Only in Venezuela do U.S. foreign investments return less than in Argentina

RIO DE JANEIRO, BRAZIL – Total profit remittances from U.S. companies abroad to the United States were lower in 2020 than the year before. Compared with US$519.7 billion in 2019, they fell by about US$68 billion last year to US$452 billion, down 13%, according to official data released last week.

The balance of movements was positive in almost all countries where U.S. multinationals operate.

The “almost” refers to two cases worldwide. Venezuela, which recorded a negative flow of US$158 million, and Argentina, which had a deficit of US$157 million, just one million less than the Caribbean country.

The data come from the latest report on direct investment by country and industry, prepared by the Bureau of Economic Analysis (BEA), which depends on the U.S. Department of Commerce for processing economic information.

Among other things, the report chronicles the fate of U.S. direct investment abroad by multinational enterprises (MNEs).

The combination of recession, post-crisis devaluation in 2018, as well as the restrictions imposed last year on access to the dollar and the transfer of corporate profits, have highlighted the contrast between Argentina’s balance sheet and the situation of U.S. companies around the world.

More than half of the total position of U.S. multinationals by the end of 2020 is accounted for by just 5 countries. The United Kingdom attracts the most U.S. direct investment abroad (US$890.1 billion), followed by the Netherlands (US$844 billion) and Luxembourg (US$759.4 billion). “Canada (US$422.2 billion) and Ireland (US$390.3 billion) close out the top five,” said the report.

“Within the total income of multinationals from around the world, dividends or repatriated profits declined by a total of US$124.6 billion, or 30.7%, last year,” the report added.

INVESTMENTS IN ARGENTINA

Historically, the report also shows that U.S. companies invested less in Argentina in 2020 than at any time since the publication series began in 2017. The trend continues to be downward.

While U.S. investment was US$15.219 billion in 2017, it dropped to US$8.9 billion in 2018. In 2019, it rose to US$9.9 billion, according to BEA data, and fell to US$8.8 billion last year.

In 2017, U.S. multinationals remitted US$1.8 billion to the United States from Argentina, down from US$1.07 billion in 2018. Already in 2019, remittances fell to US$344 million, and last year the balance of profits and income remitted from Argentina was negative by US$157 million, according to BEA data.