FDI

["Ian Murray" <seamus2001@xxxxxxxxx>]

Foreign investment drops by 60 percent as merger mania subsides
MARTIN CRUTSINGER, AP Economics Writer
Wednesday, June 5, 2002


URL:
http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2002/06/05/nat
ional1044EDT0621.DTL


(06-05) 07:44 PDT WASHINGTON (AP) --

Foreign investment in the United States, after hitting record highs for
three straight years, plunged by 60 percent in 2001, reflecting the U.S.
recession and a sharp slowdown in mergers and acquisitions.

The Commerce Department said that spending by foreigners to buy existing
U.S. companies or set up new operations fell to $132.9 billion in 2001,
down from an all-time high of $335.6 billion in 2000.

The department attributed the big decline to the recession in the United
States and economic weakness in many other major countries last year, as
well as the sharp slowdown in mergers and acquisitions, especially in
telecommunications and other high-tech industries which have seen their
stock values plummet since the spring of 2000.

Even with the big drop last year, the overall spending of $132.9 billion
was still higher than for any year prior to 1998, when the recent surge
in foreign investment began.

By industry, the largest investment outlays occurred to acquire finance
and insurance companies, a total outlay of $37.9 billion, followed
closely by manufacturing, where foreigners spent $35.6 billion to
acquire American companies or establish their own new operations in the
United States.

Within manufacturing, the biggest spending occurred in the food
category, where foreigners spent $11 billion, followed by computers and
electronic products, where $10.2 billion was invested.

By country, the biggest flow of investments came from Canada at $16.9
billion, followed closely by Britain, $16.6 billion. Other big
investment flows in Europe came from Switzerland, $15 billion; the
Netherlands, $13.2 billion; Germany, $12.8 billion, and France, $5
billion.

Outside of Europe, the biggest investment spending came from Australia,
$5 billion, followed by Japan at $3.8 billion. All of Asia and the
Pacific region accounted for $9.47 billion in spending.

Investment spending for countries outside of Canada in the Western
Hemisphere was put at $8.6 billion.