US Domestic Direct Investment in 2014 - Essay Example

 US Domestic Direct Investment in 2014 Domestic direct investment is the investment made by a local company with an aim to acquire a sustainable interest in the operation of the enterprise. The lasting interest is aimed to benefit the host country and the local company too. The purpose of the investor is normally limited to have an authority when it comes to enterprise management. The government role is to set the legal and institutional frameworks that will provide conducive environment. In the year 2014, there was an improvement in the performance of direct investment in the United States. Direct Domestic Investment in United States in 2014 There is ease to which goods and services cross the United States national borders. This has made the United States to embrace globalization since it is essential for all the economies that rely on data. These flows have been facilitated policies that govern taxation, migration, trade and those that regulate. But United States would be at the losing end if they did not practice the investment in the local country. There is a need for investment at home so as to be successful in the global market as a full partner. The direct domestic investments include the networks of digital communication, infrastructure, education and research. The additional investment regions are content, security, production of energy and product development. Domestic investments increase productivity, new jobs, higher incomes and more chances that ensure economic mobility. Direct domestic investment is therefore important so as we get the economic growth that we desire (Carew and Mandel, 2014). The year 2014 was characterized by a major portion of investment being experienced from the private companies. The gross direct domestic investment in the first quarter of 2014 was estimated to be about $ 2.952 trillion. This is an improvement from the previous quarter that had a gross of $ 2.905 trillion. This is also a great improvement from the $2.745 trillion in the previous year. This data show that there has been a steady increase in the direct domestic investment in America as per the year 2014. This is characterized by changes of 1.62% compared to last quarter. There has been a 7.54% improvement of the direct domestic investment in a year from the 2014 first quarter. By the 31st Dec, 2014, the direct domestic investment was $ 2.952 trillion (Trading Economics, 2015). The Graph Showing the Direct Domestic Investment in USA 2014 Source: Trending Economics Website. Considering the changes in the direct domestic investment in the year 2014, there is a need to check the dynamics of 2013. By the end of 2013 (Dec, 31st 2013), the direct domestic investment was $ 2.745 trillion. March 31, st 2014, saw the data fall slightly to $ 2.714 trillion. June 30th, 2014 had $ 2.844 trillion; Sept. 20th 2014 ($ 2.905 trillion) while Dec. 31st 2014 has a gross of $ 2.592 trillion. This shows that the year 2014 has been characterized by a uniform and steady growth of domestic investment (Trading Economics, 2015). The companies that made a greater impact in the in the direct domestic investment are similar to those of the year 2013. The only difference is the order to which the companies are arranged in the ranking. The top 25 companies list that lead in the direct domestic investment is characterized by both the energy and non- energy companies. The total investment by the leading 25 companies introduced approximately $ 152 billion. AT&T led the investment list investing $ 20.9 billion capital expenditure. This was followed by Verizon Communication (15.4 B), Exxon Mobile (11.1 B), Chevron (10.6 B) and Walmart (8.7 B) for the top five. To complete top 10, the nest five are Intel, Comcast, Conophilips, Occidental petroleum and Excellon respectively. The next 10 companies are: Duke, Google, General motors, Hess, Apple, Energy transfer equity, Union Pacific, Enterprise product partners, Ford and general electric respectively. To close on top, 25, we have in order: Time Warner cable, FeDEX, Microsoft, FreeportMcMoRan and Amazon (Carew and Mandel, 2014). The investment by industry shows that the leading industries are the Telecom and cable, energy production and mining and internet and technology. The other ones include Utility and energy distribution, automotive and industrial, retail and lastly transportation. The amount of investment is ranged from high to low respectively. Bar Graph showing the Value of Investment and Market by Industry Source: Carew and Mandel (2014) The telecommunication and cable invested $ 46 billion, while the energy production and mining invested $40 billion. The investment by internet and technology summed to approximately $23 billion, while the utility and energy distribution covering $ 17 Billion. The automotive and industrial industries summed to $ 11 Billion while Retail gave $ 9 Billion. To sum it up; the transportation industry closed by investment worth $ 7 Billion. All these companies have their markets linked to the local and international customers in one