.)

The industry classification of an affiliate’s foreign parent may differ from that of its UBO. The

foreign parent consists only of the first foreign

person in the affiliate’s ownership chain, and its

industry of classification reflects only the activities of that first foreign person. In contrast, the

UBO’s industry reflects its fully consolidated

worldwide activities, including the activities of

both U.S. and foreign entities in the ownership

chain below it.

A distribution of sales by industry was not obtained for UBO’s or foreign parents. For affiliates

that had more than one UBO or foreign parent,

each UBO or foreign parent was classified. In the

tables that show data disaggregated by industry

of UBO or foreign parent, all data for these affiliates are shown in the industry of the UBO or foreign parent with the largest ownership share.

	



In the benchmark survey, the UBO and the foreign parent of a U.S. affiliate were each classified

by country. For affiliates that had more than one

20. Establishment data from the link project were published previously for 1987–92 (see the section on data availability). 

UBO or foreign parent, each UBO or foreign parent

was classified; for most of the tables in this publication,

the data for a given affiliate were then classified by the

country of the UBO or the foreign parent that had the

largest ownership share in the affiliate.

For most affiliates, the country of the UBO is the

country of the foreign parent: Of the 10,090 U.S. affiliates that were required to complete a report, the coun-
 	 !"#$%$&'

M–12

Table 6.—Number of Affiliates by Country of UBO and Whether or Not

the Country of Foreign Parent is the Same as the Country of UBO 1

Country of UBO Total

Affiliates whose

country of foreign

parent is

Country

of UBO

Another

country

All countries .......................................................................... 10,090 .............. ..............

Canada ................................................................................................... 979 961 18

Europe .................................................................................................... 4,281 .............. ..............

Austria ................................................................................................ 52 41 11

Belgium .............................................................................................. 106 83 23

Denmark ............................................................................................. 66 61 5

Finland ............................................................................................... 49 39 10

France ................................................................................................ 549 490 59

Germany ............................................................................................ 1,035 983 52

Ireland ................................................................................................ 43 34 9

Italy ..................................................................................................... 234 160 74

Liechtenstein ...................................................................................... 33 28 5

Luxembourg ....................................................................................... 60 40 20

Netherlands ........................................................................................ 318 283 35

Norway ............................................................................................... 71 63 8

Spain .................................................................................................. 69 60 9

Sweden .............................................................................................. 138 123 15

Switzerland ......................................................................................... 419 321 98

United Kingdom ................................................................................. 961 781 180

Other .................................................................................................. 78 .............. ..............

Latin America and Other Western Hemisphere ................................... 693 .............. ..............

South and Central America ............................................................... 433 .............. ..............

Brazil .............................................................................................. 67 36 31

Mexico ........................................................................................... 179 127 52

Panama ......................................................................................... 54 50 4

Venezuela ...................................................................................... 52 24 28

Other .............................................................................................. 81 .............. ..............

Other Western Hemisphere .............................................................. 260 .............. ..............

Bahamas ........................................................................................ 28 25 3

Bermuda ........................................................................................ 65 36 29

Netherlands Antilles ...................................................................... 53 46 7

United Kingdom Islands, Caribbean ............................................. 105 91 14

Other .............................................................................................. 9 .............. ..............

Africa ...................................................................................................... 42 .............. .............. South Africa ....................................................................................... 19 2 17

Other .................................................................................................. 23 .............. ..............

Middle East ............................................................................................ 342 .............. .............. Israel .................................................................................................. 81 67 14

Kuwait ................................................................................................ 52 19 33

Lebanon ............................................................................................. 19 1 18

Saudi Arabia ...................................................................................... 123 18 105

United Arab Emirates ........................................................................ 25 5 20

Other .................................................................................................. 42 .............. ..............

Asia and Pacific ..................................................................................... 3,649 .............. ..............

Australia ............................................................................................. 140 125 15

China .................................................................................................. 33 32 1

Hong Kong ......................................................................................... 220 99 121

Indonesia ............................................................................................ 36 22 14

Japan ................................................................................................. 2,718 2,675 43

Korea, Republic of ............................................................................. 127 124 3

Malaysia ............................................................................................. 30 14 16

New Zealand ...................................................................................... 15 12 3

Philippines .......................................................................................... 25 17 8

Singapore ........................................................................................... 75 65 10

Taiwan ................................................................................................ 173 143 30

Other .................................................................................................. 57 .............. ..............

United States ......................................................................................... 104 0 104

1. Covers affiliates that were required to report in the benchmark survey; affiliates that filed exemption claims

are excluded.

try of the UBO and that of its foreign parent are the

same for 8,598 affiliates. Together, these affiliates account for more than 85 percent of the total assets,

sales, and employment of all affiliates.

Table 6 shows the number of affiliates that were required to report in the benchmark survey by country

of UBO. For a given UBO country, the table shows the

number of affiliates for which the affiliate’s country of

foreign parent is identical to, or differs from, its

country of UBO. For most of the countries

shown, the country of foreign parent is same as

the country of UBO for the vast majority of affiliates. However, for some UBO countries—most

notably, Hong Kong, Venezuela, and several

countries in the Middle East—the country of foreign parent of most affiliates differs from that of

their UBO. For most of these countries, tabular

totals shown when data are distributed by country of UBO are substantially higher than those

shown when data are distributed by country of

foreign parent. For other countries—most notably, the Netherlands, Panama, and a few Caribbean countries—totals shown when data are distributed by country of foreign parent are

substantially higher than those shown when distributed by country of UBO. A comparison of selected data-item totals by country of UBO and by

country of foreign parent is shown for nonbank

affiliates in table A–7 in part II.

Most of the data in the tables that are disaggregated by country in this publication are classified

by country of UBO. Classification by country of

UBO usually is used for financial and operating

data because the country that ultimately owns or

controls a U.S. affiliate and that therefore derives

benefits from owning or controlling the affiliate

generally is considered most important for analyzing these data. Except for the data in table 7, all

balance of payments and direct investment position data in this publication are also classified by

country of UBO, so that both types of data presented will be classified on the same basis. In contrast, the data in the U.S. international transactions accounts and in the foreign direct

investment position in the United States are usually classified by the country of each member of

the foreign parent group with which there are

transactions or positions.

Table A–2 presents selected financial and operating data by country of UBO; by geographic

area, it shows each country in which a UBO was

located in 1997. (Table A–2 is presented for all affiliates, for nonbank affiliates, and for bank affiliates.) Table 7 shows data for all affiliates on the
	 !"#$%$&'

M–13



Table 7.—Foreign Direct Investment Position in the United States and Direct Investment Income by Country of UBO, of Foreign Parent, and of

Each Member of the Foreign Parent Group

[Millions of dollars]

By country of

UBO

By country of

foreign parent

By country of

each member of

the foreign parent

group

Position Income Position Income

Position Income

All countries ............... 676,498 38,466 676,498 38,466 676,498 38,466

Canada ................................................. 78,283 4,235 80,991 4,206 65,863 3,114

Europe .................................................. 401,492 27,620 409,702 28,387 422,351 29,360

Austria .............................................. (D) (D) 1,693 106 1,814 114

Belgium ............................................ (D) (D) 4,046 311 6,283 357

Denmark ........................................... (D) (D) 2,734 103 2,610 100

Finland ............................................. (D) 213 3,599 188 3,349 188

France .............................................. 50,839 2,301 49,006 2,328 50,008 2,347

Germany .......................................... 79,776 4,066 75,624 3,540 70,722 3,253

Ireland .............................................. (D) (D) 3,818 252 10,250 431

Italy ................................................... 6,917 334 3,509 183 3,855 190

Liechtenstein .................................... 276 –4 314 –27 346 –27

Luxembourg ..................................... 1,160 –98 4,014 249 5,285 321

Netherlands ...................................... (D) 3,644 82,853 6,177 86,607 6,592

Norway ............................................. (D) 117 3,085 140 3,255 141

Spain ................................................ 2,496 91 2,535 96 2,513 93

Sweden ............................................ 13,277 1,085 12,968 1,001 12,400 966

Switzerland ....................................... (D) 2,849 36,944 2,699 34,701 2,544

United Kingdom ............................... 137,943 12,443 121,187 10,895 126,616 11,606

Other ................................................ 784 10 1,774 146 1,739 145

Andorra ........................................ (*) (*) 0 0 0 0

Armenia ....................................... (*) (*) (*) (*) (*) (*)

Belarus ......................................... (*) (*) (*) (*) (*) (*)

Bulgaria ........................................ 0 (*) 0 (*) (*) (*)

Croatia ......................................... 1 (*) 1 (*) 1 (*)

Cyprus ......................................... (D) –3 11 –3 11 –3

Czech Republic ........................... 7 1 (*) (*) –1 (*)

Gibraltar ....................................... (D) 2(D) 135 (D) 135

Greece ......................................... 262 5 375 10 367 10

Hungary ....................................... (D) 1(D) 1(D) 1

Iceland ......................................... (D) (*) (D) (*) (D) (*)

Malta ............................................ 1 1 25 (*) 25 (*)

Montenegro .................................. (*) (*) (*) (*) (*) (*)

Poland .......................................... 47 –2 47 –2 39 –2

Portugal ....................................... –37 4 –41 3 –60 3

Romania ...................................... (*) (*) (*) (*) (*) (*)

Russia .......................................... 85 2 79 1 84 1

Serbia .......................................... 0 0 1 (*) 1 (*)

Slovenia ....................................... 34 –2 27 –3 27 –3

Turkey .......................................... 52 2 49 3 46 2

Turkmenistan ............................... 0 0 0 0 –1 0

Ukraine ........................................ 1 (*) 1 (*) 1 (*)

Uzbekistan ................................... 2 1 0 0 0 0

Latin America and Other Western

Hemisphere ...................................... 19,920 1,275 31,070 1,128 31,736 1,145

South and Central America ............. (D) 491 11,436 830 10,558 807

Brazil ............................................ 2,413 184 1,102 64 827 52

Mexico ......................................... 4,740 166 3,766 153 3,687 148

Panama ....................................... (D) –162 5,430 550 5,172 550

Venezuela .................................... 2,509 (D) 321 25 344 25

Other ............................................ 1,224 (D) 817 39 528 33

Argentina ................................. 675 56 (D) (D) 428 38

Belize ....................................... (*) (*) 0 0 0 0

Bolivia ...................................... 1 2 1 2 1 2

Chile ........................................ 92 2 87 2 24 1

Colombia ................................. 107 6 46 1 15 2

Costa Rica .............................. (D) 3 0 0 –5 (*)

Ecuador ................................... 178 (D) 28 2 28 2

El Salvador .............................. 41 2 3 (*) 3 (*)

Guatemala ............................... 6 (*) 1 (*) –7 (*)

Honduras ................................. (D) 3 0 0 (*) 0

Nicaragua ................................ (D) 3 0 0 –9 0

Paraguay ................................. 4 (*) (*) (*) (*) (*)

