THE ECONOMY : Foreign Direct Investment in U.S. Up 61%

From Associated Press

A dozen investments of more than $1 billion each helped increase foreign direct investments in the United States to $65 billion last year, a 61.3% rise over 1987’s $40.3 billion, the Commerce Department reported Tuesday.

Britain and Japan led the world in buying or establishing business enterprises in the United States and each had four of the dozen $1-billion-plus investors, the department said. Two Canadian investments also topped the $1-billion mark.

The department said the 12 investments represented 80% of the 1988 increase. There were only six investments totaling more than $1 billion in 1987.

The report covered only foreign direct investment in the United States, such as buying control of a company. It did not include passive investment by foreigners, such as purchasing stocks or bonds they are not in a position to manage.


Analyst James Annable of First National Bank of Chicago said the sharp increase in foreign direct investment “was almost as much of a given as death and taxes” considering the nation’s high budget and trade deficits.

“We’re going to see this number grow like clockwork every year,” Annable said.

The department said factors encouraging foreign investment include the profitability of U.S. companies, a large consumer market, an advanced technological base and a cheaper dollar compared to foreign currency.

Because of growing foreign investment, legislation has been introduced in Congress to require greater disclosure about foreign investors and their purchases.


Last year’s foreign investments were widespread, the department said in its report.

“Substantial increases occurred in all major industry groups except services, real estate and financing (except banking),” the report said.

The total British direct investment was $21.5 billion, followed by Japan’s $14.2 billion. Canada was third with $10.4 billion.


Breakdown by the three major investing countries, in billions of dollars.

Country 1988 ’87 ’86 ’85 ’84 ’83 ’82 Great Britain $21.5 15.1 8.6 6.7 3.7 2.4 3.1 Japan 14.2 7.0 5.4 1.2 1.8 0.4 0.6 Canada 10.4 1.3 6.5 2.9 2.6 1.1 1.2

Source: U.S. Commerce Department