FOREIGN DIRECT 

INVESTMENT IN THE 

UNITED STATES

October 2013

 
This report was prepared by the Department of Commerce and the 

President’s Council of Economic Advisers 
1

Executive Summary

The United States has been the world’s largest recipient of foreign direct investment (FDI) since 2006. 

Every day, foreign companies establish new operations in the United States or provide additional capital 

to established businesses. With the world’s largest consumer market, skilled and productive workers, a 

highly innovative environment, appropriate legal protections, a predictable regulatory environment, and 

a growing energy sector, the United States offers an attractive investment climate for firms across the 

globe.

Foreign direct investment in the United States is substantial

 In 2012, net U.S. assets of foreign affiliates totaled $3.9 trillion. The United States consistently 

ranks as one of the top destinations in the world for foreign direct investment (FDI), with inflows 

totaling $1.5 trillion in FDI just since 2006. For 2012, FDI inflows totaled $166 billion.

 The U.S. manufacturing sector draws a considerable share of FDI dollars, led by pharmaceuticals 

and petroleum and coal products. Outside manufacturing, wholesale trade; mining; non-bank 

holding companies; finance and insurance; and banking receive the greatest shares of foreign 

investment. 

 Investment flows into the United States come mostly from a small number of industrial 

countries. Since 2010, Japan, Canada, Australia, Korea, and seven European countries1

collectively have accounted for more than 80 percent of new FDI. Although still small, flows 

from emerging economies like China and Brazil are growing rapidly.

Foreign direct investment benefits the U.S. Economy

 In 2011, value-added by majority-owned U.S. affiliates of foreign companies accounted for 4.7

percent of total U.S. private output. 

 These firms employed 5.6 million people in the United States, or 4.1 percent of private-sector 

employment. About one-third of jobs at U.S. affiliates are in the manufacturing sector.

 These affiliates account for 9.6 percent of U.S. private investment and 15.9 percent of U.S. 

private research and development spending. 

 In the 2008-09 recession and subsequent recovery, employment at U.S. affiliates was more 

stable than overall private-sector employment. As a result, U.S. affiliates’ share of total U.S. 

manufacturing employment rose from 14.8 percent in 2007 to 17.8 percent in 2011. 

 Compensation at U.S. affiliates has been consistently higher than the U.S. average over time, 

and the differential holds for both manufacturing and non-manufacturing jobs. 

Looking ahead, the United States will remain an attractive destination for foreign investment, and this 

investment will help bolster our economy. However, we need to continue to nurture and build upon the 

underlying strengths of the U.S. economy that make firms want to invest here; including an open 

investment regime, a large economy, a skilled labor force, community colleges, world-class research 

universities, predictable and stable regulatory regime, adequate infrastructure, and new energy sources.
2

Foreign Direct Investment in the United States

Every day, foreign companies establish new operations in United States or provide additional capital to 

established businesses. The United States consistently ranks as one of the top destinations in the world 

for this foreign direct investment (FDI) and has been the largest recipient of FDI since 2006, with 

investments totaling more than $1.5 trillion.2 

This investment strengthens our economy by supporting good-paying jobs for millions of American 

workers, expanding our exports, and funding research and development. This paper reviews the factors 

that individually and collectively make the United States a sought-after destination for foreign 

investment, examines recent trends in FDI, and outlines benefits from FDI for the entire economy.

Drivers of foreign direct investment in the United States

The U.S. is increasingly attractive as a destination for business investment, including FDI, for many 

reasons and companies and experts from around the world agree. In its June 2013 FDI Confidence 

Index, the U.S. surged past countries like China, Brazil and India to become the country with the top FDI 

IN-SOURCING: THE DOMESTIC EQUIVALENT OF FDI?

There has been much interest recently in the phenomenon of “in-sourcing,” which describes decisions 

by U.S.-owned firms to move certain of their operations back from abroad. While this is not FDI into 

the United States (because the investor is not foreign), in-sourcing decisions are motivated by many of 

the same considerations that motivate FDI.

