Introduction
The article begins with a breakdown of expenditures by foreign direct investors over the last few years. In 2016, they totaled $373.4 billion, which is lower than the $439.6 billion that was recorded in 2015 by $66.1 billion. The author notes that these numbers are above the annual average of $226 billion for the period of 2006-2008. This may indicate that the investments that China provided in 2015 are diminishing, but its effect is still significant. The majority of expenditures were used to acquire businesses, and only $5.6 billion was used to establish new firms in the United States. Even less was used on the expansion of existing firms at $2.2 billion. These statistics show that the majority of investors are risk-averse and prefer to purchase established organizations rather than creating new ones. Subsequently, the author begins to examine statistics sorted by country, industry, and other factors (Anderson, 2016).
Analysis
Manufacturing is stated to be the most popular industry among foreign direct investors in 2016 with $129.4 billion spent on various firms in the field. The most popular type of manufacturing was related to chemical factories. Other industries that caught the attention of foreign investors included professional, scientific, and technical services, financial companies, insurance, and other activities. Canada provided the most foreign direct investment into the United States at $58.5 billion, with the United Kingdom, Ireland, and Switzerland providing significant, but slightly smaller investments. California received the majority of all investments at $64.7 billion. Illinois, New York, and Texas are listed as the other states at the top. These statistics indicate that foreign investors seek to utilize manufacturing opportunities outside of the Chinese market. The following section of the article described investments used to create new firms in the country (Anderson, 2016).
Investments used to establish new businesses in the United States, or expand existing ones are referred to as greenfield investment expenditures. They make up $7.7 billion of all foreign direct investments in the United States. Greenfield investment expenditures went down significantly since 2015 when $13.8 was invested into the country. 20.7% of all greenfield expenditures were used in the real estate industry. However, $4.4 billion was used on utilities related to power generation. These statistics support the idea of investors being risk-averse (Anderson, 2016).
The number of investments in 2016 went down from 2,846 to 2,129 when comparing to the statistics of the previous year. Only 18 investments above $5.0 billion occurred during the year, and they accounted for the majority of all foreign direct investments. These expenditures were used to acquire existing businesses. The average expenditure per transaction for these acquisitions was $382.1 million. These changes are due to the decreased number of investments from China, which were common in 2015 (Anderson, 2016).
The previously described businesses employed 480,800 workers in 2016. This number is lower than the 2015 statistics by 3000 people. Total planned employment was also down to 499,700 workers, which is lower by 5,200 people than the results of 2015. Manufacturing accounted for the majority of employees at 162,900 people working in the field. Retail trade was recorded as the second top industry by the number of employees. Canada was once again the top employer out of the foreign investors. The low number of new firms being created by foreign companies caused a reduction in the number of workers (Anderson, 2016).
Other activities presented in the article include the total sales produced by companies affected by foreign direct investment, which made up $181.3 billion in 2016. This statistic is higher by 29.1% than the 2015 data. Their net income made up $8 billion, which was 4% of their sales. Their total assets were $383.2 billion in 2016. This data shows that investments of the previous years were profitable for the investors (Anderson, 2016).
References
Anderson, T. (2016). New Foreign Direct Investment in the United States in 2016. Web.