Peru ......................................... 38 2 31 (D) 12 4

Uruguay ................................... 17 (*) (D) –16 37 –16

Other Western Hemisphere ............ (D) 784 19,634 298 21,178 337

Bahamas ...................................... 540 –7 1,426 24 1,563 31

Bermuda ...................................... (D) 373 4,169 127 4,585 142

Netherlands Antilles .................... 2,287 (D) 5,733 405 5,817 407

United Kingdom Islands,

Caribbean ................................ (D) (D) 7,850 –295 8,603 –275

Other ............................................ 37 –6 456 37 609 33

Anguilla .................................... 1 0 1 0 1 0

By country of

UBO

By country of

foreign parent

By country of

each member of

the foreign parent

group

Position Income Position Income

Position Income

Antigua and Barbuda .............. 1 (*) 15 1 15 1

Aruba ....................................... (*) (*) (*) (*) (*) (*)

Barbados ................................. 3 –3 426 39 586 34

Dominican Republic ................ 3 –1 3 –1 1 –1

Haiti ......................................... 0 0 0 0 –2 0

Jamaica ................................... (D) 1 (*) (*) –3 (*)

St. Vincent and the

Grenadines ......................... 1 –1 (D) –1 (D) –1

Trinidad and Tobago .............. 3 (*) (*) (*) (*) (*)

United Kindgom Islands,

Atlantic ................................ (D) –2 (D) (*) (D) (*)

Africa .................................................... (D) 127 1,016 –349 1,668 –348

South Africa ..................................... 1,034 143 (D)272

Other ................................................ (D) –16 (D) –351 1,661 –351

Algeria .......................................... (D) (D) 0 0 (*) (*)

Angola .......................................... 0 0 0 0 –2 0

Congo (Kinshasa) ........................ (*) (*) 2 (*) 2 (*)

Egypt ............................................ 45 –5 40 –5 40 –5

Ethiopia ........................................ (D) (D)0000

Guinea ......................................... 0 0 0 0 (*) (*)

Kenya ........................................... 1 (*) 1 (*) 1 (*)

Liberia .......................................... 110 –40 900 –352 1,602 –351

Libya ............................................ 4 (*) 4 (*) 4 (*)

Mauritius ...................................... 0 0 0 0 –4 0

Morocco ....................................... 19 9 15 (*) 15 (*)

Nigeria ......................................... (D) 6(D)686

Rwanda ........................................ 0 0 0 0 –1 0

Senegal ........................................ (*) (*) (*) (*) (*) (*)

Tunisia ......................................... 0 0 0 0 –4 (*)

Zimbabwe .................................... 0 0 2 (*) 2 (*)

Middle East .......................................... (D) 641 5,983 642 5,985 642

Israel ................................................ 2,409 172 2,012 141 2,047 141

Kuwait .............................................. (D) 335 (D) 335 (D) 335

Lebanon ........................................... 398 20 5 (*) 5 (*)

Saudi Arabia .................................... 2,660 180 (D) (D) (D) (D)

United Arab Emirates ...................... 1,124 –4 81 –1 73 –1

Other ................................................ 312 –62 –78 (D) –79 (D)

Bahrain ........................................ 143 –69 (D) (D) (D) (D)

Iran ............................................... 27 (*) (D) (*) (D) (*)

Jordan .......................................... 63 2 13 2 13 2

Oman ........................................... 7 1 7 1 6 (*)

Qatar ............................................ 23 3 (D) 3(D) 3

Syria ............................................. 49 (*) 2 (*) 2 (*)

Yemen ......................................... (*) (*) 0 0 0 0

Asia and Pacific ................................... 158,861 4,188 147,736 4,452 148,895 4,554

Australia ........................................... (D) (D) 13,810 –783 13,205 –730

China ................................................ (D) (D) 265 42 258 38

Hong Kong ....................................... 2,587 32 1,595 44 1,849 46

Indonesia .......................................... 378 24 255 (D) 249 (D)

Japan ............................................... 128,923 6,152 125,427 6,107 125,916 6,086

Korea, Republic of ........................... 470 –1,062 433 –1,060 262 –1,060

Malaysia ........................................... (D) 10 458 2 459 –2

New Zealand .................................... 280 –54 144 –28 191 –27

Philippines ........................................ 182 (D) 78 (D) 97 (D)

Singapore ......................................... 2,610 –98 1,950 –23 2,876 54

Taiwan .............................................. 5,014 –216 2,908 105 3,013 104

Other ................................................ 853 (D) 413 4 521 4

Afghanistan .................................. (D) (*) (D) (*) (D) (*)

Bangladesh .................................. 3 (*) 3 (*) 3 (*)

Brunei .......................................... (D) (D) (D) –3 (D) –3

Cambodia .................................... 0 0 0 0 –2 (*)

French Islands, Pacific ................ 1 (*) 1 (*) 1 (*)

India ............................................. 153 10 98 14 94 14

Pakistan ....................................... 71 11 49 10 48 10

Papua New Guinea ..................... 1 (*) 1 (*) 1 (*)

Sri Lanka ..................................... (*) (*) (*) (*) –2 (*)

Thailand ....................................... 186 –49 196 –19 312 –19

United Kingdom Islands, Pacific (*) (*) (D) 1(D) 1

Vanuatu ....................................... (D) (*) (D) (*) (D) (*)

United States ....................................... 6,247 379 .............. .............. .............. ..............

Addenda:

European Union (15) ....................... 362,065 24,657 367,919 25,443 382,617 26,571

OPEC ............................................... 10,278 764 4,689 594 4,648 594

OPEC Organization of Petroleum Exporting Countries.

UBO Ultimate beneficial owner.

NOTE.—See the ‘‘Notes to the Tables’’ on page 3.
 	 !"#$%$&'

M–14

 Table 8.—Selected Financial and Operating Data of U.S. Affiliates 

by Country of Foreign Parent

Millions of dollars

Thousands of

employees Total

assets

Gross

property,

plant,

and

equipment

Sales Net

income

Compensation

of employees

All countries ........... 4,405,019 886,077 1,850,446 44,839 240,578 5,310.6

Canada .................................... 419,985 88,359 155,854 3,519 23,970 643.3

Europe ..................................... 2,565,937 497,863 1,032,691 33,214 156,739 3,325.2

Austria ................................. 13,811 (D) 4,707 89 393 9.1

Belgium ................................ 24,883 11,739 22,550 530 2,501 112.1

Denmark .............................. (D) 2,715 (D) (D) 1,342 30.4

Finland ................................. (D) 2,663 (D) (D) 1,300 25.7

France ................................. 467,243 73,254 137,353 2,792 20,884 382.1

Germany .............................. 419,470 84,145 193,608 4,192 30,524 652.0

Ireland .................................. (D) (D) (D) (D) (D) K

Italy ...................................... 43,620 3,146 9,380 291 1,026 27.7

Liechtenstein ....................... 909 346 636 –10 152 1.6

Luxembourg ......................... 13,195 5,493 16,709 337 2,935 65.9

Netherlands ......................... 510,884 120,612 220,457 8,297 28,132 615.3

Norway ................................ (D) (D) (D) (D) 1,046 29.4

Spain ................................... 36,550 1,280 3,772 66 (D) I

Sweden ................................ 55,807 10,170 33,355 1,043 4,682 101.4

Switzerland .......................... 432,684 33,758 117,253 3,422 21,405 343.9

United Kingdom ................... 476,495 136,043 231,686 11,561 38,565 885.0

Other .................................... 9,361 408 2,330 16 187 4.2

Latin America and Other

Western Hemisphere .......... 280,977 65,588 79,810 6,333 12,289 354.6

South and Central America 193,042 25,514 31,625 5,437 3,747 72.7

Brazil ............................... 6,918 903 (D) (D) (D) H

Mexico ............................. (D) 1,579 6,659 1,347 756 20.7

Panama ........................... (D) (D) (D) (D) (D) K

Venezuela ....................... 3,625 (D) 1,067 221 174 3.4

Other ............................... 5,188 127 820 43 68 1.8

Other Western Hemisphere 87,935 40,074 48,185 897 8,542 281.8

Bahamas ......................... 3,262 1,749 1,678 1 271 11.3

Bermuda .......................... (D) 6,266 (D) (D) 2,204 94.4

Netherlands Antilles ........ 16,229 (D) 12,645 628 2,228 65.0

United Kingdom Islands,

Caribbean ................... 50,435 (D) 22,890 –44 3,775 107.7

Other ............................... (D) 526 (D) (D) 64 3.5

Africa ........................................ (D) 5,238 (D) (D) 310 6.9

South Africa ......................... (D) 8 28 2 2 .1

Other .................................... 5,990 5,231 (D) (D) 308 6.8

Middle East .............................. (D) 10,829 (D) (D) 945 20.5

Israel .................................... (D) 600 2,427 131 374 8.3

Kuwait .................................. (D) 5,184 (D) (D) 71 3.2

Lebanon ............................... 8 7 (*) (*) 0 0

Saudi Arabia ........................ 7,557 (D) (D) (D) (D) H

United Arab Emirates ......... 203 (D) (D) (D) 6 .2

Other .................................... 2,723 282 (D) (D) (D) H

Asia and Pacific ...................... 1,101,331 218,200 562,322 897 46,325 960.1

Australia ............................... 62,046 16,371 25,227 –1,344 3,346 70.7

China ................................... (D) (D) (D) (D) 122 2.1

Hong Kong .......................... 8,156 1,405 2,157 13 225 7.4

Indonesia ............................. 5,090 389 1,089 44 196 7.0

Japan ................................... 955,349 186,279 494,934 3,451 39,799 815.1

Korea, Republic of .............. 33,554 5,737 23,305 –1,156 1,040 20.1

Malaysia .............................. (D) 592 (D) (D) 287 7.4

New Zealand ....................... 637 143 1,421 –59 182 2.6

Philippines ........................... 788 (D) 116 10 26 .8

Singapore ............................ 6,841 3,173 2,456 –239 382 8.1

Taiwan ................................. 17,438 3,157 7,388 81 587 15.4

Other .................................... 4,526 326 845 –5 134 3.5

Addenda:

European Union (15) .......... 2,118,211 460,236 899,753 29,857 133,996 2,947.0

OPEC .................................. 23,497 12,701 15,899 1,361 776 18.0

OPEC Organization of Petroleum Exporting Countries.

NOTES.—See the ‘‘Notes to the Tables’’ on page 3.

Size ranges are given in employment cells that are suppressed. The size ranges are A–1 to 499; F–500 to 999; G–1,000 to 2,499; H–2,500 to 4,999; I–5,000 to 9,999; J–10,000 to 24,999; K–25,000 to 49,999; 

L–50,000 to 99,999; M–100,000 or more.

cause of confidentiality requirements, many

countries could not be shown in the other tables

in this publication. However, each country included, but not identified, in a geographic group

shown in the other tables may be ascertained by

referring to table A–2 or table 7.

