Foreign Investment - More Exact Numbers

Article excerpt

THE facts on foreign investment in the United States have until recently been somewhat nebulous. Debates over the dangers (or benefits) of foreign corporate takeovers and foreign direct investment in new plant and equipment have been conducted with hazy numbers.

Now, as a result of 1990 federal legislation, improved, more detailed statistics have become available, even if somewhat dated. A recent study by the Commerce Department shows that as of 1987:

* Foreign-owned businesses had a 1 percent share of the total number of US businesses. These foreign enterprises had 3.3 million employees, accounting for 4 percent of the employment of US businesses. In manufacturing, the share was 7 percent.

(By the last quarter of 1990, the number of employees had grown to 4.7 million, accounting for 5.2 percent of total private employment, according to preliminary data released last month by the Bureau of Labor Statistics.)

* More than one-fourth of the employment by foreign business was in three states - California (376,000 employees), New York (335,000), and Texas (218,000). The foreign business share of total state employment was largest in Delaware (13 percent) and Hawaii (7 percent).

* Foreign businesses tend to be in industries that rely more on larger amounts of capital (investment in plant and equipment) and skilled labor than the average of US businesses. For example, the share of employment of foreign companies in the 50 most capital-intensive manufacturing industries was 15 percent, compared with only 4 percent in the 50 least capital-intensive industries.

* Foreign-owned establishments tend to be concentrated in the US industries with the most research-and-development activity.

* The payroll per employee of foreign businesses was 29 percent higher ($25,106 per year) than that of US-owned enterprises ($19,416). In manufacturing, it was 12 percent higher. Average payroll per employee increases from $18,933 in 35 industries with zero employment by foreign businesses to $27,380 in the 29 industries with most foreign investment activity. …