Foreign Direct Investment

This is GAO's final report on the Secretary of Commerce's first three annual reports on foreign direct investment in the United States. GAO (1) assesses the extent to which Commerce's second and third reports--issued in 1993 and 1995--fulfilled their requirements under the law and responded to recommendations made in a 1992 GAO report; (2) reviews the process by which federal agencies collect data on foreign direct investment; (3) reviews the status and processes of the data exchanges, or links, initiated by the Financial Data Improvements Act of 1990 between the Commerce Department's Bureau of Economic Analysis and its Bureau of the Census and between the Bureau of Economic Analysis and the Labor Department's Bureau of Labor Statistics; and (4) evaluates the extent to which implementation of the act has improved public information on foreign direct investment in the United States.

GAO found that: (1) Commerce's FDIUS reports included all of the applicable data requirements and responded to prior GAO recommendations; (2) the reports' analyses and conclusions relating to FDIUS economic effects were generally thorough and reasonable, but in a few instances, Commerce's conclusions were more definitive than evidence warranted; (3) BEA obtains FDIUS information through survey questionnaires that require U.S. affiliates of foreign firms to report on financial and operating data; (4) BEA has strengthened its survey procedures and increased its staff devoted to survey follow-up in order to ensure compliance with reporting requirements; (5) BEA-Census and BEA-BLS data sharing efforts have generated data on U.S. affiliates of foreign firms at a greater level than was previously available, allowing Commerce to draw more meaningful conclusions in its reports; (6) certain restrictions and factors related to the protection of confidential data continue to limit more extensive data sharing among federal agencies; and (7) Commerce has fulfilled the legislative requirements by improving the quantity and quality of FDIUS data, resulting in both government officials and private sector analysts gaining access to previously unavailable FDIUS data.