American Manufacturing in Foreign Countries

June 24, 1959

Report Outline
Rise in U.S. Private Investment Abroad
Attractions in Foreign Manufacturing
Aspects of American Production Abroad
Domestic Effects of Foreign Investment
Special Focus

Rise in U.S. Private Investment Abroad

Tripling of the Value of Direct Investments

Interest among American manufacturers in market potentialities for their products in foreign countries has been growing steadily since World War II. More and more companies have expanded exports from their plants at home; licensed patents and processes to foreign producers in exchange for royalties or a share of profits; or established subsidiary companies or branch factories abroad. The last-named of the three main ways of penetrating foreign markets has attained special importance in the past decade. The huge dollar investment poured into foreign production facilities by American business has forged strong private economic ties with many countries.

Ten years ago, exports of non-military goods and foreign sales of goods produced abroad by American companies each amounted to about $12 billion. By 1958, U.S. exports had risen to $16.3 billion, while American companies producing in foreign countries rang up sales estimated at $30 billion. Net earnings of American business from operations abroad exceeded $3.3 billion in 1957, latest year for which the figures are available.

These earnings were derived from direct private investments valued by the Department of Commerce at $25.3 billion. Actually, direct private investments abroad—as distinct from indirect or portfolio investments, i.e. investments in foreign securities—are worth much more. Department of Commerce figures are based on book value, or original cost of plant and equipment, rather than current market value, and the totals do not include those American holdings abroad which represent less than 25 per cent ownership in a foreign enterprise. Business Week recently hazarded the statement that total direct private investment “in foreign branches, subsidiaries, and affiliates may be worth $50 billion.”

ISSUE TRACKER for Related Reports
American Investment Abroad
Jan. 26, 1968  American Investments in European Industry
Jul. 11, 1962  Protection of Investments in Backward Countries
Feb. 21, 1962  Foreign Competition for American Producers
Jun. 24, 1959  American Manufacturing in Foreign Countries
Feb. 25, 1953  American Private Investment Abroad
May 11, 1949  Government Guaranties for Foreign Investments
Apr. 26, 1932  American Manufacturing in Foreign Countries
Feb. 03, 1932  Defaulted Foreign Bonds
May 14, 1931  Protection of American Lives and Property Abroad
Apr. 01, 1929  American Investments in European Industry
May 17, 1926  American Investments in the Western Hemisphere
May 14, 1925  American Investments in Foreign Countries 1919–1924
International Finance
Manufacturing and Industrial Production