Three tables—tables 7 and 8 in and table A–7

in part II—show data by country of foreign parent. Table 7 shows the direct investment position

and direct investment income by country of foreign parent and by country of each member of

the foreign parent group, in addition to by country of UBO. Table 8 shows selected financial and

operating data for all affiliates, classified by country of foreign parent. As mentioned above, table

A–7 compares a few key data items classified by

country of UBO and by country of foreign parent

for nonbank affiliates.

"
#	$

Nonbank affiliates with total assets, sales, or net

income greater than $3 million were required to

report in the benchmark survey. Depending on

their size, they had to report on either a long

form, a short form, or an abbreviated short

form.21 In order to present financial and operating data in the same detail for all nonbank affiliates, BEA estimated the items that appeared only

on the long form for the affiliates that reported

on the short form or the abbreviated short form.

Estimates were also made for some affiliates that

failed to report in the benchmark survey but for

which BEA had a basis for estimation, usually

from data reported in other BEA surveys. In addition, estimates were made for affiliates that

were exempt from reporting in the benchmark

survey.22

The long form (BE–12(LF)) was filed by nonbank affiliates with total assets, sales, or net income (or loss) greater than $100 million and collected the most detailed data. The short form

(BE–12(SF)) was filed by nonbank affiliates with

total assets, sales and net income (or loss) of $100

million or less. The full short form—which was

21. Bank affiliates reported on a separate form. For nonbank affiliates, the abbreviated short form consists of items 1 through 20 in

part I of the short form. All the forms used in the benchmark survey

are reprinted in appendix A.

22. As noted in the section on “Coverage,” estimates for exempt

affiliates were not made in previous benchmark and annual surveys;

however, because the data for exempt affiliates are minuscule, this

change has virtually no effect on comparability with the published

data for earlier years.

direct investment position and on direct investment income

by each country in which a UBO was located. Primarily be-
	 !"#$%$&'

M–15



 Table 9.—Selected Data for U.S. Affiliates That Filed Reports and for Affiliates 

for Which Reports Were Estimated

Number

of

affiliates

Millions of dollars

Thousands of

employees Total

assets

Gross

property,

plant,

and

equipment

Sales Net

income

Compensation of

employees

Affiliates that were required to file a

report ..................................................... 10,090 4,401,547 883,861 1,848,667 44,926 239,488 5,302

Bank affiliates ....................................... 438 1,333,536 8,509 124,102 3,916 7,095 109

Nonbank affiliates ................................. 9,652 3,068,011 875,353 1,724,565 41,010 232,393 5,194

Nonbank affiliates that actually filed

reports .......................................... 9,211 3,016,493 862,282 1,698,220 40,967 227,618 5,065

Affiliates that filed long forms ...... 2,380 2,902,723 799,182 1,600,746 40,976 210,764 4,630

Affiliates that filed full short forms 1,712 71,662 41,601 64,635 203 10,841 280

Affiliates that filed abbreviated

short forms ............................... 5,119 42,108 21,499 32,840 –212 6,014 155

Nonbank affiliates that failed to file

reports and for which reports

were estimated ............................ 441 51,517 13,071 26,345 43 4,775 128

Affiliates that were exempt from

reporting 1 ............................................. 5,906 3,473 2,216 1,779 –87 311 8

Addendum:

Nonbank affiliates that filed long forms as

a percentage of all nonbank affiliates

that were required to report ................. 24.7 94.6 91.3 92.8 99.9 90.7 89.2

1. For exempt affiliates, data were estimated for all items except total assets, sales, and net income (which were reported on

the exemption form).

filed by nonbank affiliates with total assets, sales, or net

income (or loss) greater than $30 million—collected

most balance of payments data items but only selected

financial and operating data items. The abbreviated

short form—which was filed by nonbank affiliates

with total assets, sales, and net income (or loss) of $30

million or less—collected key financial and operating

data items only. For a given short-form affiliate, longform items were generally estimated on the basis of relationships among data items for a comparable panel

of long-form affiliates.

A total of 2,380 nonbank affiliates filed long forms

(table 9). Although these affiliates accounted for only

25 percent of all nonbank affiliates that were required

to report, in terms of value, they accounted for 90 percent or more of the nonbank universe for most key

data items.

A total of 1,712 nonbank affiliates filed short forms,

and 5,119 affiliates filed abbreviated short forms. Together, these affiliates accounted for about 70 percent

of all nonbank affiliates that were required to report;

however, in terms of value, they accounted for less than

10 percent of the nonbank universe for most key data

items. A large number of these affiliates were in real estate, and their shares of the universe in this industry in

terms of value were disproportionately high. In real estate, affiliates that filed either the short form or the abbreviated short form accounted for 25

percent of total assets, 27 percent of

sales, and 19 percent of employment.

Special estimates were made for 441

nonbank affiliates that did not file a

benchmark survey report even though

they met the criteria for filing (these affiliates accounted for about 5 percent of

all nonbank affiliates that were required

to report). For these affiliates, BEA had

a report in another direct investment

survey that could serve as a basis for the

estimation. These affiliates, most of

which were small, accounted for less

than 3 percent of the nonbank universe

for most key data items.

The data reported by U.S. affiliates

had to pass a substantial number of

computerized edit checks. Where possible, the data for an affiliate were reviewed for their consistency with related

data for the affiliate from other parts of

the report form, with data provided in

related report forms, with comparable

data reported by other affiliates, and with comparable

data from outside sources. As a result of this edit and

review process, a number of changes to the reported

data were made, usually after consulting with the reporting affiliate. In some cases, usually involving small

affiliates, estimates based on industry averages or other

information were substituted for missing or erroneously reported data.

For some items—such as those pertaining to trade

by product and country of origin or destination and

employment by industry of sales or by State—affiliates

had difficulty in supplying the required information

because the data were not easily accessible or were unavailable from their standard accounting records. In

these cases, affiliates often made estimates, the quality

of which is difficult to assess.

%&	


Several tables in this publication present the number

(by industry, country, or State) of affiliates that were

required to report in the benchmark survey. Because

the exemption level for filing reports was higher than

in previous benchmark surveys, the number is not

comparable with that shown in previous benchmark

and annual publications.23

The number of affiliates shown in the tables of this

publication exclude affiliates that were exempt from
 	 !"#$%$&'

M–16

reporting, even though estimates for exempt affiliates

are now included in the data for other items. For the

benchmark survey, exemption claims were filed by

5,906 affiliates; however, the total number of affiliates

that were below the threshold for submitting benchmark survey reports may be considerably higher than

the number of exemption claims that were actually

filed. In terms of value, the effect of any omission of

exempt affiliates on the benchmark survey data is negligible, as exempt affiliates account for only a tiny percentage of the data for all affiliates (table 2). However,

the number of exempt affiliates that were not counted

could be substantial.

The published data on the number of affiliates that

were required to report may also be subject to some

imprecision, because some affiliates that were required

to file a report did not do so. Because of limited resources, BEA’s efforts to ensure compliance with reporting requirements focused mainly on large affiliates. As a result, some small affiliates that were not

aware of the reporting requirements and that were not

on BEA’s mailing list may not have filed reports. Although the omission of these affiliates from the benchmark survey results probably has not significantly affected the aggregate value of the various data items

collected, it could have caused an unknown, but possibly significant, understatement of the number of affiliates.

Even an exact count of U.S. affiliates would be difficult to interpret because each report covers a fully consolidated U.S. business enterprise, which may consist

of several companies. The number of fully consolidated enterprises varies according to the degree of consolidation used and the differences in the organizational structure of the company. Tables A–1 and A–2 in

this publication show the number of companies consolidated in the affiliates’ reports in addition to the

number of affiliates that were required to report. Because the report for one affiliate may cover many companies, the number of companies consolidated is substantially higher than the number of affiliates—34,900

companies, compared with 10,090 affiliates. For nonbank affiliates, the comparable figures are 34,082 companies and 9,652 affiliates.

23. As stated in the section on “Coverage,” affiliates with total assets, sales,

and net income (or loss) of $3 million or less were exempt from reporting

in the 1997 benchmark survey. In the previous benchmark surveys, the exemption level for reporting was $1 million. Under a $3 million exemption

level, 2,811 of the 12,672 affiliates that were required to report in the 1992

benchmark survey would have been exempt from reporting. 

This publication includes the number of nonbank

affiliates by State in the following three categories: Affiliates with either property, plant, and equipment or

employment (table A–9); affiliates with property,

plant, and equipment (tables D–18 and D–19); and affiliates with employment (table G–18). In these tables,

the number for a given State may differ because some

affiliates have both employment and property, plant,

and equipment in the State, some have only employment, and some have only property, plant, and equipment.

An affiliate is counted even if it only has a few employees in the State and even if the value of its property, plant, and equipment is small. For example, sales

offices often account for a substantial portion of the

total number of affiliates in a State. These offices often

have fewer than 10 employees and only a nominal

amount of property, plant, and equipment. The significance of such small operations in a particular State

can be ascertained from tables D–18 and G–18, which

show the number of affiliates with property, plant, and

equipment and the number with employment, each

disaggregated by size.

'	


Financial and operating data focus on the overall operations of U.S. affiliates. Among the items covered by

these data are the following: Balance sheets and income statements; gross product; sales of goods and services; external financial position; taxes; property, plant,

and equipment; employment and compensation of

employees; U.S. trade in goods; research and development activities; and U.S. land owned and leased by affiliates. Only a few of these items were obtained for

bank affiliates; consequently, most of the tables that

present financial and operating data cover nonbank

U.S. affiliates only. Financial and operating data for

bank affiliates are shown in tables 3 and 9, in table A–1

in part I, and in all the tables in part III.

The financial and operating data for U.S. affiliates

are not adjusted for the ownership share of the foreign

direct investors. Thus, for example, the employment

data include all the employees of each affiliate, including affiliates in which the foreign investor’s ownership

share is less than 100 percent. To help address issues for

which control is relevant, this publication includes selected tables—those in groups J and L—that cover only

those nonbank U.S. affiliates that are majority-owned

by foreign direct investors.
	 !"#$%$&'

M–17



Most of the concepts and definitions used in reporting the financial and operating data can be found on

the survey forms or in the Instruction Booklet to the

forms in appendix A. The following discussion focuses

on the concepts, definitions, and statistical issues that

require further explanation or that are not covered in

either the forms or the Instruction Booklet.

(





U.S. affiliates’ balance sheets and income statements

are required to be filed according to U.S. generally accepted accounting principles (GAAP), and any major

changes in GAAP will affect the affiliate data.

For most affiliates, the income statement includes

all types of income, both ordinary and extraordinary.

However, for some affiliates, such as those in insurance, GAAP requires certain unrealized gains and

losses to be carried directly to owners’ equity in the

balance sheet rather than to be recorded on the income

statement.

Under GAAP, depreciation and depletion charges

are used to distribute the cost of an asset over that asset’s estimated useful life. For example, affiliates engaged in extracting natural resources report net income after the deduction of book depletion—that is,

those expenses representing the periodic chargeoff of

the actual cost of natural resources. Tax or percentage

depletion is not deducted.