The 2013 Economic Report of the President contains a detailed discussion of in-sourcing that includes 

the role of our productive workers, highly innovative environment, appropriate legal protections, and 

growing energy sector in attracting investment by U.S. firms back to the United States. That discussion 

also explains the concept of hidden costs. These matter also for FDI but are very concretely grasped in 

the context of in-sourcing.

In earlier decisions to locate abroad, many U.S. firms may have been motivated by a quest to pay low 

wages, but may not have had a full picture of the productivity drag that they would bear because of less 

productive workers, inadequate legal protections, and a generally more risky environment. As these 

costs became apparent, some firms moved operations back.

Distance itself can be costly. Compared with operating in the United States, setting up a supply chain 

far away and learning to communicate with suppliers requires many long trips and much time of top 

executives—time that could be spent on introducing new products or processes at home. There is also 

greater risk from a long supply chain, because shipping prices and delivery times can vary enormously. 

In addition, U.S. companies are coming to value more highly the advantages that come from having 

production, innovation, and design close together. For example, the experience of manufacturing often 

motivates ideas for new products. Thus, Intel manufactures its most advanced chips in the United 

States, near where they are designed. Some in-sourcing clearly traces to a greater recognition of the 

benefit that comes from recognizing and avoiding these costs, and a desire to capture that benefit.
3

prospects globally, as ranked by 302 companies representing 28 countries and multiple industry sectors.

2013 marks the first time that the US occupies the #1 spot in the survey since 2001. No single factor 

explains why the United States is an attractive destination for investment. This discussion highlights a 

few, and the way they interact:

 An open investment regime

 A large economy with big and diverse consumer markets

 A skilled labor force

 Community colleges, incorporating skill-development missions

 The world’s top research universities

 Predictable and stable regulatory regime, including appropriate intellectual property protections

 Adequately capacitated infrastructure

 New sources of energy

For decades, and across presidential administrations, the United States has upheld an open investment 

policy, which affords companies national treatment regardless of country of origin. President Obama 

reaffirmed the U.S. commitment to an Open Investment Policy in 2011. A recent study finds that access 

to markets is one of the factors that significantly affect the decisions of multinationals to locate in the 

United States.

3

 For example, a policy of “build where you sell” allows firms to gain deep insight into how 

local consumers use a firm’s product, uses that may differ significantly from in a multinational’s home 

market. In our bilateral investment treaties (BIT), national treatment is a core obligation that ensures 

that investors and investments receive treatment no less favorable than each treaty party accords to its 

own investors and investments within its own territory.

The U.S. economy is the largest in the world, and with median household income of $51,017, offers a 

large and steady demand for a variety of products.4 The workforce is highly skilled and innovative. Our 

business regulations are among the most transparent and least cumbersome, including appropriate 

intellectual property protections. Exporting from the United States is relatively easy and inexpensive.5 

To these long-standing American strengths, we add the more recent increases in energy availability and 

decreases in energy costs.6 

In the past, low wages and cost competitiveness were considered synonymous, with businesses “chasing 

low wages” with an eye on achieving cost savings, regardless skill and productivity differences between 

the low-wage and American workforces. However, experience in low-wage countries has given 

businesses a more nuanced point of view, especially as wage inflation in some countries has exceeded 

productivity growth. Put another way, businesses have learned that today’s low wages may be gone 

tomorrow and that other costs and risks can offset the savings from cheap labor.

The United States’ strong community college system increasingly emphasizes industry-focused training 

for high-demand occupations, with those efforts bolstered by various Administration efforts to ensure 

the availability of skilled workers for all firms operating in the United States. Our research universities 

are top ranked (15 of the top 20 universities in the world are located here); they are essential partners 

for companies making R&D investments here. The United States sits among the top five of the World 

Intellectual Property Organization’s rankings in both investment in knowledge as a share of GDP and 

innovation.

