Manufacturers' Foreign Direct Investment Falls Again

By John S. McClenahen It could be that U.S. manufacturers have been putting their globalization efforts on hold. Or that they have been a lot more selective in making foreign direct investments. Or that there haven't been as many big prizes to be had. Whatever the reasons, figures from Deloitte Research, a unit of Deloitte Consulting, show that global U.S. manufacturing investment fell in 2002 to an estimated $23 billion from $36 billion in 2001. The 36% decrease in foreign direct investment (FDI) was nearly as large, in percentage terms, as the 38% decline between 2000 and 2001, when manufacturing FDI dropped from a record $58 billion to $36 billion. Continuing weakness in the global economy generally coupled with the impact of such regional factors as SARS (severe acute respiratory syndrome) could continue to dampen FDI in the short term, says Deloitte Consulting. "But, with a stock of about $400 billion invested overseas, U.S. manufacturing foreign direct investment should recover as economies rebound and industry cycles turn upward," the firm says.

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