Impacts of Foreign Direct Investment in the U.S. Economy

• Foreign Direct Investment Creates New Jobs: U.S. affiliates of foreign companies (majority owned) employ more than 5 million U.S. workers, or 4.4 percent of private industry employment. An additional 4.6 million U.S. jobs indirectly depend on foreign investment in the United States. Between 2002 and 2006, nearly 2,900 new projects were announced or opened by foreign companies, yielding $82 billion in investment and about 170,000 new jobs.
  
  
• Foreign Direct Investment Boosts Wages: U.S. affiliates of foreign companies tend to pay higher wages than U.S. companies. Foreign companies support an annual U.S. payroll of $335.9 billion, with average annual compensation per employee of more than $65,000. Average compensation per employee within these companies has risen every year since 1992. U.S. subsidiaries of foreign firms pay 32 percent higher compensation than the private-sector national average.
  
  
• Foreign Direct Investment Helps U.S. Companies Penetrate International Markets and Increase U.S. Exports: U.S. companies can use multinationals’ distribution networks and knowledge about foreign tastes to export into new markets. Approximately 19 percent of all U.S. exports ($169.2 billion) are generated by U.S. subsidiaries of foreign companies.
  
  
• Foreign Direct Investment Strengthens U.S. Manufacturing: 33 percent of the jobs related to U.S. affiliates of foreign companies are in the manufacturing sector, a sector which accounts for just 12 percent of overall private sector employment.
  
  
• Foreign Direct Investment Brings in New Research, Technology, and Skills: Affiliates of foreign companies spent more than $31 billion on research and development in 2005 and $121 billion on plants and equipment.
  
  
• Foreign Direct Investment Contributes to Rising U.S. Productivity: The increased investment and competition from inward investment leads to higher productivity growth, a key ingredient that increases U.S. competitiveness abroad and raises living standards at home.
  
  
• Foreign Direct Investment Contributes to U.S. Tax Revenues: In 2003, foreign affiliates paid $19.1 billion in taxes, which represented 11 percent of U.S. corporate tax revenues.
  
  

Source: U.S. Department of Commerce - International Trade Administration (http://www.investamerica.gov.)

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