By Carol Radice
From the March/April 2022 Issue
Last year was a very good one for foreign direct investment (FDI). From a global perspective, FDI saw a huge jump in 2021, increasing 77% to an estimated $1.65 trillion. According to the Investment Trends Monitor, this amount exceeds pre-Covid levels. Not surprisingly, developed economies were the biggest recipients, with FDI accounting for $777 billion last year alone.
FDI in the U.S.—the largest host economy—increased by 114% to $323 billion during this same time, with cross-border mergers and acquisitions almost tripling in value to $285 billion. Japan, Canada and the UK are among the countries with the largest FDI positions in the U.S.
And while analysts predict the growth rate seen in 2021 is not likely to be echoed in 2022 at the same levels, the outlook is considered positive, nonetheless. Foreign direct investments, whether on a global or nation scale, are increasing for obvious reasons. States and regions receiving FDI often experience new job growth, an influx of cutting- edge technology, and benefit from new sources of innovation, all of which advances economic development in recipient states and regions.
Here is a look at what some states are doing to attract FDI:
Group: Metro Hartford Alliance
Headquarters: Hartford, CT
Globally recognized as a leading center for insurance/financial services (IFS) and for aerospace/defense companies as well as a top 15 location for U.S. corporate headquarters, the Hartford region and entire state of Connecticut offer foreign companies everything that they need to access the U.S. and Canadian markets.
Located within a days’ drive of 85% of the Canadian and 23% of the US population, Hartford is the center of $5.6 trillion of economic activity.
“Our location provides a cost advantage to companies that is 57% lower in total tax and Class A office lease costs than locating in NYC, 48% lower than Boston and 46% lower than Austin, Texas,” said Gene Goddard, chief business investment officer for Metro Hartford Alliance. “Additionally, Connecticut offers a quality of life that is unparalleled. We have sailing, hiking, arts, sports and skiing all within a short drive.”
To many, Hartford is known as the “Insurance Capital of the World.” As part of Metro Hartford Alliance’s efforts to further expand the state’s IFS strengths, through its Connecticut Insurance Financial Services (CT IFS) initiative the group has been working with the United Kingdom’s Department of International Trade (UK DIT) to create an Insurtech corridor. The goal of this program is to help companies from both sides of the Atlantic access the private sector ecosystem and the regulatory agencies in each location that can support their growth.
The Hartford region and the state at large are also known as “The World’s Aerospace Alley.” Connecticut is one of the top five states for defense spending and the number one location in the world for jet engine manufacturing. Goddard said the group has partnered with its OEMs to support reshoring of supply chain to the U.S. and building partnerships with aerospace/defense firms based in the Midlands region of the UK.
For both the insurance/financial services industry and the aerospace/defense industry, Hartford and the state of Connecticut have worked to develop clusters of public and private sector support to help them grow. Their many efforts range from targeted training and talent attraction to regulatory and business assistance programs that help companies gain access to the resources that they need.
Group: Georgia Department of Economic Development
Headquarters: Atlanta, GA
Setting economic development investments and job creation records has become the new normal in Georgia in recent years. Companies across a wide range of industries are attracted to the skilled and diverse workforce, robust and integrated infrastructure, and affordable cost of living in a moderate climate. Georgia’s pro-business approach has created a stable and reliable environment in a right-to-work state with low unionization.
A significant portion of this growth comes from international companies. For decades, Georgia leaders have invested in representatives in strategic markets located throughout Europe, the Middle East, Asia and the Americas. In fiscal year 2021, international partnerships helped generate nearly $2 billion in foreign direct investment that spurred a 20% increase in job creation versus prior year.
On average, FDI accounts for 23% of Georgia’s new job creation each year. Georgia’s workforce is supported with a strong educational pipeline, and Quick Start, the nation’s number one workforce training program. This training program is tailored to not only meet the skillsets required by a company, it also fosters acclimation to communities, corporate culture, and cultural practices.
