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.
Hartford, CT Skyline. (Photo: METRO HARTFORD ALLIANCE)
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.
Rendering of Aurubis Recycling Facility in Augusta, GA. (Photo: Georgia Department of Economic Development)
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.
University of Illinois (Photo: Intersect Illinois)
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.
Detroit, MI (Photo: Michigan Economic Development Corporation)
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.”