What is FDI?

The Bureau of Economic Analysis (BEA) defines foreign direct investment (FDI) as “ownership or control, directly or indirectly, by one foreign person, or entity, of 10 percent or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise.” FDI is generally divided into two categories: Greenfield Investment and Mergers & Acquisitions. Greenfield investments are those that create new enterprises and develop or expand production facilities. Mergers and Acquisitions involve the purchase of an existing enterprise. FDI plays an important role in the U.S. economy.

The United States is the world’s largest recipient of FDI. More than $325.3 billion in FDI flowed into the United States in 2008, which is a 37 percent increase from 2007. The $2.1 trillion stock of FDI in the United States at the end of 2008 is the equivalent of approximately 16 percent of U.S. gross domestic product (GDP).