Collaboration and innovation has spurred investments across a variety of industries including advanced manufacturing, automotive, food processing, logistics, and technology. The electric vehicle (EV) sector in particular is seeing extraordinary growth. The 2018 investment in an EV battery manufacturing plant by SK Innovation has created a ripple effect, attracting global e-mobility suppliers and leaders like Duckyang, Enchem Ltd, TEKLAS, GEDIA, and others.
In late 2021, Korean multinational corporation SK Group subsidiary SKC announced they will join with other business partners to manufacture glass-based substrates for semiconductor chips in Georgia. This unprecedented venture is a result of research conducted at Georgia Tech’s Packaging Research Center.
A key objective for Georgia is the development of an integrated EV supply chain. A recent investment by a German company adds a crucial piece of to the chain. Aurubis, one of the leading recyclers of copper, precious metals, and non-ferrous materials worldwide, will invest $340 million in a state-of-the-art recycling and secondary smelting facility in Augusta. This new facility will be the very first of its kind in the U.S. At the announcement, GDEcD Commissioner Pat Wilson said “Georgia is home to more than 500 German companies, it’s tough to go anywhere in Georgia without seeing Germany’s influence on our economy or our culture. It is very exciting to see the ways in which our longstanding relationship with Germany continues to help us create exciting new jobs that will play a role in keeping Georgia in the driver’s seat of our green manufacturing future.”
Group: Intersect Illinois
Headquarters: Chicago, IL
Illinois is home to more than 2,000 foreign-owned companies and registers about $112 billion in FDI. International companies currently employ more than 380,000 people in the state, which is the headquarters locations for 38 Fortune 500 companies, ranging from Boeing to McDonalds, and a location where small businesses thrive. No one industry dominates the economic landscape in Illinois, and many do quite well, including advanced manufacturing, agribusiness, energy and electric vehicles, information technology, life sciences and transportation & logistics.
The state has a skilled workforce and more than 200 higher education institutions training the talent that companies need. Many consider its infrastructure unmatched. Illinois is within a four-hour flight of all major North American destinations and O’Hare Airport in Chicago, the nation’s busiest airport, has the most nonstop overseas flights. Illinois is also centrally located with vast digital connectivity and unrivaled road, water, and rail networks.
Officials at Intersect Illinois are continuously working with partners throughout the state and across the globe to attract foreign investment. For example, according to CEO Dan Seals, the group recently traveled to the UK with a delegation of Illinois leaders where they spoke to companies in the electric vehicle industry about the state’s thriving sector and supplier network. Additionally, Intersect Illinois coordinates Team Illinois’ presence at the U.S. Department of Commerce’s SelectUSA Investment Summit. The group of economic development organizations from across the state showcases Illinois’ position as a leading global business destination, highlighting the state’s tremendous workforce, world-class infrastructure, diverse industries, and robust international resources.
Illinois is hosting the 2022 Midwest U.S.-Japan Association Conference in September, providing leadership from across the Midwest and Japan with the unique opportunity for dialogue, while serving as a platform to increase bilateral trade and investment between these two regions.
Group: Michigan Economic Development Corporation (MEDC)
Headquarters: Lansing, MI
Michigan is one of the most globally connected states in the nation. Located within 500 miles of half the U.S. and Canadian markets, along with 33 active deep-water ports, 18 commercial airports and 26 freight railroads, it is easy to see why Michigan is attractive to investors. The state also ranks among the top 10 in the U.S. for its road infrastructure and toll-free highways.
Thanks to an extensive university ecosystem developing and investing in future industry solutions, Michigan is a national leader in research & development with a cultural ethos of enthusiastic curiosity and willingness to push boundaries. Its supply chain assets and globally connected location are among the top in the nation for providing safety and security in an era of increasing extreme weather.
With multiple countries operating consulates within the state and one of the most active international borders globally, Michigan has welcomed the world to its two peninsulas for generations. Today, Michigan is home to nearly 1,500 global companies with more than 5,500 locations and a robust network of service providers that support both its first-to-U.S. companies and well-established global corporations.
“In Michigan, we put a premium on our ability to quickly deliver solutions based on the complex needs of our global clients,” said Quentin Messer, Jr., CEO of the Michigan Economic Development Corporation (MEDC). “Team Michigan is equipped with the expertise, knowledge and on-the-ground support needed to help international companies receive prompt support as they grow their worldwide business.”