#	

	

Gross product is an economic accounting measure of

the production of goods and services. A U.S. affiliate’s

gross product measures the value added by the affiliate

and, thus, its contribution to U.S. gross domestic product (GDP).

For a U.S. affiliate, as for any firm, gross product can

be measured as its gross output (sales or receipts and

other operating income, plus inventory change) less its

intermediate inputs (purchased goods and services).

Alternatively, it can be measured as the sum of the

costs incurred (except for intermediate inputs) and the

profits earned in production. The costs fall into four

major categories: Compensation of employees, net interest paid, indirect business taxes, and the capital consumption allowance.24 The estimates presented in this

publication were calculated as the sum of costs and

profits.

Affiliate gross product is generally preferred to sales

or other measures used to assess the economic impact

of affiliates on the entire U.S. economy and on individual industries. Gross product permits a more focused

analysis of the impact of affiliates because it measures

only the affiliates’ own value added, whereas sales do

not distinguish between the affiliates’ own value added

and the value embodied in inputs purchased from

other companies. In addition, gross product estimates

measure the value added to the economy by affiliates

during a specific period. In contrast, some of the sales

in a given period may represent production from earlier periods.





	


For nonbank affiliates, the 1997 benchmark survey collected affiliates’ sales (or gross operating revenues) disaggregated into goods, services, and investment

income. Services were further disaggregated into sales

to U.S. persons, sales to members of the foreign parent

group, sales to foreign affiliates, and sales to other foreigners.

For purposes of distributing sales into goods, services, and investment income, sales of goods are defined as sales that are characteristic of establishments

in any of the following six NAICS sectors: “Agriculture,

forestry, fishing and hunting” (except support activities for agriculture and forestry); mining (except support activities); construction; manufacturing; wholesale trade; and retail trade (an affiliate need not be

classified in one of these sectors to have sales of goods).

Sales of services are defined as sales that are characteristic of establishments in the 14 other NAICS sectors

and the support activities for agriculture and forestry

and for mining (an affiliate need not be classified in

24. In the U.S. national income and product accounts (NIPA’s), two measures of depreciation, or capital consumption, are used—the capital consumption allowance and the consumption of fixed capital. The capital

consumption allowance (CCA) consists of depreciation charges, which are

based largely on tax returns, and allowances for accidental damage to fixed

capital. Consumption of fixed capital consists of CCA plus an adjustment

to place depreciation on an economic basis that uses economic service lives,

depreciation that follows a geometric pattern, and replacement-cost valuation.

For U.S. affiliates, the only measure of capital consumption available from

BEA’s survey data is the book value of depreciation, reported on a basis consistent with GAAP. Because this measure does not provide for replacementcost valuation, it is termed the “capital consumption allowance” in this

publication (see table F–1).

The basis used to measure depreciation has no effect on the value of total

gross product; any differences between the measures of depreciation, which

is a cost of production, have equal and offsetting effects on the profit-typereturn component.
 	 !"#$%$&'

M–18

one of these sectors to have sales of services).25 In previous benchmark and annual surveys, sales of goods

and services were defined as the sales that were characteristic of establishments in specified groups of SICbased industries.26

Information on investment income was collected

primarily to ensure that, if investment income was included in total sales (or gross operating revenues), it

would not be included in sales of services. In finance

and insurance, affiliates include investment income in

sales because it is generated by a primary activity of the

affiliate. In other industries, most affiliates consider investment income an incidental revenue source and include it in the income statement in an “other income”

category rather than in sales.

"



In the benchmark survey, affiliates were requested to

report employment as the number of full-time and

part-time employees on the payroll at the end of fiscal

year 1997. However, a count taken during the year was

accepted if it was a reasonable proxy for the end-ofyear number. In addition, if employment at the end of

the year was unusually high or low because of temporary factors, such as seasonal variations or a strike, a

number reflecting normal operations was requested.

Employment is classified both by industry of affiliate and by industry of sales. The classification by industry of sales is based on information supplied by

each affiliate on employment in the four-digit industries in which it had sales.

Data on employment, compensation of employees,

and wages and salaries covering affiliates’ total U.S. operations were collected. For nonbank affiliates, data on

their total employment and on their manufacturing

25. The 14 NAICS sectors are Utilities; transportation and warehousing;

information; finance and insurance; real estate and rental and leasing; professional, scientific, and technical services; management of companies and

enterprises; administrative and support and waste management and remediation services; educational services; health care and social assistance; arts,

entertainment, and recreation; accommodation and food services; other

services (except public administration); and public administration.

26. For the most part, the distinction between sales of goods and sales of

services under the NAICS-based classifications introduced in the 1997

benchmark survey is similar to that under the SIC-based classifications

used in previous surveys. However, some sales under the NAICS-based classifications–particularly, sales characteristic of newspaper, periodical, book,

and record publishers and of restaurants—are treated as sales of services,

but under the SIC-based classifications, these sales are treated as sales of

goods. In addition, some sales under the NAICS-based classifications—particularly, sales characteristic of land subdividers, of firms that reproduce

software and video, and of dental laboratories—are treated as sales of

goods, but under the SIC-based classifications, they are treated as sales of

services. The net effect of these differences in classification is that sales of

services is slightly higher, and sales of goods slightly lower, on the new basis

than on the old basis.

employment were also collected by State. Manufacturing employees in a given State consist of the employees

on the payroll of manufacturing plants in the State.

These data are shown in table G–13.

For manufacturing, three measures of employment

are available from the benchmark survey. The employment totals under each of the three measures differ.

Employment by manufacturing affiliates (tables G–1,

G–3 to G–5, G–7, and G–10) consists of the employment by affiliates classified in manufacturing. It includes all the employees of affiliates whose primary industry is manufacturing, even though the affiliates

may have activities, and thus employees, in other industries; it excludes the manufacturing employees of

affiliates not classified in manufacturing. Nonbank affiliates’ manufacturing employment (table G–13) consists of the employees on the payrolls of manufacturing

plants of nonbank affiliates. It includes employees of

manufacturing plants of nonbank affiliates that are not

classified in manufacturing, and it excludes employees

of nonmanufacturing plants of affiliates that are classified in manufacturing. Manufacturing employment

when employees are disaggregated by industry of sales

(tables G–10 to G–12) consists of the employment of

affiliates in each four-digit manufacturing industry in

which they had sales. Unlike nonbank affiliates’ manufacturing employment, it may include some nonmanufacturing employees.27

The manufacturing employment data in table G–13

give a better indication of the number of manufacturing employees in a State than the data in table G–7,

which shows affiliate employment in each State classified by industry of affiliate. The manufacturing employees shown in table G–13 are those actually engaged

in manufacturing in the State regardless of the industry classification of the affiliate. In contrast, in table G–

7, all the employees of a U.S. affiliate in the State are

shown in the single industry in which, based on its total U.S. operations, the affiliate is classified, even if

some of the employees are in other industries.

Although the data on employment and compensation of employees from the benchmark survey can be

used to compute rates of compensation per employee

and wages and salaries per employee, these rates may

not accurately reflect the compensation rates normally

paid by affiliates (and, thus, are not shown in this publication). The computed rates may be distorted by the

inclusion of part-time employees, because part-time

27. See the discussion of affiliate sales and employment classified by industry of sales in the section “Industry classification.”
	 !"#$%$&'

M–19



employees are counted the same as full-time employees, or by data that cover only part of the year—for example, data for an affiliate that was newly established

during the year.28

		))*

In the benchmark survey, U.S. affiliates were required

to disaggregate the gross book value of their property,

plant, and equipment (PPE) by use, both for their total

U.S. operations and for their operations in each State.

A breakdown was obtained for two broad categories—

commercial property and PPE used for all other purposes. Commercial property consists of the gross book

value of all commercial buildings and associated land

owned by the affiliate. Commercial buildings include

apartment buildings, office buildings, hotels, motels,

and buildings used for wholesale, retail, and services

trades (such as shopping centers, recreational facilities,

department stores, bank buildings, restaurants, public

garages, and automobile service stations). PPE used for

all other purposes includes PPE used for agriculture,

mining, manufacturing, or other industrial purposes;

it also includes equipment used in commercial buildings.

	



The concepts and definitions underlying the data collected in the benchmark survey on U.S. trade in goods

of U.S. affiliates are nearly identical to those used for

the data on total U.S. trade in goods compiled by the

Census Bureau. The trade data are particularly difficult

for affiliates to report, but BEA’s review of the reported

data indicates that most of the data conform well to

Census Bureau concepts and definitions. However, because of certain reporting problems, the affiliate trade

data are not completely comparable with the Census

Bureau trade data. In the benchmark survey, data on

U.S. trade in goods had to be reported on a “shipped”

basis—that is, on the basis of when, where, and to (or

by) whom the goods were shipped—in order for them

to be comparable with official U.S. trade data. However, most affiliates keep their books on a “charged”

basis—that is, on the basis of when, where, and to (or

by) whom the goods were charged. The two bases are

usually the same, but they can differ substantially. For

example, if a U.S. affiliate buys goods from country A

28. Employee compensation rates are better measured by hourly wage

rates, which do not suffer from these shortcomings. Data on hourly wage

rates for foreign-owned manufacturing establishments for 1988–92 are

available from the BEA-Census Bureau data link project (see the section on

data availability).

and sells them to country B and if the goods are

shipped directly from country A to country B, the affiliate’s books would show a purchase from country A

and a sale to country B. Because the goods never entered or left the United States, on a shipped basis, they

would not be recorded as either U.S. imports or U.S.

exports. However, if the affiliate’s trade data were reported on a charged basis, the purchase would appear

as a U.S. import and the sale would appear as a U.S. export.

On the basis of its review, BEA believes most affiliates reported on a shipped, rather than on a charged,

basis. However, some affiliates had difficulty obtaining

data on a shipped basis, which usually requires using

shipping department invoices rather than accounting

records. If BEA determined that the data were reported

on a charged basis and that these data were likely to

differ materially from data reported on a shipped basis,

it required revised reports to be filed. However, some

cases of erroneous reporting were probably not identified.

In addition, the data on trade by U.S. affiliates that

are collected by BEA are on a fiscal year basis, whereas

the data on total U.S. trade in goods that are collected

by the Census Bureau are on a calendar year basis. In

the 1997 benchmark survey, affiliates whose fiscal year

exactly corresponded to the calendar year 1997 accounted for less than three-fourths of the total exports

and imports of goods reported for all nonbank affiliates (table 3).

Additional differences between the BEA trade data

and the Census Bureau trade data may have resulted

simply because the data come from different sources:

The BEA data are based on company records, whereas

the Census Bureau data are compiled from export and

import documents filed by shippers with the U.S. Customs Service on individual transactions. The timing,

valuation, origin or destination, shipper, and product

involved in a given transaction may be recorded differently on company records than on customs export and

import documents.

In the 1997 benchmark survey, as in previous

benchmark surveys, exports shipped by affiliates were

disaggregated by country of destination, and imports

shipped to affiliates were disaggregated by country of

origin. To minimize the reporting burden on U.S. affiliates, breakdowns of trade in goods by country of destination or origin are collected only in benchmark-survey years.

