Foreign investors stepped up acquisitions of US-based businesses last year, boosting foreign direct investment (FDI) to a record high, but part of the increase was due to corporate tax inversion transactions. The Commerce Department said on Wednesday FDI surged 68 percent to $420.7 billion, the highest since the government started tracking the series in 1982.
Foreigners spent $408.1 billion to acquire existing business and $11.2 billion to set up new enterprises. The remaining $1.4 billion in FDI last year was for the expansion of existing foreign-owned businesses in the United States. Planned total expenditures, which include both actual and planned future expenditures, totalled $439.2 billion in 2015. Manufacturing accounted for more than half of the FDI inflows last year, with investment totalling $281.4 billion. Much of the investment was in pharmaceuticals and medicines industries. Ireland was the largest source country, accounting for $176.5 billion, probably because of corporate inversions - where a domestic corporation that is currently the owner of its world-wide operations becomes a subsidiary of a foreign corporation for tax purposes.