In 2023, US manufacturing foreign direct investment dropped by a third, reaching its lowest point in a decade. The sharp decline raises questions about the real impact of recent industrial policy on attracting long-term foreign investment. By FDI Intelligence
US manufacturing foreign direct investment (FDI) in 2023 fell by a third to $42.9 billion, marking the lowest point in a decade. Despite numerous project announcements fueled by policy initiatives like the Inflation Reduction Act and the Chips and Science Act, actual capital expenditure has lagged significantly. Manufacturing's share of new FDI also dropped to a decade-low of 28.8%, signaling a widening gap between expectations and tangible investment outcomes.
The decline in FDI, particularly from European investors, is due to several factors, including stringent subsidy requirements, delays in policy implementation, and operational bottlenecks like labor shortages and rising costs.
Many large-scale projects have been delayed or paused, contributing to investor uncertainty about the US market. While overall private investment in US manufacturing has hit record highs, the fall in foreign FDI raises concerns about the sustainability of these trends. Industry experts believe geopolitical risks, financial instability, and policy delays contribute to a broader slowdown in foreign commitments.
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