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Foreign Investment Drops 60 Percent

Wed Jun 5,11:06 AM ET


WASHINGTON (AP) - Foreign investment in the United States, after hitting record highs for three straight years, plunged by 60 percent in 2001, reflecting the U.S. recession and a sharp slowdown in mergers (news - web sites) and acquisitions.
The Commerce Department (news - web sites) said that spending by foreigners to buy existing U.S. companies or set up new operations fell to $132.9 billion in 2001, down from an all-time high of $335.6 billion in 2000.

The department attributed the big decline to the recession in the United States and economic weakness in many other major countries last year, as well as the sharp slowdown in mergers and acquisitions, especially in telecommunications and other high-tech industries which have seen their stock values plummet since the spring of 2000.

Even with the big drop last year, the overall spending was still higher than for any year prior to 1998, when the recent surge in foreign investment began.

By industry, the largest investment outlays occurred to acquire finance and insurance companies, a total outlay of $37.9 billion, followed closely by manufacturing, where foreigners spent $35.6 billion to acquire American companies or establish their own new operations in the United States.

Within manufacturing, the biggest spending occurred in the food category, where foreigners spent $11 billion, followed by computers and electronic products, where $10.2 billion was invested.

By country, the biggest flow of investments came from Canada at $16.9 billion, followed closely by Britain, $16.6 billion. Other big investment flows in Europe came from Switzerland, $15 billion; the Netherlands, $13.2 billion; Germany, $12.8 billion, and France, $5 billion.

Outside of Europe, the biggest investment spending came from Australia, $5 billion, followed by Japan at $3.8 billion. All of Asia and the Pacific region accounted for $9.47 billion in spending.

Investment spending for countries outside of Canada in the Western Hemisphere was put at $8.6 billion.

Copyright © 2002 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.
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