U.S. trade in construction and related services

Construction Review, Fall, 1997 by Patrick H. MacAuley, John Sondheimer, Sylvia Bargas

Cross-border exports of construction services by U.S. firms were

nearly $3.0 billion in 1996, which was double the value of 1991. The

United States has a $2.5 billion trade surplus in this sector, since

imports are less than $0.5 billion. The Asia-Pacific region is by far the

largest market area for U.S. construction service exports, with Latin

America being the second largest.

The data in this article differ from the values published in

Engineering News-Record in that these statistics cover only cross-border

exports and imports of services. Thus, these export statistics

do not include construction work done by foreign affiliates; nor do

U.S. imports include work done by American employees and

subcontractors for foreign-owned construction companies. A

discussion of concepts, definitions, and methodology is appended to

this article.

Summary statistics for U.S. cross-border trade in construction,

engineering, and mining services are shown in Table 1. Net export

receipts in 1996 were $2,990 million, which was calculated as gross

operating revenues ($5,383 million) less the sum of goods included

with construction services ($1,274 million) and foreign expenses

incurred ($1,119 million). Foreign expenses are excluded because they

are not exports in the balance-of-trade sense, as published in the

official U.S. trade statistics. Sales of goods associated with

construction service exports are counted separately as merchandise

exports.

Table 1 - U.S. Exports and Imports of Construction Services

(Millions of Dollars)



                              EXPORTS



YEAR     NET        Gross       Exports of

       EXPORT      Export      goods included       Foreign

       RECEIPTS    Operating      in gross          Expenses

                   Revenues      operating       or disbursements

                                  revenues



1987      668        1653              700              285

1988      790        1533              439              304

1989      939        1917              279              699

1990      867        2467              238            1,542



1991     1478        2901              211            1,212

1992     1935        3221              369              918

1993     2407        4289              282            1,600

1994     2474        4834              690            1,670

1995     2848        5193              850            1,495

1996     2990        5383            1,274            1,119



       EXPORTS       IMPORTS       BALANCE



YEAR   Addendum:       NET          TRADE

       Gross value    IMPORT       BALANCE

       of new        PAYMENTS    (exports less

       contracts                   imports)



1987      1,460         163             505

1988      1,373         307             483

1989      2,899         443             496

1990      2,749         170             697



1991      3,422         315           1,163

1992      5,191         261           1,674

1993      6,044         319           2,088

1994        -           280           2,194

1995        -           339           2,509

1996        -           489           2,501

U.S. and unaffiliated foreign persons. Because the data are collected

from the U.S. purchasers, who do not have information on the gross

payments to these contractors is collected.

U.S. sales of architectural, engineering, mining, and construction

services are recorded in the U.S. international transactions accounts on

a net basis. Net receipts equal U.S. contractors' gross operating

revenues from foreign projects less the sum of (1) U.S. merchandise

exports included in gross operating revenues (which are recorded in the

merchandise trade account of the balance of payments) and (2) foreign

expenses, such as those for local labor or locally procured materials

and supplies.(*)

Net receipts measures the portion of gross operating revenues

retained by the U.S. contractor, either as profits or as returns to other

U.S.-located factors of production employed in connection with a

foreign project (for example, its own employees or equipments). Net

receipts from all projects performed by U.S. contractors for

unaffiliated foreigners are included in U.S. exports, whether the

projects are financed by private U.S. or foreign sources, by U.S.

Government grants or loans (such as the Agency for International

Development or the Export-Import Bank), by foreign governments, or

by international organizations. Excluded are revenues from projects

carried out by foreign affiliates of U.S. companies; only U.S. parent

companies' shares in the earnings of these affiliates are included in the

current account of the U.S. international transactions accounts, where

they are recorded as investment income rather than as sales of

services.

U.S. imports of engineering, architectural, construction, and

mining services are recorded simply as foreign contractors' gross

operating revenues from U.S. projects. Although deductions should,

in principle, be made for related U.S. merchandise imports and for

foreign contractors' outlays in the United States for wages and other