For much of the 21st century, the US has been the undisputed champion of attracting foreign investment. Despite a Great Recession and wave of political dysfunction, multinational corporations from around the world continued to pump money into the world’s largest economy, an influx that rose to a record $468 billion in 2015.
But in the pandemic-ravaged year of 2020, the US nearly lost that crown, according to data collected by the UN. China, slowly gaining on its US competitors, came within $2 billion to claim the top spot, raising concerns in the US as to whether the burgeoning, emerging Asian power would permanently displace its geopolitical rival.
“It really caused huge competition problems for the United States,” said Patrick Dine, chief executive of PSD Global, an international business consultancy, adding that China’s rise led to “political pressure” to reverse the trend.
Last year, as China struggled to maintain its “zero Covid” strategy, the US was easily back on top, rising to $367 billion in foreign inflows – more than double the $181 billion raised by China. economy was included. And 2022 will be another record year, with at least 12 “megaprojects” — investments worth at least $1 billion — announced by foreign investors in the US, totaling $34.9 billion in capital spending, according to data from fDi Markets, a information provider owned by the Financial Times that tracks foreign direct investment, or cross-border investment that creates new jobs and facilities.
“There is certainly a lot of uncertainty in the United States right now,” said Nancy McLernon, head of the Global Business Alliance, a trade association that represents the largest foreign multinationals in the US. “But when I talk to executives at my member companies, they feel optimistic.”
Still, the shock of 2020 has caused many US cities and states to redouble their efforts to attract foreign capital, no longer complacent that the sheer size and dynamism of the country’s economy is enough to convince foreign executives to enter the US. to choose their next investment dollar.
This increasing competition for foreign capital has prompted the FT and Nikkei – two of the world’s leading chroniclers of cross-border investment – to launch the inaugural Investing in America rankinga data-driven tally of the best cities in the US for foreign companies to do business.
Many of the metrics the FT and Nikkei used to measure cities are the same a domestic company would consider when deciding where to invest: A skilled workforce, for example, appeared in nearly a third of U.S. project announcements from foreign investors last year. , according to fDi Markets.
“Every site we pay for, we want to make sure it’s successful — and that success starts with the workforce,” said Tim Ingle, chief financial officer of Toyota North America, which moved its US headquarters to the Dallas area in 2017 and this Years ago, a $1.3 billion battery plant near Greensboro, North Carolina broke ground — an investment that was complemented by an additional $2.5 billion announced in August.
But the FT and Nikkei also examined properties that would specifically attract foreign investors. How many international flights depart from nearby airports? How much do local economic development authorities help businesses with requirements such as visas once established? How many foreigners live in the region? (For more details, read our methodology.)
The top 20 cities in the FT-Nikkei ranking took in nearly a third of all new FDI projects announced in the US last year. Some have long been hailed as multinational hubs. Miami, the winning city, has been a gateway to Latin America for half a century and has landed more than 70 new projects from the region in the past decade, according to data from fDi Markets.
Other cities scored surprisingly well despite not winning major projects – Jacksonville, Pittsburgh, Kansas City – because they have created a business environment where foreign companies can thrive.
The Toyota investment is a sign that North Carolina has become something of a hub of such cities, joining others in the Southeast with pro-corporate labor laws and low corporate taxes. The state has three in the top 20 in the FT-Nikkei ranking — Charlotte, Raleigh and Greensboro — with executives citing the state’s lower cost of living as a key driver.
Kim Sneum Madsen, chief executive of Danish tech group Umbraco, says his company chose Charlotte for its U.S. headquarters in 2020 after looking at five other cities, including Chicago, Austin and Philadelphia, because of its low cost of living and a multi-family airport. nonstop flights to Europe and smaller technology groups competing for talent.
“I have to admit that I didn’t know Charlotte beforehand,” says Sneum Madsen.
Other smaller U.S. cities have been targeted by foreign investors because of low living costs, including lower taxes and cheap rents. Louisville, Kentucky, which finished 30th overall on the FT-Nikkei list, came in first in our “business environment” category; office space in the city averaged $19.37 per square foot in 2021, less than a third the cost of space in New York, Boston or San Francisco, according to data from CommercialEdge, a real estate information platform.
Likewise, the small town of Taylor, Texas, has landed its biggest FDI commitment of last year: a $17 billion chip deal with Samsung. The production site will cover more than 5 million square meters, putting low cost real estate and low operating costs at the forefront.
“The perfect location is probably something you’ve never heard of,” said Didi Caldwell, president of Global Location Strategies, a site selection consultancy.
big is beautiful
Still, the largest, most cosmopolitan cities in the US performed well in the FT-Nikkei rankings. In addition to Miami, three of the top five finishers are among the largest and most storied cities in the US: New York, Boston and Houston.
Despite higher costs to do business, these metropolitan centers excel when it comes to deep talent pools, openness to expats and other specific needs of foreign multinationals, such as major ports and airports.
New York, for example, has more than 320 universities within a 50-mile radius, according to GIS Planning, a business location specialist owned by FT, meaning companies there have multiple pipelines for training and recruiting. Houston has the largest shipping port in the US by water tonnage, and more than half of Miami’s population is foreign-born, the majority of all major US cities.
“We have all the infrastructure for international,” said Susan Davenport, senior vice president and chief economic development officer at the Greater Houston Partnership, a business association. “We have that great talent base and we love that we are an international city. We celebrate that.”
However, cities and regional development agencies were increasingly forced to become more proactive in securing the large foreign investment that in the past has come almost unsolicited.
Foreign companies are not only seeking tax breaks and incentive packages, but they are also increasingly seeking “aftercare” – the term used to refer to a range of services, including assistance with visas and navigating unfamiliar legal hurdles, provided to businesses. are offered as soon as they arrive in the US — provided by some municipalities.
Savannah, Georgia, is a prime example of this. In May, Hyundai announced it would build a $5.5 billion electric vehicle plant in nearby Bryan County. But that deal was only struck after the state courted South Korean companies for years, including Kia, which built its first-ever US assembly plant in the city of West Point. In addition to identifying a large plot of land for the factory, the regional authorities had job training programs in place to provide a skilled workforce.
“FDI is about relationships,” said Pat Wilson, commissioner of the Georgia Department of Economic Development. “These are long-term relationships. They are investments in the future.”