Messer said that MEDC has two teams focused on FDI. One team is focused on attracting larger multinational companies to Michigan and the other, its international trade team, is focused on affording smaller, Michigan-based companies with opportunities to export their products globally. He added that the group is committed to offering businesses concierge services across state government and working with companies every step of the way to find success in the state.
“In Michigan, we put a premium on our ability to quickly deliver solutions based on the complex needs of our global clients …Team Michigan is equipped with the expertise, knowledge and on-the-ground support needed to help international companies receive prompt support as they grow their worldwide business.”
— Quentin Messer, Jr., CEO of the Michigan Economic Development Corporation (MEDC)
“Streamlining and simplifying all state processes and delivering a whole of government response is a priority for every project we support. Beyond our commitment to excellent customer service, we are laser-focused on growing our site readiness in the state to support large projects while building out our pipeline of professionals in high-demand fields through various workforce development programs such as MI Reconnect and the Michigan Revolution for Electrification of Vehicles Academy,” he said.
Group: Texas Economic Development Corporation
Headquarters: Austin, TX
There is a lot to like about doing business in Texas. Centrally located, the Longhorn State offers ready access to numerous North American markets. Ranked one of the top states for doing business in, Texas is home to nearly 50 Fortune 500 companies, hundreds of publicly-traded firms and three million small businesses.
Officials at many companies appreciate that Texas has lower operating costs, lower energy costs, lower land costs and fewer land-use restrictions compared to other domestic locations. It is also a top state for population growth, having a younger and faster-growing population in comparison to other states.
In fact, it is its young, diverse, and skilled workforce—more than 14 million and counting—that helps make Texas an easy choice for companies looking to do business in the state. Throughout the years Texas has become a leading choice for companies in aerospace, cybersecurity, finance, manufacturing, and for startups. It is also home to some of the top cities for high-tech and life sciences job growth.
“Texas offers international companies many advantages including access to our skilled and young workforce, favorable business climate, established infrastructure and business supply chains, lower operating costs and available real estate,” said Robert Allen, president and CEO of the Texas Economic Development Corporation. “All of these assets are readily available for international companies looking to expand or locate their operations in the U.S. to utilize.”
Additionally, the group’s businessintexas.com website was created to help promote existing international companies’ commitments in Texas.
Group: Toronto Global
Headquarters: Toronto, Ontario, Canada
The Toronto region is one of the largest and fastest growing metropolitan regions in North America. By 2041, the area, the most populated in all of Canada, is projected to grow to nearly 10 million people.
From 2013 to 2019, 80,000 tech jobs were created in the Toronto-Waterloo Corridor alone—more than in San Francisco, Seattle and Washington, DC combined.
The Toronto region’s economy represents 20% of Canada’s GDP. The region’s prime location provides businesses with excellent North American and international market access, including an exclusive market of 130 million people within a 500-mile radius.
Speaking of population, Toronto is the most diverse major city in the world, with 51% of residents being foreign-born. More than 100,000 immigrants find their new home in the Toronto region each year and well over 150 different languages are spoken in the area. “We see the Toronto region’s diversity as our strength and its people as our purpose,” said Toronto Global CEO Stephen Lund.
Talent remains the primary factor impacting corporate strategy and is a key driver for location decision making. In the last two years, it has become evident that there is, in fact, a global war for talent, with companies competing for highly-skilled people, especially when it comes to the engineering and new technology segments.
Talent is one of the strongest assets that the Toronto region has to offer. Well over half of its population has a postsecondary degree.
In complement, within the province of Ontario, Toronto is home to 18 postsecondary institutions that are conducting innovative and ground-breaking work, with some of the best researchers in the world. As a region, it stands to compete with other global hubs like London, New York, and Silicon Valley. “Toronto Global is dedicated to understanding our clients’ business needs and delivering tailored, innovative solutions that will set the stage for their success in the Toronto Region,” said Lund. “We will continue to promote the Toronto Region as the best choice for international business.”