Affiliate exports and imports are also disaggregated
 	 !"#$%$&'

M–20

by product only in benchmark-survey years. In the

1997 benchmark survey, exports and imports were

broken down by 10 broad product categories that are

based on the Standard International Trade Classification (see tables H–9 to H–21 in part II). Some of these

product categories differ from the categories used in

the benchmark surveys for 1980, 1987, and 1992. For

example, the 1997 benchmark survey includes three

product categories—industrial machinery and equipment; office machines and automatic data processing

machines; and telecommunications, sound equipment, and other electrical machinery and parts—that

in the previous benchmark surveys were aggregated in

the category “machinery, electrical and nonelectrical,

except transportation equipment.” In contrast, some of

the other categories used in the 1997 benchmark survey are more aggregated than those used in the previous benchmark surveys.

In the 1997 benchmark survey, as in the 1980 and

1992 benchmark surveys, imports shipped to affiliates

were disaggregated by intended use into three categories: Capital equipment, goods for resale without further manufacture, and goods for further manufacture.

However, in the 1987 benchmark survey, capital equipment and goods for further manufacture were grouped

in “other.” Data on goods for further manufacture have

been collected in the annual surveys since the 1993

survey.

 
	

The 1997 benchmark survey collected data on two

technology-related items—research and development

(R&D) expenditures and the number of employees engaged in R&D-related activities.

As in the 1992 benchmark survey, the 1997 benchmark survey data on R&D expenditures were collected

on two bases: R&D funded by the affiliate (whether the

R&D was performed internally or by others) and R&D

performed by the affiliate (whether the R&D was for its

own use or for use by others). The first basis views

R&D from the perspective of the costs of production

and can be used as an indicator of affiliates’ use of

technology; this basis is consistent with guidelines of

the Financial Accounting Standards Board for accounting for the costs of R&D. The second basis can be

used to gauge the technological capabilities of affiliates, and it is the primary basis on which National Science Foundation surveys collect information on R&D

from U.S. businesses.

R&D funded by affiliates is the only basis on which

data on affiliate R&D expenditures were collected in

BEA’s previous annual surveys. Beginning with the

1998 annual survey, the basis shifted to R&D performed by affiliates.

Data on the number of employees associated with

R&D activities have been collected in the annual surveys since the 1993 survey. They were previously collected only in the benchmark surveys for 1980 and

1992.

	!





(


Direct investment position and direct investment balance of payments data measure the U.S. affiliate’s

transactions and positions with its foreign parent and

other members of its foreign parent group. In contrast,

affiliate financial and operating data provide measures

of the U.S. affiliate’s overall operations, including its

transactions and positions with persons other than

members of its foreign parent group. For example, the

direct investment position in an affiliate is equal to its

foreign parent group’s equity in, and net outstanding

loans to, its U.S. affiliate; a U.S. affiliate’s total assets, in

contrast, are equal to the sum of (1) the total owners’

equity in the affiliate held both by members of the foreign parent group and by all other persons and (2) the

total liabilities owed by the affiliate both to members of

the foreign parent group and to all other persons.29

In the benchmark survey, data for the position and

balance of payments items were obtained in parts III

and IV of the long form and in part III of the short

form (see appendix A). For foreign direct investment

in the United States, the following major items appear

in the U.S. international transactions (balance of payments) accounts:

● Direct investment financial flows,

● Direct investment income,

● Direct investment royalties and license fees, and

● Other direct investment services.

Two adjustments are made to the balance of payments data before they are entered into the U.S. international accounts. First, two of these items—income

and financial flows—are adjusted to reflect current-pe29. To illustrate, suppose that an affiliate is owned 80 percent by its foreign parent and that the affiliate has total owners’ equity of $50 million and

total liabilities of $100 million, of which $20 million is owed to the parent.

In this case, the affiliate’s total assets would be $150 million (total owners’

equity of $50 million plus total liabilities of $100 million), and the parents’

position in the affiliate would be $60 million (80 percent of the $50 million

of owners’ equity plus the $20 million of intercompany debt).
	 !"#$%$&'

M–21



riod prices.30 Second, the data from the benchmark

survey are adjusted from a fiscal year basis to a calendar year basis. As discussed in the section on fiscal year

reporting, the direct investment position and balance

of payments data collected in the 1997 benchmark survey are on a fiscal year basis. Thus, before the data are

incorporated into the U.S. balance of payments accounts and the annual series on the position, which are

on a calendar year basis, they must be adjusted from a

fiscal year basis to a calendar year basis. The adjusted

data for 1997 will be extrapolated forward to derive

universe estimates for calendar years after 1997 on the

basis of sample data collected in BEA’s quarterly surveys for those years.

		






The foreign direct investment position in the United

States at historical cost is equal to the net book value of

the foreign parent groups’ equity in, and net outstanding loans to, their U.S. affiliates. The position may be

viewed as the foreign parent groups’ contributions to

the total assets of their U.S. affiliates or as financing

provided in the form of equity or debt by foreign parent groups to U.S. affiliates.

The direct investment position data presented in

this publication are valued at historical cost and are

not adjusted to current value. Thus, they largely reflect

prices at the time of investment rather than prices of

the current period. Because historical cost is the basis

used for valuation in company accounting records in

the United States, it is the only basis on which companies can report data in BEA’s direct investment surveys.

It is also the only basis on which detailed estimates of

the position are available by country, by industry, and

by account. However, BEA does provide aggregate estimates of the position valued in current-period prices.31

30. The adjustments are made only at the global level; the data required to

make them for countries and industries are not available.

The adjustments are accomplished in three steps. First, a capital consumption adjustment is made to convert depreciation charges from a historical-cost basis to a current- (or replacement-) cost basis. Second,

earnings are raised by the amount of charges for the depletion of natural

resources, because these charges are not treated as production costs in the

NIPA’s. Third, expenses for mineral exploration and development are reallocated across periods to ensure that they are written off over their economic lives rather than all at once.

31. Position estimates measured at current cost and at market value for

foreign direct investment in the United States (and for U.S. direct investment abroad) are published each July in an article on the U.S. international

investment position in the SURVEY OF CURRENT BUSINESS. For a discussion of

concepts and estimating procedures, see J. Steven Landefeld and Ann M.

Lawson, “Valuation of the U.S. Net International Investment Position,” SURVEY 71 (May 1991): 40–49.

Direct investment equity positions in U.S. affiliates

are, by definition, held only by foreign parents. Foreign

parents may also have direct debt positions with U.S.

affiliates. For other members of the foreign parent

groups, only direct debt positions are included in the

direct investment position.

Foreign parents’ equity in incorporated affiliates can

be broken down into foreign parents’ holdings of capital stock in, and other capital contributions to, their

U.S. affiliates and foreign parents’ equity in the retained earnings of their U.S. affiliates. Capital stock

consists of all the stock of the affiliates—both common

and preferred and voting and nonvoting. Other capital

contributions by foreign parents, also referred to as the

“foreign parents’ equity in additional paid-in capital,”

consist of the invested and contributed capital that is

not included in capital stock, such as cash contributions, the amount paid for stock in excess of its par or

stated value, and the capitalization of intercompany

accounts (conversions of debt to equity) that do not

result in the issuance of capital stock. Foreign parents’

equity in retained earnings is the foreign parents’

shares of the cumulative undistributed earnings of

their incorporated U.S. affiliates.

Although some unincorporated affiliates could not

disaggregate owners’ equity by type, the data on foreign parents’ equity in affiliates by type cover both incorporated and unincorporated affiliates. For unincorporated affiliates for which no breakdown of owners’

equity by type was available, parents’ total equity was

included in “other” equity. The foreign parents’ share

in total owners’ equity (not broken down by type) is

shown for incorporated affiliates and for unincorporated affiliates in addenda to the tables.

Foreign parent groups’ net outstanding loans to

their U.S. affiliates, also referred to as “U.S. affiliates’

net intercompany debt payables,” consist of trade accounts and trade notes payable, other current liabilities, and long-term debt owed by the affiliates to their

foreign parents or other members of their foreign parent groups, net of similar items due to the affiliates

from their foreign parents or other members of their

foreign parent groups.

Intercompany debt includes the value of capital

leases and of operating leases of more than 1 year between U.S. affiliates and their foreign parent groups.

The value of the property leased to a U.S. affiliate by its

foreign parent group is included in affiliates’ payables,

and the value of the property leased by a U.S. affiliate

to the foreign parent group is included in affiliates’ re-
Methodology FDIUS: 1997 BENCHMARK SURVEY

M–22

ceivables. Under a capital lease, it is assumed that the

title to the leased property will be transferred to the

lessee at the termination of the lease, similar to an installment sale. Operating leases have a term that is significantly shorter than the expected useful life of the

tangible property being leased, and the leased property

is usually returned to the lessor at the termination of

the lease. For capital leases, the value of the leased

property is calculated according to GAAP; under

GAAP, the lessee records either the present value of the

future lease payments or the fair market value, whichever is lower, and the lessor records the sum of all future lease receipts. For operating leases of more than 1

year, which are carried only on the balance sheet of the

lessor, the value recorded is the original cost of the

leased property less the accumulated depreciation.

For U.S. affiliates that are depository institutions,

the direct investment position is defined to include

only their foreign parent groups’ permanent equity

and debt investment in them; similarly, the direct investment flows that enter the U.S. international transactions accounts for these affiliates include only transactions related to such permanent investment. All

other transactions and positions—mainly claims and

liabilities arising from the parents’ and affiliates’ normal banking business—are excluded from the direct

investment accounts and included with other banking

claims and liabilities in the portfolio investment accounts.

For nonbank U.S. affiliates that are primarily engaged in financial intermediation, the direct investment position and associated direct investment capital

flows exclude intercompany debt transactions.32 This

treatment, which was introduced in the U.S. international transactions accounts for 1994, is similar to the

treatment of nonpermanent debt investment for affiliates that are depository institutions.33

A foreign parent and its U.S. affiliate may have a

two-way relationship—each may have debt and equity

investment in the other. Thus, a foreign parent may

have investment in a U.S. affiliate that, in turn, has in32. For this purpose, a nonbank affiliate that is primarily engaged in financial intermediation is defined to be a financial affiliate whose UBO is either (1) a foreign depository institution or (2) a finance or insurance

company. (Ideally, this definition should not include affiliates of UBO’s that

are insurance companies. However, the industry of UBO for both foreign

finance and insurance companies is reported under a single industry code,

so it is not possible to exclude these affiliates.)

33. See the section on “reclassification of intercompany debt and associated interest transactions with financial intermediaries” in Christopher L.

