The U.S. share of global cross-border investment projects has soared to its highest level on record, underscoring the country's economic momentum compared to Europe or Europe as Donald Trump begins his second term in the Oval Office. China is stronger.
The data on announced greenfield projects - companies building or expanding new facilities and operations in foreign countries - came as political and business leaders gathered in Davos to discuss how the Trump presidency will be reshaped by high tariffs and reshoring production. global economic order.
The proportion of new FDI projects announced in the United States rose to 14.3% in the 12 months to November 2024, up from 11.6% in 2023, according to a Financial Times analysis of data collected by fDI Markets. - Border investments since 2003.
Economists said the growth was driven by strong consumer demand and government incentives in the world's largest economy.
Innes McFee, global economist at Oxford Economics, said: "The United States is attracting an increasing number of global investment projects, reflecting a strong demand outlook and much stronger productivity growth than elsewhere."
"We expect American exceptionalism to continue," he said, adding that while Trump's policies were creating uncertainty, a looser budget would drive demand and "increase the case for investing in the U.S. in the short term." Protectionist policies may do the same."
Trump will speak via video link from the World Economic Forum in Davos on Thursday, with delegates in the Swiss resort eager to hear his economic plan. The president did not immediately impose higher import taxes in an executive order issued on Inauguration Day.
The United States attracted more than 2,100 new FDI greenfield projects in the 12 months to November. By comparison, China secured just under 400 projects over the same period, close to a record low and a fraction of the more than 1,000 investments it received each year in the decade to the mid-2010s.
New projects in Germany plunged to 470 in the 12 months to November 2024, the lowest number in Europe's largest economy in 18 years and a sharp drop from 1,100 greenfield investments a year ago.
Nathan Sheets, chief economist at Citigroup, said the surge in the U.S. was driven in part by the country’s importance as a center for artificial intelligence innovation, lower energy costs and as a result of the Biden administration’s Inflation Reduction Act and the Investment incentives as part of the CHIP Act.
Meanwhile, China's share of foreign direct investment inflows has declined due to "geopolitics," Sheets said, referring to Western attempts to "reduce" risks from China.
Europe's share fell even more sharply. Energy prices on the continent soared after Russia invaded Ukraine in early 2022, making "cheap energy attractive to investors," Sheets said.
According to fDi, the estimated value of new greenfield FDI projects announced in the United States increased by more than $100 billion to $227 billion in the 12 months to November 2024. The data is based on corporate project announcements, news reports and estimates of foreign direct investment over the life of the project, rather than annual capital expenditure.
The growth in U.S. greenfield investment is spread across multiple sectors. A record 12-month total of projects benefited from CHIP Act support in the semiconductor, as well as industrial equipment, construction, electronic components, renewable energy and aerospace sectors.
According to data released by the International Monetary Fund last week, U.S. economic growth is expected to continue to outpace other developed countries. The United States is currently expected to grow by 2.7% in 2025, while the euro zone will grow by just 1%.
The changing geopolitical landscape and rising U.S.-China trade tensions are driving recent foreign direct investment trends as multinational companies try to hedge supply chain risks.
“Global trade is more fragmented and securing supply chains is key,” said Samy Chaar, chief economist at Lombard Odier. “This means there will be friendly outsourcing of goods you don’t intend to produce, and there will be strategic industries like microchips and healthcare. The trend of reshoring.”
Last year, 62% of U.S. FDI projects came from Western Europe, up from 58% in the 10 years to 2019, the last year before the pandemic.
Contrary to the surge in FDI inflows, the number of overseas projects from the United States shrank to 2,600 in the 12 months to November, the lowest level in two decades (excluding the peak of the epidemic). Experts say the Biden administration's industrial policies incentivize U.S. companies to keep production in the country.
While uncertainty over the Trump administration's trade and tax policies has loomed over big business since the November election, economists don't expect his agenda to block projects in the short term.
Richard Bolvien, head of investment research at UNCTAD's Investment and Enterprise Sector, said Trump's election "will not change investors' investment incentives and economic prospects." "From this perspective, the attractiveness of the United States to world investment will continue to rise."