Do intangible assets explain high U.S. foreign direct investment returns?

U.S. investors abroad receive a higher return on their assets than their counterparts that invest in the United States. I examine the degree to which excluding intangible assets and repatriation taxes from the international transactions accounts can account for this gap. Using a growth accounting framework, I find that adjusting for these exclusions cuts the gap by more than half. The overall returns gap is nearly eliminated when the adjusted FDI rates of return are applied to the overall overseas asset portfolio. The results suggest a portion of the gap is persistent.