Bach, “U.S. International Transactions: Revised Estimates for 1986–97,”

SURVEY 78 (July 1998): 52–53.

vestment in the parent as a result of the affiliate’s lending funds to, or acquiring voting securities or other equity interest in, the parent. In addition, the other

members of the foreign parent group may have debt

investment in a U.S. affiliate, and a U.S. affiliate may

have debt or equity investment in the other members

of the foreign parent group. In the intercompany debt

portion of the position, affiliates’ receivables from

their foreign parent groups (reverse debt investment)

are netted against affiliates’ payables to their foreign

parent groups.34 Equity investment by U.S. affiliates in

members of their foreign parent groups is included in

the U.S. portfolio investment position abroad if the affiliate’s ownership is less than 10 percent or in the U.S.

direct investment position abroad if the affiliate’s ownership is 10 percent or more.

The direct investment position at the end of the year

is equal to the position at the end of the previous year

plus the change in the position during the year (table

10).

The change during the year is the sum of direct investment capital flows (defined below) and valuation adjustments. Valuation adjustments are broadly defined

to include all changes in the position other than capital

flows. They primarily reflect differences between the

transactions values, which are used to record direct investment capital flows, and the book values on U.S. af34. In the extremely rare case in which a U.S. affiliate and its foreign parent own 10 percent or more of each other, a U.S. affiliate’s debt investment

in the foreign parent group is not netted against the group’s debt investment in it. In order to avoid double-counting, the foreign parent group’s

debt investment in the affiliate is included in the foreign direct investment

position in the United States, and the affiliate’s debt investment in the foreign parent group is included in the U.S. direct investment position abroad.

Table 10.—The Foreign Direct Investment Position

 in the United States on a Historical-Cost Basis

Change From Yearend 1996 to Yearend 1997

[Millions of dollars]

Position at yearend 1996 .....................................

Change in position ...............................................

 Capital inflows .................................................

 Equity capital ..............................................

 Increases ................................................

 Decreases ..............................................

 Reinvested earnings ....................................

 Intercompany debt.......................................

 Increases in U.S. affiliates’ payables .......

 Increases in U.S. affiliates’ receivables ..

 Valuation adjustments .....................................

Position at yearend 1997 ......................................

567,957

108,541

111,721

66,049

77,795

11,746

11,351

34,322

46,464

12,142

–3,181

676,498
	 !"#$%$&'

M–23



filiates’ books, which are used to record the position

and, hence, changes in the position. For example, valuation adjustments include differences between the sale

value and the book value of affiliates that are sold by

foreign parents and differences between the purchase

price and the book value of affiliates that are acquired

by foreign parents.35 They also include currency-translation adjustments—that is, the gains and losses that

arise because of changes in the exchange rates used in

translating affiliates’ foreign-currency-denominated

assets and liabilities into U.S. dollars—and other capital gains and losses, such as revaluations of assets that

result from mergers and acquisitions.

	



Direct investment capital inflows (which are recorded

in the financial account of the U.S. international transactions accounts) consist of equity capital inflows, reinvested earnings, and intercompany debt inflows.

This section first defines these components and then

discusses the coverage, measurement, and presentation

of direct investment capital inflows.

Equity capital inflows. Equity capital inflows are net

increases in foreign parents’ equity in their U.S. affiliates; equity capital outflows (decreases in equity) are

netted against equity capital inflows (increases in equity) to derive the net inflow. Equity capital inflows exclude changes in equity that result from the reinvestment of earnings, which are recorded as a separate

component of direct investment capital inflows.

Equity capital inflows to U.S. affiliates result from

foreign parents’ establishment of new U.S. affiliates,

from their initial acquisition of 10-percent-or-more

ownership interests in existing U.S. business enterprises, from their acquisition of additional ownership

interests in existing U.S. affiliates, and from their capital contributions to U.S. affiliates.

Equity capital outflows result from liquidations of

U.S. affiliates, from partial or total sales of ownership

interests in U.S. affiliates, and from the return of capital contributions. Equity capital outflows also include

liquidating dividends, which are a return of capital to

foreign parents.

Equity capital inflows are recorded at transactions

values. In most cases, transactions values may be obtained from the books of the U.S. affiliates. However,

35. For the current-price estimates of the foreign direct investment position entered in the U.S. international investment position, the corresponding adjustments would reflect differences between the transactions values

and the estimated current values of the affiliates.

in some cases, such as when a foreign parent purchases

or sells capital stock in the affiliate from or to an unaffiliated third party, the transactions value may be obtained only from the parent’s books. In addition, transactions values on foreign parents’ books reflect the

actual cost of ownership interests in affiliates that are

acquired or sold by foreign parents, including any premium or discount; such values may differ from the

book values recorded on the affiliates’ books.

Reinvested earnings. Reinvested earnings of U.S. affiliates are earnings less distributed earnings. Earnings

are foreign parents’ shares in the net income of their

U.S. affiliates after provision for U.S. income taxes;

earnings are from the books of the U.S. affiliate. A foreign parent’s share in earnings is based on its directly

held equity interest in the U.S. affiliate. The earnings

and reinvested earnings estimates in this publication

are not adjusted to reflect current-period prices, because the source data needed to adjust the estimates by

detailed country and industry are not available.

Earnings are entered into direct investment income

because they are income to the foreign parent, whether

they are reinvested in the affiliate or remitted to the

parent.36 However, because reinvested earnings are not

actually transferred to the foreign parent but increase

the parent’s investment in its affiliate, an entry that is

equal to that made in the direct investment income account but that has the opposite sign is made in the direct investment capital account.

For incorporated U.S. affiliates, distributed earnings

are dividends on common and preferred stock held by

foreign parents. Distributions can be paid out of current or past earnings. Dividends exclude stock and liquidating dividends. Stock dividends are excluded because they are a capitalization of retained earnings—a

substitution of one type of equity (capital stock) for

another (retained earnings); they reduce the amount

of retained earnings available for distribution but leave

total owners’ equity unchanged. Thus, stock dividends

do not give rise to entries in the balance of payments

accounts.37 Liquidating dividends are excluded because

they are a return of capital rather than a remittance of

earnings (liquidating dividends are included as outflows in the direct investment equity capital account).

For unincorporated affiliates, distributed earnings are

36. See the next section, “Direct investment income.”

37. “Stock dividends” are used here to refer to essentially the same concept that is discussed in the IMF Manual (see footnote 8) under the heading

of “bonus shares.” BEA has retained its terminology because it conforms to

what U.S. firms understand by the term “stock dividends.”
 	 !"#$%$&'

M–24

earnings distributed to foreign parents out of current

or past earnings.

Distributed earnings, like total earnings, are based

on the books of the U.S. affiliate. Because they are on

an accrual basis, they are reported as of the date that

they are either paid to foreign parents or entered into

intercompany accounts with the foreign parents. Distributed earnings are included whether they are paid in

cash, through debt creation, or in kind.

Intercompany debt inflows. Intercompany debt inflows consist of the increase in U.S. affiliates’ net intercompany debt payables to their foreign parent groups

during the year. The increase for a given period is derived by subtracting the net outstanding intercompany

debt balance (that is, affiliate payables less affiliate receivables) at the end of the previous period from the

net outstanding balance at the end of the current period.

When a member of a foreign parent group lends

funds to a U.S. affiliate, the balance of the affiliate’s

payables (amounts owed) to the foreign parent group

increases; subsequently, when the affiliate repays the

principal owed to a member of the foreign parent

group, the balance of the affiliate’s payables to the

group is reduced. Similarly, when a member of the foreign parent group borrows funds from a U.S. affiliate,

the balance of the affiliate’s receivables (amounts due)

from the group increases; subsequently, when the

member of the group repays the principal owed to the

affiliate, the balance of the affiliate’s receivables from

the group is reduced.

Increases in affiliates’ payables to, or reductions in

affiliates’ receivables from, their foreign parent groups

give rise to inflows on intercompany debt accounts. Increases in affiliates’ receivables from, or reductions in

affiliates’ payables to, their foreign parent groups give

rise to outflows.

Not all intercompany debt transactions reflect actual flows of funds. For example, when distributed

earnings, interest, or royalties and license fees from a

U.S. affiliate accrue to a foreign parent group, the full

amount is included as an income payment or royalty

and license fee payment (an outflow) on foreign direct

investment in the United States. If part of that amount

is not actually transferred to the foreign parent group,

the amount not transferred is entered into intercompany accounts as an increase in the U.S. affiliate’s payables to its foreign parent group (an inflow).

The net change in intercompany debt includes

changes in the value of capital leases and operating

leases of more than 1 year between foreign parent

groups and their U.S. affiliates. When property is

leased by a U.S. affiliate from its foreign parent group,

the value of the leased property is recorded as an intercompany debt inflow because it increases the affiliate’s

payables. The subsequent payment of principal on a

capital lease or the component of rent on an operating

lease that reflects depreciation is a return of capital and

is recorded as an intercompany debt outflow because it

reduces the affiliate’s payables. Similarly, when property is leased by a U.S. affiliate to its foreign parent

group, the value of the leased property is recorded as

an intercompany debt outflow because it increases the

affiliate’s receivables. The subsequent payment of principal on a capital lease or the component of rent on an

operating lease that reflects depreciation is a return of

capital and is recorded as an intercompany debt inflow

because it reduces the affiliate’s receivables.

Coverage, measurement, and presentation. Most intercompany debt and equity capital flows result from

transactions between foreign parent groups and their

U.S. affiliates. However, some of these flows may result

from transactions between foreign parents and unaffiliated U.S. persons; for example, a direct investment equity capital flow results from a transaction between a

foreign parent and an unaffiliated U.S. person when

the parent purchases an affiliate’s capital stock from

the unaffiliated person.

In general, direct investment capital inflows exclude

transactions among members of a foreign parent

group or between the members of the group and other

foreigners, because foreign-to-foreign transactions are

not international transactions of the United States.38

Thus, if a foreign parent purchases additional capital

stock in a U.S. affiliate from another foreign person,

the foreign parent’s ownership interest in the U.S. affiliate will increase, but no equity capital inflow is recorded, because the transaction occurs entirely outside

the United States. In addition, there is no net increase

in foreign claims on the United States; instead, the foreign parent’s claims have merely been substituted for

the claims of the other foreign person.39

38. An exception to this general rule is a transaction in which one member of a U.S. affiliate’s foreign parent group sells a bond or other debt instrument issued by the affiliate to a second member of the group. If the two

members are located in different countries, this transaction would result in

offsetting direct investment capital flows—an outflow to the first country

and an inflow from the second country.

39. If this exchange involves more than one country, offsetting valuation

adjustments are made to the direct investment position, reducing the position of the seller’s country and increasing the position of the purchaser’s

country.
	 !"#$%$&'

M–25



However, if the foreign parent’s original interest

represented only a portfolio (less-than-10-percent) investment interest and if the combined interests qualify

as a direct investment as a result of the purchase of an

additional interest, a direct investment capital inflow

equal to the value of the additional interest is recorded.

In addition, a valuation adjustment is made to the direct investment position to bring into the position the

original interest. If a foreign parent’s interest in an affiliate falls below 10 percent, a direct investment capital

outflow is recorded and a valuation adjustment is

made to extinguish the remaining direct investment

interest.