7

 
4

Those investments further benefit from the world's best intellectual property (IP) protection regime.8

Government fees for obtaining a U.S. patent are among the lowest in the industrialized world.9,10 

Appropriate trademark protections protect companies' investments in brand and reputation. The U.S. 

Patent and Trademark Office bolsters those protections by performing "relative grounds examination" 

of trademark applications, ensuring that potential trademarks are not likely to be confused with 

currently active, registered trademarks. This up-front vetting of a brand or mark guards against 

potentially costly trademark disputes in the future. These protections benefit the owners of the IP and 

may benefit the United States as a whole. Empirical evidence points to a positive correlation between 

such protection of IP and economic growth.11 This appropriate IP regime is just one example of the 

stable and predictable regulatory environment that the United States has on offer. This makes doing 

business easier. In 2013, the World Bank ranked the United States fourth out of 185 countries in terms 

of the “ease of doing business.”

Also important to the ease of doing business is the ability to move goods and services around. Although 

U.S. infrastructure would benefit from significant investment, as the President has proposed, the United 

States does have world class ports plus a freight rail, air transportation, and a road network that are

capable of not only serving the large U.S. market but making the United States a base for exports as 

well.

Increased domestic energy production has brought down prices and brightened the energy outlook, 

most notably for natural gas. Between 2007 and 2012, U.S. prices dropped nearly 60 percent as 

production rose and new reserves were uncovered. The country's natural gas boom has catalyzed 

domestic and foreign investment in petrochemical manufacturing as well as in the manufacturing of 

steel and equipment needed for gas extraction. Multiple industries benefit directly from inexpensive 

U.S.-produced natural gas because of its diverse industrial uses, ranging from on-site electricity 

generation to process heating, space heating, steam generation, and petrochemical processing. In 

addition, rapidly growing demand for renewable energy offers opportunities for firms to produce 

domestically in order to offset high shipping costs for heavy parts such as wind turbine towers and 

blades. 

0

50

100

150

200

250

300

350

400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total 

reserves

Shale 

gas

Source: Department of Energy, Energy Information Administration

Note: The energy Information Administration began to collect separate estimates of shale gas reserves 

in 2007.

Figure 1: U.S. Natural Gas Proved Reserves, 2000-2011

Trillions of cubic feet
5

There is already substantial foreign direct investment in the United States

In 2012, the foreign investment position, or stock of foreign investment, in the United States was $3.9 

trillion (at market value), including new inflows of $166 billion12. Inflows fluctuate broadly from year to 

year, with large drops in FDI flows roughly coincident with global recession years and relatively slow 

growth in FDI flows in the years immediately following.13 Since 1997, the inflows reached a peak of $321 

billion in 2000, coinciding with a peak in the business cycle, before falling to a low of $64 billion in 2003. 

Investment flows climbed in the subsequent economic expansion to a high of $310 billion in 2008. In 

2009, FDI inflows dropped to $150 billion, rebounded in the next two years, and then edged down to 

$166 billion in 2012. 

 

Investment flows into the United States come mostly from a small number of industrial countries. From 

2010 to 2012 (roughly -- the current expansion), Japan, Canada, Australia, and seven European countries 

collectively accounted for 83.5 percent of FDI inflows to the United States.14 Companies from the 

United Kingdom have been the biggest recent investors, accounting for 17.1 percent of FDI inflows from 

2010 to 2012. Switzerland is the second biggest source of FDI, with 10.6 percent of FDI inflows, largely 

concentrated in chemicals, followed by 9.7 percent from Luxembourg, concentrated in the finance and 

insurance industries. 

