Foreign Direct Investment (“FDI”) continues to play an increasing role in the U.S. economy. This article presents an overview of FDI as well as resources for international companies.

FDI Defined. FDI occurs when a resident of one country obtains a lasting interest a business enterprise in another country. FDI can include (1) establishment of new operations (known as “greenfield investments”); (2) the purchase of existing operations (mergers and acquisitions, M&As); or (3) the addition of capital to existing operations.

The U.S. is the #1 country in the world for both inbound and outbound foreign direct investment.

Source: Congressional Research Service (2024)

From 2005 to 2022, FDI into the United States nearly quadrupled. U.S. trade policy goals seek to promote a level playing field for both U.S. residents and international companies. There is greater scrutiny, however, on investments in goods and services that could impact U.S. national security.

FDI Statistics. FDI data for both inbound and outbound U.S. investment in 2022-2023 is shown below:

Europe is the top U.S. investment partner, accounting for 61% of U.S. outbound investment and 65% of U.S. inbound in 2022. With regard to sector, U.S. investment abroad was primarily in holding companies (47%); financial services (14%); and manufacturing (15%). The largest share of U.S. inbound FDI (42%) was in manufacturing.

FDI Assistance. International companies wishing to do business in the United States have many resources available to them. SelectUSA is a U.S. Department of Commerce program that focuses on facilitating job-creating business investment in the United States. The SelectUSA Investment Summit is a yearly event attended by thousands of individuals, including international companies seeking U.S. Market entry partners. The economic development organizations (EDOs) of nearly all 50 U.S. states attend. SelectUSA provides international companies and investors the opportunity to learn more about the many financial incentives that are available to them. Incentives take many forms, including grants, soft-landing programs, and tax breaks to qualified foreign direct investors.

Editor’s note: to learn more about SelectUSA and how to get started in doing business in the United States, contact our Fedtrade® team using the form here.