way or another (Carew and Mandel, 2014). U. S Investment in other Countries U.S has been investing in different part of the world and 2014 was not different. The regions that U.S invested in include Canada, Europe, Latin America, Africa, Middle East, Pacific and Asia and Addenda. In the year 2014, all these countries investment totaled to approximately U.S.D 49, 042 million. In Canada, the investment was worth $ 4,393 M, Europe $ 9,412 M, and Latin America and its environs $ 13, 984 M. The investment in Africa was $ 2,347 M, Middle East $ 1,216, Pacific and Asia 17,690. The investment which is treated as an inflow gave an outflow of USD 84,717 million thus making a profit of USD 35,675 million (U.S Department of Commerce, 2014) Top Countries by Direct Domestic Investment Flows According to Knoema (2015), the leading country in the year 2014 in terms of direct domestic investment flows is the United States. The top ten countries are U.S, China, Japan, Germany, France, U.K, Brasil, Italy, Russia and India. This is a ranking that is done in the relation to the gross domestic product per country. The leading two countries have given the rest of the countries a range making it a two horse race (Knoema, 2015). The method to which this data is collected is unique compared to the rest of the data. In this ranking there is an adoption of the “International Investment Position Manual and Balance of Payments.” As per this ranking, merchanting has been classified as goods exports. The services related to manufacturing are listed under physical goods. The repair and maintenance services have been removed goods and services. Capital transfer as per to migrant transfer has been removed due to consideration hat ownership is changed. The reverse investments are now treated as gross basis liabilities and assets. A table showing countries ranking in terms of direct investment flows Source: Knoema 2015 Note: United States is left out of the graph due to the range it gives China. United States has a direct domestic investment flow of USD 17, 416.3 billion. It is followed by a range by China that has a USD 10, 355.4 billion, then Japan with USD 4, 769.8 billion. The next three countries are Germany (USD 3, 820.5 billion), France (USD 2, 902 billion) and United Kingdom (USD 2, 847.6 billion). The last four that make top ten are: Brazil (USD 2, 244.1 billion), Italy (USD 2, 129.3 billion), Russia (USD 2, 057.3 billion) and India (USD 2,047.8 billion). The gap between the United States and China is approximately 7,000 billion United States dollars. China has given Japan a range of approximately 6,000 billion USD. There is a huge gap between the United States and China is making U.S to stand alone. The gap between China and Japan is also huge making United States of America and China to be in a lonely competition. The rest of the eight countries have a slightly uniform range with Japan tending to be an exception. Checking at the graph, the main competitor to America is therefore China whereby if the annual difference is to be considered the gap would be so little with China leading. This shows that in terms of domestic investment per annum China is the leading one followed by America (Knoema, 2015). This paper shows that there was a great and steady improvement in the direct domestic investment in the United States. The paper gives the reason to why there has been a great improvement in terms of US domestic direct investment. The improvement has been steady since 2013 that might be linked to the election and other political activities. This paper discusses the domestic direct investment of the United States in terms of both inbound and outbound investment. There is also discussion on the industries that has made the greatest impact to the US domestic direct investment. Through these companies one would know the activities that have made the greatest changes in the US domestic Direct Investment Market. The paper discusses the top twenty five companies that have impacted more in the US domestic direct investment market. United States of America still are leading in terms of direct domestic investment as per 2014. This is despite a stiff competition that it faces from China, which has shown a dramatic improvement in terms of domestic direct investment. References Carew, D. and Mandel, M. (2014). U.S investment heroes of 2014: Investing at home in a connected world. Retrieved from http://www.progressivepolicy.org/wp- content/uploads/2014/10/2014.09-Carew_Mandel_US-Investment-Heroes-of- 2014_Investing-at-Home-in-a-Connected-World.pdf Knoema (2015). IMF World Economic Outlook, October 2014. Retrieved from http://knoema.com/IMFWEO2014Oct/imf-world-economic-outlook-october-2014 Trading Economics (2015). Gross Private Domestic Investment- United States. Retrieved from http://www.tradingeconomics.com/united-states/gross-private-domestic-investment-bil- of-$-q-saar-fed-data.html U.S Department of Commerce (2014). U.S Direct Investment Abroad: Balance of Payment and Direct Investment Position Data. Retrieved from http://www.bea.gov/international/di1usdbal.htm Read More