Investment inflows from emerging markets remain relatively small. For example, FDI from China 

averaged slightly less than $1 billion in 2010-2012, or 0.5 percent of total FDI into the U.S, while inflows 

from Brazil averaged $1.9 billion, or 1.0 percent of the total. But these investments from emerging 

nations mark a dramatic increase from the negligible levels a decade earlier. Historically, investment 

from emerging nations into the United States has been hindered by factors such as the lack of financial 

resources, uncompetitive products for the U.S. market, unfamiliarity with the U.S. market, and low labor 

costs at home. Many of these factors are changing. Some emerging economies, such as China, Taiwan, 

and Brazil, have accumulated large foreign exchange reserves through trade surpluses. For many 

$106

$179

$289

$321

$167

$84

$64

$146

$113

$243

$221

$310

$150

$206

$230

$166

-3

-1

1

3

5

7

9

11

-100

-50

0

50

100

150

200

250

300

350

400

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Figure 2: Foreign Direct Investment in the U.S.

1997-2012

Billions of dollars, current cost basis Percent

Source: Department of Commerce, Bueau of Economic Analysis; International Monetary Fund

Note: Light blue shading denotes a global recession year (real GDP growth was below 3 percent).

Real GDP Growth

(Right Axis)

FDI

(Left Axis)
6

companies in these countries, financing investment projects abroad is becoming easier, and some of 

these companies have acquired the size, expertise, and networks to compete worldwide. Rising wages 

associated with economic development in these countries has narrowed wage gaps with the United 

States. This narrowing, along with high U.S. labor productivity and market-friendly features of the 

United States, makes undertaking new investment here an attractive option. 

The U.S. manufacturing sector draws a considerable share of FDI dollars. Over the last ten years, 

manufacturing’s share of FDI averaged 39.2 percent, and has increased to 45.4 percent in the last two 

years. From 2010-2012, pharmaceuticals accounted for nearly one-quarter (23.6 percent) of 

manufacturing FDI, followed by petroleum and coal products (16.5 percent); electrical equipment, 

appliances, and components industry (9.6 percent); basic chemicals (9.0 percent), and transportation 

equipment (9.0 percent). A look under the hood finds that the transportation equipment investments 

were mostly in the motor vehicle industry; German investors funded one-third of such inflows, and 

Japanese investors one-fifth.

16.5%

3.9%

4.8%

5.8%

6.4%

7.6%

8.4%

9.3%

9.7%

10.6%

17.1%

0% 5% 10% 15% 20% 25%

All Other

Australia

Belgium

France

Germany

Canada

Netherlands

Japan

Luxembourg

Switzerland

United Kingdom

Figure 3: Foreign Direct Investment into the U.S. 

Top 10 Investor Countries, 2010-2012 Average

Source: Department of Commerce, Bureau of Economic Analysis
7

Aside from manufacturing, sectors that received significant FDI from 2010-2012 were wholesale trade 

(11.1 percent of total FDI), mining (10.7 percent), non-bank holding companies (10.6 percent), finance 

(except banking) and insurance (7.8 percent), and banking (6.4 percent).15 Between 2009 and 2011 

outflows of investment from the United States information sector exceeded inflows, leading to some net 

disinvestment in that sector. However, net investment flows turned positive again in 2012. About 5 

percent of the foreign investment position (or net financial claims) are in this industry.

Foreign direct investment benefits the U.S. economy

Inbound foreign direct investment funds a number of physical assets, including production plants, 

research and development (R&D) facilities, sales offices, warehouses, and service centers. It can take 

the form of a “greenfield” establishment that creates something from scratch or a merger or acquisition 

(“M&A”) of a sufficiently large stake in an existing enterprise. Whatever the form, it ultimately 

translates into output, jobs, exports, and R&D on American soil—data on which are captured in the 

Bureau of Economic Analysis’ operations statistics on majority-owned U.S. affiliates of foreign firms. The 

vast majority of U.S. affiliates of foreign firms involve at least a 50 percent foreign ownership stake, and 

BEA publishes its most detailed operational data on these “majority owned” firms, which will be 

referred to as U.S. affiliates of multinational companies or “affiliates” from here on. 16

