US Direct Foreign Investment Position - Europe 2009

Details of the USFDI (US Foreign Direct Investment) position for 2009 in the Netherlands was highlighted on our website in September (here). In this note we look into the total investment position of the US in other major European economies and compile a chart that gives another indication of the flow of US investment by cleaning the figures of US holding activities. Holding activities comprise 70 percent of the total US investment position in the Netherlands - almost twice the international average.

U.S. Direct Investment Position on a Historical-Cost Basis 2009
(millions of dollars)

For the past three decades, the share of direct investments abroad owned directly – that is, by US parent companies owning foreign affiliates that in turn own other foreign affiliates – has increased. While affiliates in any industry can own other foreign affiliates, much of this investment is funneled through holding-company affiliates.¹  Foreign affiliates classified as holding companies accounted for 36 percent of the US direct investment position in 2009². In 1982, foreign affiliates classified as holding companies accounted for 9 percent of the US direct investment position abroad.

¹      A holding company is a company whose primary activity is holding the securities or financial assets of other companies.
²       In 2009, the 36 percent share was virtually unchanged from that in 2008. In 2007 and 2004, the share was 35 percent. The shares in 2005-2006 were lower—32 percent in 2005 and 34 percent in 2006—primarily as the result of large earnings distributions (and the resulting negative reinvested earnings) in 2005 associated with the American Jobs Creation Act of 2004. The largest distributions by far were from holding companies, especially those with parents in chemicals manufacturing.