Equity capital and intercompany debt inflows can

be disaggregated into several subaccounts. Equity capital inflows, which are recorded as a net amount, can be

disaggregated to show increases and decreases in equity. Intercompany debt inflows are disaggregated to

show both the flows resulting from changes in U.S. affiliates’ payables and the flows resulting from changes

in U.S. affiliates’ receivables. Certain transactions may

affect two or more of these subaccounts simultaneously and by exactly offsetting amounts. Such transactions are “grossed up”; that is, the inflows and the

offsetting outflows are recorded in the affected subaccounts rather than being netted to zero and not recorded in any subaccount. However, because such

gross flows are offsetting, they have no effect on net

capital inflows. For example, the capitalization of intercompany debt, which gives rise to an intercompany

debt outflow and an offsetting equity capital inflow, results in gross, but not net, flows.

	


Direct investment income is the return on the foreign

direct investment position in the United States; that is,

it is the foreign parents’ return on their debt and equity investment in their U.S. affiliates plus the return of

other members of the foreign parent groups on their

debt investment in U.S. affiliates. Direct investment income consists of earnings (that is, the foreign parents’

share in the net income of their U.S. affiliates) plus interest on intercompany accounts of U.S. affiliates with

their foreign parent groups (interest is defined as the

interest paid by U.S. affiliates to their foreign parent

groups net of the interest received by U.S. affiliates

from their foreign parent groups). Earnings are the

foreign parents’ return on their equity investment, and

interest is the foreign parents’ return on their debt investment in U.S. affiliates. Table 11 shows direct investment income and the relationships among its

components for all U.S. affiliates from the 1997 benchmark survey.

Direct investment income is reported as accrued.

Direct investment income and earnings exclude currency-translation adjustments and other capital gains

and losses, whether or not such gains and losses are included in net income for income statement purposes.

This treatment is intended to make income and earnings correspond more closely to the current operating

performance of affiliates as recommended by international guidelines for the compilation of balance of payments accounts.

Direct investment income is measured before deduction (that is gross) of all withholding taxes.40 This

treatment views taxes as being levied upon the recipient of the distributed earnings or interest and thus as

being paid across borders, even though, as an administrative convenience, the taxes actually were paid by the

firm whose disbursements gave rise to them. Thus,

U.S. withholding taxes on distributed earnings and on

interest received by the foreign parent are recorded as if

they were paid by the foreign parent, not by the U.S. affiliate. Similarly, foreign withholding taxes on interest

payments by the foreign parent are recorded as if they

were paid by the U.S. affiliate, not by the foreign parent. Counterentries for these taxes are made in the U.S.

international transactions accounts under unilateral

current transfers.

BEA collects data on withholding taxes on distributed earnings on its quarterly surveys of foreign direct

investment in the United States, but withholding taxes

on interest, royalties and license fees, and other private

services are collected only in benchmark surveys.

Withholding taxes on these items must be estimated

for nonbenchmark years; the estimates are prepared

and are shown in the U.S. international transactions

40. Withholding taxes are taxes withheld at the source on income or other

funds that are distributed or remitted.

Table 11.—Direct Investment Income

and Its Components

[Millions of dollars]

Income.......................................

Earnings .................................... 

Distributed earnings ...............

Reinvested earnings................

Interest .....................................

U.S. affiliates’ payments .........

U.S. affiliates’ receipts ............ 

38,466

30,679

19,328

11,351

7,787

9,450

1,663
 	 !"#$%$&'

M–26

accounts on a global basis, but not allocated by country or industry.

Interest is recorded on a net basis as interest paid or

credited to foreign parents and other members of the

foreign parent groups on debt owed to them by U.S. affiliates less interest received from, or credited by, foreign parents and other members of the foreign parent

groups on debt owed by them to U.S. affiliates.41 Interest receipts are netted against interest payments because in the intercompany debt component of the direct investment position, debt owed by foreign parent

groups to U.S. affiliates is netted against debt owed by

U.S. affiliates to foreign parent groups. Like other components of direct investment income, interest is reported as accrued. It includes interest paid through

debt creation or in kind as well as interest paid in cash.

Interest includes net interest payments on capital

leases between U.S. affiliates and their foreign parent

groups because the outstanding capitalized value of

such leases is included in the intercompany debt component of the direct investment position.42

	
	




Direct investment royalties and license fees consist of

payments of fees by U.S. affiliates to, and receipts of

fees by U.S. affiliates from, their foreign parents and

other members of the foreign parent groups for the use

or sale of intangible property or rights, such as patents,

industrial processes, trademarks, copyrights, franchises, designs, know-how, formulas, techniques, manufacturing rights, and other intangible assets or

proprietary rights.

In the U.S. international transactions accounts, U.S.

affiliates’ receipts of royalties and license fees are recorded as U.S. exports of services, and U.S. affiliates’

payments are recorded as U.S. imports of services.

Both receipts and payments are measured before the

41. For U.S. affiliates that are depository institutions (commercial banks,

savings and loan institutions, and credit unions), interest includes only payments on permanently invested debt capital in the affiliate. For nonbank affiliates that are primarily engaged in financial intermediation, all interest on

intercompany debt is excluded from direct investment income payments.

The treatment of interest for these two types of affiliates parallels the treatment of their debt transactions with their foreign parent groups, as described in the section “Foreign direct investment position in the United

States.”

42. Although the value of operating leases of more than 1 year is also included in the intercompany debt position, payments of net rent (which covers interest, administrative expenses, and profit) on such leases are recorded

as charges for the use of tangible property (part of the “other direct investment services” account) rather than as interest.

deduction, or gross, of (foreign or U.S.) withholding

taxes.

Payments and receipts of royalties and license fees

are based on the books of U.S. affiliates and are reported as accrued. When funds are not actually transferred, offsetting entries are made in the intercompany

debt account.

'		

	


Transactions in other direct investment services consist

of payments by U.S. affiliates to, and receipts by U.S.

affiliates from, their foreign parents or other members

of their foreign parent groups of service charges, of

charges for the use of tangible property, and of film

and television tape rentals. Payments and receipts are

reported as accrued and are based on the books of U.S.

affiliates.

In the U.S. international transactions accounts, U.S.

affiliates’ receipts are recorded as U.S. exports of services, and U.S. affiliates’ payments are recorded as U.S.

imports of services. Both receipts and payments are

measured before the deduction, or gross, of (foreign or

U.S.) withholding taxes.

Service charges. Service charges consist of fees for

services—such as management, professional, or technical services—rendered between U.S. affiliates and

their foreign parents or other members of their foreign

parent groups. The service charges may represent sales

of services or reimbursements. Sales of services are receipts for services rendered that are included in sales or

gross operating revenues in the income statement of

the seller. Normally, receipts are included in sales if the

performance of the service is a primary activity of the

enterprise. (For example, if a U.S. management-consulting firm provides management-consulting services

to its foreign parent or foreign parent group, the resulting revenues are included in its sales.)

Reimbursements are receipts for services rendered

that are normally included in “other income” rather

than in sales in the income statement of the provider of

the service. Typically, the performance of the service is

not a primary activity of the enterprise; however, the

service may facilitate or support the conduct of the enterprise’s primary activities. (For example, if a foreign

manufacturer provides management services to its U.S.

manufacturing affiliate, the associated charges normally would be recorded in its income statement under “other income” and would be reported to BEA as a

reimbursement.)
	 !"#$%$&'

M–27



Reimbursements may be allocated expenses or direct charges for the services rendered. Allocated expenses are overhead expenses that are apportioned

among the various divisions or parts of an enterprise.

An example would be R&D assessments on the U.S. affiliate by its foreign parent for R&D the parent performs and shares with its affiliate.

For the first time in the 1997 benchmark survey,

data on service charges by type of service between U.S.

affiliates and their foreign parent groups were collected; the six types of services are insurance services,

financial services, transportation services, computer

and information services, communication services,

and “other services.”43 In table P–3 of section II, communication services are included in “other services”

(see the footnotes to table P–3 for the definitions used

on the 1997 benchmark survey for each category of intercompany service charges).44

The data on intercompany service charges by type of

service indicate that 89 percent of U.S. affiliates’ payments and 84 percent of U.S. affiliates’ receipts were

for “other services” (table P–3 in part II). These high

percentages may result because survey respondents do

not have the necessary information in their standard

accounting records to provide a breakdown of their allocated expenses or of other services transactions with

their foreign parent groups by type of service. The

share for “other services” may also be large because

“other services” includes many services (such as advertising, management, research and development, and

accounting services) that are not covered by the other

four categories.45

43. These categories were chosen on the basis of the detail recommended

in the International Monetary Fund’s Balance of Payments Manual.

44. The data for communication services are minuscule; they exclude all

settlements payments related to basic telecommunications services (including payments that flow through affiliated channels) because these payments

represent the distribution of revenues collected from unaffiliated customers.

45. After the 1997 benchmark survey, BEA’s quarterly survey of foreign

direct investment in the United States was amended to collect, once each

year, detail on service charges by type of service. Beginning with the quarterly surveys for 2001, two categories—management and consulting services and research, development, and testing services—were added, and the

category for communication services was dropped. 

Charges for the use of tangible property. Charges for

the use of tangible property include total lease payments under operating leases of 1 year or less and net

rent on operating leases of more than 1 year. From the

lessors’ viewpoint, total lease payments for operating

leases consist of two components: (1) Net rent, which

covers interest, administrative expenses, and profit,

and (2) depreciation, which is a return of capital.

For operating leases of more than 1 year, net rent is

included in “other direct investment services,” and depreciation is included as an intercompany debt flow in

the direct investment capital account. For operating

leases of 1 year or less, total lease payments—both net

rent and depreciation—are included in “other direct

investment services.” Because the value of property

leased to or from foreigners for 1 year or less is excluded from U.S. exports and imports of goods in the

U.S. international transactions accounts, no export to

or import from the foreign parent groups by U.S. affiliates is recorded in the trade in goods account; thus,

there is no subsequent return of capital to or from the

foreign parent groups in the form of depreciation to be

recorded in the direct investment capital account. Such

depreciation is instead considered part of rentals—a

payment for services rendered by, rather than a return

of capital to, the foreign parent groups.

Film and television tape rentals. Film and television

tape rentals are rentals that U.S. affiliates pay to, or receive from, foreign parents or other members of the

foreign parent groups for the sale or use of film and

television tapes. Except for mass-produced films and

tapes, such as prerecorded video cassettes (which are

recorded in U.S. trade in goods), such film and television tapes are treated as if they were being rented

rather than sold, and payments for the tapes are considered payments for services rather than payments for

goods. This treatment is used because the value of the

tapes is derived mostly from the services, such as entertainment and education, that they provide, not from

the value of the media on which they are recorded.

Thus, the cost of the film and television tapes is excluded from the U.S. trade-in-goods account and is included in “other direct investment services.”
 	 !"#$%$&'

M–28
M–29

Group A. Selected Data

1997 1992 1993–96 1987 1988–91 1977–86

A–1

A–2

A–6

A–7—A–9

A–1

A–2

A–6

A–7—A–9

A–1

A–2

A–6

A–7—A–9

A–1

A–2

n.a.