Between 2010 and 2011, the value-added production of affiliates rose 11.4 percent to $736 billion. This 

output accounted for 4.7 percent of total U.S. private output. These firms employed 5.6 million people 

in the United States, or 4.1 percent of private sector employment. Consistent with estimates of the 

investment position by industry, about one-third of jobs at U.S. affiliates are in the manufacturing 

sector.17 Manufacturing employment at U.S. affiliates was 2.1 million in 2011, or 17.8 percent of all U.S. 

manufacturing employment. Next to manufacturing, the largest industry sectors for employment by 

U.S. affiliates are wholesale trade, which employed 546,600 workers in 2011; retail trade with 488,500; 

and administration, support, and waste management, with 482,200.

Manufacturing

45%

Wholesale 

trade

11%

Mining

11%

Banking

6%

Finance

8%

Other

19%

Figure 4: Foreign Direct Investment into the U.S. by Industry

Percent of Total, 2010-2012

Source: Department of Commerce, Bureau of Economic Analysis
8

In the 2009-09 recession and subsequent recovery, employment at U.S. affiliates proved more stable 

than overall private-sector employment. Total affiliate employment increased by 0.9 percent between 

2007 and 2011, while total U.S. private employment fell 5.3 percent. Likewise, employment at 

manufacturing affiliates edged down just 1.5 percent from 2007 to 2011, compared to a 15.4-percent 

drop in overall U.S. manufacturing employment. As a result, U.S. affiliates’ share of total U.S. 

manufacturing employment rose from 14.8 percent in 2007 to 17.8 percent in 2011.

U.S. affiliate firms make substantial investments in capital equipment and R&D, tend to hire highly 

skilled workers and pay excellent wages. These firms paid wages and other forms of compensation that 

averaged more than $77,000 per U.S. employee in 2011 as compared to average earnings of $58,000 for 

workers in the economy as a whole. Compensation at U.S. affiliates has been consistently higher than 

the U.S. average over time, and the differential holds for both manufacturing and non-manufacturing 

jobs, with a slightly higher differential in manufacturing.

80

85

90

95

100

105

110

2007 2008 2009 2010 2011 2012

Total manufacturing 

employment

Manufacturing U.S. affiliate 

employment

Total U.S. affiliates 

employment

Total private 

employment

Figure 5: Employment, 2007-2011

Index (2007=100)

Source: Department of Commerce, Bureau of Economic Analysis

DATA ON FOREIGN DIRECT INVESTMENT IN THE UNITED STATES1

Data in this report are from the Bureau of Economic Analysis (BEA) unless otherwise noted. BEA 

collects two broad sets of data on foreign direct investment in the United States: (1) international 

transactions (balance of payments) and direct investment position data, and (2) financial and 

operating data of U.S. affiliates. Each of these data sets focuses on a distinct aspect of foreign direct 

investment. The financial and operating data provide a picture of the overall activities of the U.S. 

affiliates, and the international transactions and direct investment position data cover foreign 

investors’ transactions with, and position in, both new and existing U.S. affiliates.
9

More generally, the U.S. affiliates are typically high-productivity firms that are major private-sector 

contributors to efforts to innovate and build. U.S. affiliates contribute 9.6 percent of total U.S. private 

investment and 15.9 percent of total U.S. private R&D. U.S. affiliates are also well-integrated globally 

and are the source of 20.5 percent of total U.S. goods exports. 

A second positive benefit of U.S. affiliates is their high research and development (R&D) spending. U.S. 

affiliates account for a rising amount and share of U.S. businesses’ research and development 

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

U.S. Affiliates U.S. Affiliates U.S. Affiliates

All industries Manufacturing Non-manufacturing

Figure 6: Annual Compensation per Employee, 2011

Dollars

Source: Department of Commerce, Bureau of Economic Analysis

4.7% 4.1%

9.6%

15.9%

20.5%

0%

5%

10%

15%

20%

25%

Output Employment Capital

Investment

R&D Exports

Figure 7: Economic Activities of Majority-Owned 

U.S. Affiliates of Foreign Companies, 2011

Percent of total for U.S. Economy

Source: Department of Commerce, Bureau of Economic Analysis; National Science Foundation
10

expenditures. In 2011, these firms spent $45.2 billion on R&D, accounting for 15.9 percent of total R&D 

spending by businesses.18 Since 1997, when the data were first published, R&D expenditures of U.S. 

affiliates have climbed 163 percent, close to double the 87 percent growth among overall business 

spending on R&D.

