WHY EUROPEAN COMPANIES INVEST IN THE UNITED STATES
The United States is the world's largest economy with a GDP of over $15 trillion and a population and consumer market of more than 310 million people. The U.S. is a thriving market with a stable economic, political, and legal structure that offers a wealth of opportunities for foreign companies and investors.
The U.S. has significant natural resources, a healthy labor market, and solid industries that help support more than 310 million people with a median household income of $48,000, which is among the highest in the world's major developed countries. In short, the continued demand for products and services appears great.
In addition, the United States has entered into free trade agreements with 19 other countries, providing access to a further 415 million customers for U.S. goods and services.
Foreign Direct Investment (FDI) into the United States has been an important factor in the U.S. economy for a number of years, with FDI totaling $1.7 trillion over the last ten years. Though investment hit a low of $64 billion in 2003, it surged to an historical peak of $328 billion in 2008. FDI continues to be strong with investments of $194 billion in 2010.
At present, relatively few countries account for most of the investment in the United States. In fact, 84% of FDI in the U.S. in 2010 came from or through eight countries: Switzerland, the United Kingdom, Japan, France, Germany, Luxembourg, the Netherlands, and Canada.
A significant portion of FDI goes to the U.S. manufacturing sector. In 2010, $78 billion of FDI, or 41 percent of total FDI, was spent on the manufacturing sector. Over the past 14 years, manufacturing's share of FDI has varied from a high of 81 per cent in 1998 to a low of 15 per cent in 2004, averaging 39 per cent. Other sectors that have received significant FDI over time include the wholesale and retail sector (21 percent in 2010) and financial-related industries (14 percent in 2010).
Given the power of FDI as an economic engine and the quality of jobs it supports, there is great potential benefit from broadening and deepening foreign direct investment in the United States.
During the last ten years, majority-owned U.S. affiliates of foreign companies have employed between 5-6 million workers.
FDI supported 2 million manufacturing jobs, which have been less affected by the sector-wide losses in employment than domestic manufacturing jobs.
With all the opportunities, however, there is also some risks and challenges to potential investors. Unlike many countries, the U.S. is a nation of 50 separate states that have their own state and local regulations that require a healthy knowledge of tax, commercial, and labor laws. This is why C.A.S.E. is a valuable partner for any new investor, with its local knowledge and network of experienced professionals.
When making your investment decisions we advise you to approach the market carefully and take the given information as a general guide. We also strongly advise you to consult with your advisors to appreciate and understand the challenges that any major investment decision can bring.
EU-US FACT AND FIGURES
- EU and US-based companies account for nearly two-thirds (65 percent) of the top R&D companies worldwide
- EU-US trade climbed to $636 billion in 2011, 14 percent more than the previous year
- The transatlantic economy generates close to $5 trillion in total commercial sales a year and employs up to 15 million workers in mutually "on shored" jobs on both sides of the Atlantic.
- The transatlantic economy is the largest and wealthiest market in the world, accounting for over 54% of world GDP in terms of value and 40% in terms of purchasing power.
- The U.S. and Europe are each other's primary source and destination for foreign direct investment, accounting for more than 60 percent of the inward stock of foreign direct investment (FDI), and more than 75 percent of outward FDI stock worldwide in 2009.