Outlays for New Investment in the United States by Foreign Direct Investors

N 2001, outlays by foreign direct investors to acquire or establish U.S. businesses decreased substantially, reflecting the slowdown in the U.S. economy and in the world economy. Outlays decreased 60 percent to $132.9 billion in 2001 from an exceptionally high level of $335.6 billion in 2000.1 The decrease, the first since 1997, was part of a sharp drop in overall merger and acquisition activity worldwide.2 Despite the decline, outlays were still higher than in any year prior to 1998 (chart 1 and table 1). The sharp decrease in outlays in 2001 followed 3 years of unprecedented levels of spending for new investments, largely reflecting the strength of the U.S. economy and the world economy. In 1998–2000, outlays in each year were at least triple those in any year prior to 1998 and large—$2 billion or more—investments accounted for at least two-thirds of total outlays in each year. These large investments were concentrated in industries in which large businesses are prev-