The bulk of the R&D investments were in the manufacturing sector, with the manufacturing sector 

accounting for 69.9 percent of total R&D expenditures by U.S. affiliates, nearly equal to the 68.5 percent 

manufacturing share of business R&D spending across all firms. Affiliates in the wholesale trade sector 

spent $7.0 billion on R&D in 2011,19 followed by the professional, scientific, and technical services sector 

($4.1 billion), and the information sector ($1.5 billion).

In 2011, the majority of R&D expenditures by U.S. affiliates were from the top investor countries –

specifically, Switzerland, the United Kingdom, Japan, France, and Germany. Swiss-owned affiliates have 

100

125

150

175

200

225

250

275

1997 1999 2001 2003 2005 2007 2009 2011

Total U.S. 

affiliates R&D

Total business

R&D

Figure 8: R&D Expenditures, 1997-2011

Index (1997=100)

Source: Department of Commerce, Bureau of Economic, Analysis; National Science Foundation

Note: Prior to 2007, FDI data do not include U.S. affiliates of foreign banks.

0 5 10 15 20 25 30

Manufacturing

Wholesale trade

Professional, scientific,

and technical services

Information

All others

Figure 9: R&D Expenditures by U.S. Majority-Owned Affiliates

Billions of Dollars, 2011

Source: Department of Commerce, Bureau of Economic Analyis
11

spent the most of any country on R&D since 2009, holding steady at approximately $9.0 billion annually 

during that time. 

Finally, U.S. affiliates of foreign firms account for a disproportionate share of total U.S. exports (relative 

to their employment size). In 2011, U.S. affiliates exported $303.7 billion of goods, accounting for 20.5 

percent of total U.S. exports, the second highest share since 1995. As the chart highlights, goods 

exported by U.S. affiliates follow the broad trends of overall exports, but tend to do better during 

economic downturns, likely because U.S. affiliates tend to trade heavily with their parent group and 

related parties, such as subsidiaries, foreign affiliates and sister companies. In fact, a significant portion 

of their exports – 59.0 percent in 2011 – is classified as a related-party transaction. This share of 

transactions has been constant throughout the time period and remains an important source of overall 

exports. These firms are heavy importers of goods as well, accounting for 28.4 percent of total U.S. 

imports—contributing to our negative trade balance but also further illustrating how these firms link the 

United States to the global economy.

Conclusions

FDI supports a host of benefits in the United States, notably good jobs and innovation led by research 

and development investment. While industrial countries are the primary source of FDI to the United 

States, emerging markets are becoming a bigger source of FDI and their share should be expected to 

increase as institutional and structural barriers in those countries decline.

Looking ahead, the United States will remain an attractive destination for foreign investment, and this 

investment will help bolster our economy. However, we need to continue to nurture and build upon the 

underlying strengths of the U.S. economy that make firms want to invest here; Including an open 

investment regime, a large economy, a skilled labor forced, community colleges, world-class research 

universities, predictable and stable regulatory regime, adequately capacitated infrastructure, and new 

energy sources.

0%

5%

10%

15%

20%

25%

30%

0

50

100

150

200

250

300

350

Source: Department of Commerce, Bureau of Economic Analysis

Note: Data prior to 2007 do not include U.S. affiliates of foreign banks. 