A–6—A–8

A–1

A–2

n.a.

A–6—A–8

5

8

n.a.

n.a.

Group B. Balance Sheet

1997 1992 1993–96 1987 1988–91 1977–86

B–1—B–4

B–5

B–6

B–7—B–8

B–9

B–1—B–4

B–5

B–6

B–7—B–8

B–9

B–1—B–4

B–5

B–6

n.a.

n.a.

B–1—B–4

B–5

B–6

B–7—B–8

B–10

B–1—B–4

B–5

B–6

n.a.

n.a.

B–1—B–4

B–7

n.a.

n.a.

n.a.

Group C. Composition of External Financial Position

1997 1992 1993–96 1987 1988–91 1977–86

C–1

C–2—C–7

C–8

C–1

C–2—C–7

C–8

C–1

n.a.

n.a.

C–1

C–2—C–7

C–9

C–1

n.a.

n.a.

C–1

n.a.

n.a.

Group D. Gross Property, Plant, and Equipment

1997 1992 1993–96 1987 1988–91 1977–86

D–1—D–2

D–3

D–4—D–5

D–6—D–7

D–8

D–9—D–11

D–12—D–13

D–14

D–15

D–16—D–17

D–18

D–19

D–20—D–21

D–22—D–25

D–1—D–2

D–3

D–4—D–5

D–6—D–7

D–8

D–9—D–11

D–12—D–13

D–14

D–17

D–18—D–19

D–20

D–21

D–22—D–23

D–24—D–27

D–1—D–2

D–3

n.a.

D–6—D–7

n.a.

D–9—D–11

D–12—D–13

n.a.

n.a.

D–18—D–19

D–20

D–21

D–22—D–23

D–24—D–27

D–1—D–2

D–3

D–5—D–6

D–8—D–9

D–7

D–10—D–12

D–13—D–14

D–15

D–19

D–20—D–21

D–22

D–24

D–25—D–26

D–27—D–30

D–1—D–2

D–3

n.a.

D–8—D–9

n.a.

D–10—D–12

D–13—D–14

n.a.

n.a.

D–20—D–21

D–22

D–24

D–25—D–26

D–27—D–30

D–1—D–2

D–4

n.a.

D–7—D–8

n.a.

n.a.

D–13—D–14

n.a.

n.a.

n.a.

D–23

n.a.

D–29—D–30

n.a.

( )
*
+,	()

* )#**-

The data for 1987, 1992, and 1997 are derived

from benchmark surveys of foreign direct investment in the United States. The estimates for the

other years are derived from annual surveys that

are less detailed than the benchmark surveys.

The estimates for affiliates by industry for

1997 are based on industry classifications that are

derived from the 1997 North American Industry

Classification System. The estimates for the other

years are based on industry classifications that are

derived from the Standard Industrial Classification (SIC) system. Selected data for 1997 are also

presented on an SIC basis (tables K and L).

The data for the benchmark-survey years also

include data for bank affiliates and on the direct

investment position and international transactions (tables M, N, O, P, and Q in this publication). 

n.a. Not available.
M–30

Group E. Income Statement

1997 1992 1993–96 1987 1988–91 1977–86

E–1—E–2

E–3

E–4

E–5—E–6

E–7—E–8

E–9

E–10

E–11

E–12—E–15

E–1—E–2

E–3

E–4

E–5—E–6

E–7—E–8

E–9

E–10

E–11

E–12—E–15

E–1—E–2

E–3

E–4

n.a.

E–7—E–8

n.a.

E–10

E–11

E–12—E–15

E–1—E–2

E–3

E–4

E–5—E–6

E–7—E–8

E–9

E–10

E–11

E–12—E–15

E–1—E–2

E–3

E–4

n.a.

E–7—E–8

n.a.

E–10

E–11

E–12—E–15

E–1—E–2

E–5

n.a.

n.a.

n.a.

n.a.

E–9

E–10

n.a.

Group F. Gross Product

1997 1992 1993–96 1987 1988–91 1977–86

F–1—F–3

F–4

F–5—F–6

F–1—F–3

F–4

F–5—F–6

F–1—F–3

n.a.

F–5—F–6

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

G. Employment and Compensation of Employees

1997 1992 1993–96 1987 1988–91 1977–86

G–1—G–2

G–3

G–4

G–5

G–6

G–7—D–8

G–9

G–10—G–11

G–12

G–13

G–14

G–15

G–16—G–17

G–18

G–1—G–2

G–3

G–4

G–5

G–6

G–7—D–8

G–9

G–10—G–11

G–12

G–13

G–14

G–15

G–16—G–17

G–18

G–1—G–2

G–3

G–4

n.a.

G–6

G–7—D–8

n.a.

G–10—G–11

n.a.

G–13

n.a.

G–15

G–16—G–17

G–18

F–1—F–2

F–3

F–4

F–5

F–6

F–7—F–8

F–9

F–10—F–11

F–12

F–13

F–15

n.a.

F–16—F–17

F–19

F–1—F–2

F–3

F–4

n.a.

n.a.

F–7—F–8

n.a.

F–10—F–11

n.a.

F–14

n.a.

n.a.

F–16—F–17

F–19

F–1—F–2

F–4

n.a.

n.a.

n.a.

F–7—F–8

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

F–13—F–14

F–10

Group H. U.S. Trade in Goods

1997 1992 1993–96 1987 1988–91 1977–86

H–1—H–2

H–3

H–4

H–5

H–6

H–7

H–8—H–36

H–37

H–1—H–2

H–3

H–4

H–5

H–6

H–7

H–8—H–36

H–37

H–1—H–2

H–3

H–4

n.a.

H–6

H–7

n.a.

H–37

G–1—G–2

G–3

G–4

G–5

G–6

G–7

G–8—G–36

n.a.

G–1—G–2

G–3

n.a.

n.a.

G–6

n.a.

n.a.

n.a.

G–3—G–4

G–6

n.a.

n.a.

G–9

n.a.

n.a.

n.a.

n.a. Not available.

 $ .!"
M–31

 $ .!"

I. Interest, Dividends, Taxes Other Than Income Taxes, and Research and Development

1997 1992 1993–96 1987 1988–91 1977–86

I–1

I–2

I–3

I–4—I–5

I–6

I–1

I–2

I–3

I–4—I–5

n.a.

I–1

I–2

n.a.

n.a.

n.a.

H–1

H–2

H–3

n.a.

n.a.

H–1

H–2

n.a.

n.a.

n.a.

H–3

H–6

n.a.

n.a.

n.a.

J. Selected Data for Majority-Owned Affiliates

1997 1992 1993–96 1987 1988–91 1977–86

J–1—J–3

J–4

J–5

J–6—J–7

J–8

J–9—J–11

J–12

J–13

J–1—J–3

n.a.

J–4

n.a.

J–5

n.a.

n.a.

n.a.

J–1—J–3

n.a.

n.a.

n.a.

J–5

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a. Not available.
M–32

Enterprise data

1987 Benchmark Survey, Final Results ... NTIS ........... PB91–108316............... $67.50

1992 Benchmark Survey, Final Results ... GPO ........... 003–010–00259–0 ....... $20.00

1997 Benchmark Survey, Final Results ... GPO ........... 003–010–00289–1 .......  

Operations of U.S. Afilliates in 1977–80 ... NTIS ........... PB85–240604............... $51.00

Operations of U.S. Affiliates of Foreign Companies

1981 ....................................................... NTIS ........... PB96–170386............... $27.00

1982 ....................................................... NTIS ........... PB86–161908............... $31.50

1983 ....................................................... NTIS ........... PB87–125019............... $31.50

1984 ....................................................... NTIS ........... PB88–100565............... $31.50

1985 ....................................................... NTIS ........... PB89–121768............... $31.50

1986 ....................................................... NTIS ........... PB90–114083............... $31.50

1988 ....................................................... NTIS ........... PB92–113844............... $34.00

1989 ....................................................... NTIS ........... PB93–108934............... $34.00

1990 ....................................................... NTIS ........... PB93–216224............... $34.00

1991 ........................................................ BEA ........... IPN–0063 ..................... $6.00

1993 ........................................................ BEA ........... IPN–0202 ..................... $8.50

1994 ....................................................... GPO ........... 003–010–00267–1 ....... $8.50

1995 ........................................................ BEA ........... IPN–0234 ..................... $9.50

1996 ....................................................... GPO ........... 003–010–00279–4 ....... $8.50

1998 (Preliminary) ................................. GPO ........... 003–010–00286–5 ....... $12.00

Establishment Data

1987 ........................................................ BEA ........... IPN–0068 ..................... $36.00

For Manufacturing

1988 ..................................................... BEA ........... IPN–0069 ..................... $13.00

1989 ..................................................... BEA ........... IPN–0070 ..................... $13.00

1990 ..................................................... BEA ........... IPN–0071 ..................... $14.00

1991 ..................................................... BEA ........... IPN–0190 ..................... $14.00

1992 ....................................................... GPO ........... 003–010–00265–4 ....... $32.00

IDN–0053

IDN–0058

 ** **

 ***

IDN–0047

IDN–0048

IDN–0049

IDN–0050

IDN–0051

IDN–0052

IDN–0054

IDN–0055

IDN–0056

IDN–0057

IDN–0059

IDN–0061

IDN–0200

IDN–0233

IDN–0269

IPN–0072

IPN–0073

IPN–0074

IPN–0075

IPN–0076

IPN–0077

Publications

Source Product number Price**

Diskettes*

*Each diskette is $20. The information is in ASCII format on a 3 1/2-inch high-density diskette.

**For the prices for mailing outside the United States, call the source.

***The following estimates are available on these diskettes: For 1977, IDN–0043; for 1978, IDN–0044;

for 1979, IDN–0045; and for 1980, IDN–0046 .

**** The price was not available at press time. For the availability of the diskettette, go to BEA's Web site.

Number

The data on the operations of U.S. affiliates of foreign companies are available both at the enterprise

(company) level and at the establishment (plant) level.

The enterprise-level data for 1977–98 are derived from

the benchmark and annual surveys of foreign direct

investment in the United States (FDIUS) that are

conducted by the Bureau of Economic Analysis (BEA).

The more detailed establishment-level data for

1987–92 are a result of a project that linked BEA’s enterprise data on FDIUS with the establishment data for

all U.S. companies from the Bureau of the Census.

These data are available in publications and on diskettes and BEA’s Web site. The publications are available from BEA, the National Technical Information

Service (NTIS), or the U.S. Government Printing Office (GPO). The diskettes are available from BEA. The

data on the diskettes are also available as compressed

files that can be downloaded for free from BEA’s Web

site. Go to <www.bea.doc.gov>, and click on Catalog

of Products.

#
)*	

To order a publication from GPO, call 202–512–1800.

To order from NTIS, call 1–800–553–6847.

To order from BEA, call the Order Desk at 1–800–704–0415

(outside the United States, call 202–606–9666.)