U.S. Direct Investment Abroad

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U.S. Direct Investment Abroad

A major investment by an American corporation outside the United States. For example, an American company may buy a factory in Indonesia because labor costs are lower. Many economists believe that U.S. direct investment abroad is good for an economy, as it provides jobs and increases domestic capital. Critics point out that profits usually leave the invested country and go to the American company. U.S. direct investment abroad is a type of foreign direct investment.
References in periodicals archive ?
The international transactions data for FDIUS, like counterpart data on USDIA, cover affiliates' transactions with their parents--in this case, U.S.
affiliates that is somewhat more comprehensive than that provided for foreign affiliates in the data sets on USDIA. As with the data on USDIA, a variety of indicators are provided, including data on sales, gross product (value added), employment, compensation of employees, capital expenditures, exports and imports, and research and development expenditures.
These same data items were added to the 2004 benchmark survey of USDIA. Bank affiliates were asked to supply data on their total sales of services by destination (as nonbank affiliates are asked to do) and on their total interest paid and received.
Highlights of the USDIA estimates include the following:
(3) Historically, reinvested earnings have been one of the largest sources of growth in the USDIA position.
This article presents a discussion of the historical-cost direct investment positions by type of capital flow and by host country for USDIA and by type of capital flow and by country of foreign parent for FDIUS.
The USDIA position valued at historical cost--the book value of U.S.
The USDIA position increased $18.8 billion in 2005, less than 1 percent.
The $18.8 billion increase in the USDIA position was the net result of capital inflows (which decrease the USD IA position) of $12.7 billion and valuation adjustments of $31.5 billion (table B and chart 3).
Capital flows for USDIA shifted from outflows (which, as noted earlier, increase the USDIA position) of $222.4 billion in 2004 to inflows of $12.7 billion in 2005.
Equity capital outflows fell to $39.7 billion in 2005, down sharply from $81.4 billion in 2004, but were nonetheless the largest contributor to the net change in the USDIA position.
As a result, net intercompany debt inflows from foreign affiliates (which reduce the USDIA position), totaling $19.4 billion, were recorded for the year.