Total U.S. goods 

exports (left axis)

U.S. affiliates' share of total 

goods exports (right axis)

Figure 10: Exports of Goods by Majority-owned

U.S. Affiliates of Foreign Firms, 1997-2011

Dollars, in millions Percent
12

Notes

 

1

These seven European countries, in descending order of direct investment in the U.S. from 2010 to 2012, are: the 

United Kingdom, Switzerland, Luxembourg, the Netherlands, Germany, France, and Belgium.

2

UNCTAD World Investment Report, Annex table 01, 

http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Annex-Tables.aspx

The combined inflows to mainland China and Hong Kong were larger than those to the United States in 2012. 

However, under the “One Country, Two Systems” principle, transactions in direct investment between Hong Kong 

and mainland China are treated as external transactions. Hong Kong FDI data include investments from China. 

Likewise, inflows to mainland China include investments from Hong Kong.

3

Friedman, J., Gerlowski, D.A., Silberman, J., 2006. “What Attracts Foreign Multinational Corporations? Evidence 

from Branch Plant Location in the United States,” Journal of Regional Science 32(4), 403-418.

4

DeNavas-Walt, C., Proctor, B., Smith, J., 2013. “Income, Poverty, and Health Insurance Coverage in the United 

States: 2012,” U.S. Census Bureau.

5

See http://acetool.commerce.gov/regulatory-compliance-costs.

6

Please refer to Department of Commerce’s Assess Costs Everywhere website for further details.

http://acetool.commerce.gov/

7

http://www.wipo.int/pressroom/en/articles/2013/article_0016.html

8

http://acetool.commerce.gov/intellectual-property

9

http://www.gpo.gov/fdsys/pkg/BILLS-112hr1249enr/pdf/BILLS-112hr1249enr.pdf

10 http://www.uspto.gov/web/offices/pac/mpep/mpep-9015-appx-l.html#al_d1b0d9_16b04_f6

11 Maskus, K., 2000. “Intellectual Property Rights in the Global Economy”, Institute for International Economics, 

Washington D.C., provides a comprehensive analysis of policy reform issues pertaining to IP protection; Fink, C., 

and Maskus, K.E, (Eds), 2005. “Intellectual Property and Development: Lessons from Recent Economic Research,” 

World Bank, Washington, D.C., present a set of empirical studies that assess the effects of stronger standards of 

protection on measures of various economics and social performance. 

12 http://www.bea.gov/scb/pdf/2013/09%20September/0913_inward_direct_investment_tables.pdf, Table 2 in 

current costs and market value.

13 Years in which global real GDP growth, as published in the International Monetary Fund’s World Economic 

Outlook Database, falls below 3 percent are commonly referred to as periods of global recession, or global 

economic slowdowns.

14 Because of data availability, these estimates do not include a current cost adjustment.

15 Holding companies hold investments of other companies. The industry categorization of these other companies 

is not reported. An example of a non-bank holding company is a financial holding company participating in 

banking-related activities including insurance underwriting, securities dealing and underwriting, etc. Further 

information is available from 

https://www.ffiec.gov/nicpubweb/Content/HELP/Institution%20Type%20Description.htm. 

16 This section analyzes “majority-owned” U.S. inbound foreign direct investment for reasons of data availability. 

Although the vast number of affiliates are majority owned, there are important foreign investments in U.S. 

businesses that involve less than a 50 percent foreign ownership stake

17 These estimates are based on the industry of sales. See box note titled “Using Employment Data to Estimate 

Affiliate Shares of the U.S. Economy by Industry” in “U.S. Affiliates of Foreign Companies: Operations in 2010,” 

Survey of Current Business, August 2012.
13

 

18 Data on all U.S. business R&D expenditures are available from the National Science Foundation, 

http://nsf.gov/statistics/industry/. 

19 Wholesale trade is an industry not necessarily associated with R&D. The relatively high share of R&D 

expenditures may stem from the fact that each U.S. affiliate is classified in a single industry, even though a single 

affiliate may be involved in a wide range of business activities. In particular, among U.S. affiliates, the wholesale 

trade industry includes many companies that also have substantial activities in manufacturing.