Foreign Multinational Investment Mostly Targets Manufacturing, European Countries: Report

Multinational corporations in the U.S. invest in many countries — but they don’t invest equally.

U.S. direct investment abroad increased $244.9 billion to $6.15 trillion at the end of 2020, according to a new Bureau of Economic Analysis report.

Most of the recipients were in the U.K and the Netherlands, and in general, the primary beneficiaries of the increased investment by industry included manufacturing, finance and insurance and wholesale trade.

Foreign direct investment in the U.S. also increased. About $187 billion more dollars were invested in 2020, as compared to 2019, bringing total investment to $4.63 trillion. Most of the additional money came from German companies.

Here’s what else you need to know about the report:

• The U.S. largely invested in the U.K. ($890.1 billion), the Netherlands ($844 billion) and Luxembourg ($759.4 billion). Total investment in Europe was about $3.6 trillion. 

• Manufacturing received the bulk of invested dollars at 51.6%. Earned income for American multinational companies dropped 13% to a total of $452 billion and dividends decreased by $124.6 billion.

• Foreign investment in America disproportionately stemmed from five countries, including Japan ($647.7 billion), Canada ($490.8 billion), the U.K. ($486.9 billion), the Netherlands ($484 billion) and Germany ($411.3 billion). 

• The manufacturing sector received most of the foreign investment at 40.3%, followed by insurance and finance (12.2%) and wholesale trade (11.1%).

• Foreign multinational corporations earned an income of $151.8 billion, decreasing the total by about 24% compared with the previous year.