For much of the 21st century, the United States has been the undisputed champion in attracting foreign investment. Despite a Great Recession and waves of political dysfunction, multinational corporations around the world have continued to pump money into the world’s largest economy, an inflow that reached a record $468 billion in 2015.
But in the pandemic-stricken year 2020, the United States nearly lost that crown, according to data compiled by the UN. China, which was gaining slowly over its American rivals, fell within $2 billion of claiming the top spot, prompting the United States to wonder whether the rapidly growing Asian powerhouse would supplant its geopolitical rival for good.
“It’s really caused huge competition problems in the United States,” says Patrick Dine, managing director of PSD Global, an international business consultancy, adding that China’s rise has triggered “political pressures to reverse the trend.
Last year, as China struggled to maintain its “zero Covid” strategy, the United States easily returned to the top, hitting $367 billion in foreign inflows – more than double the $181 billion taken in by China. Chinese economy. And 2022 is shaping up to be another banner year, with at least 12 “megaprojects” – investments worth at least $1 billion – announced by foreign investors in the United States, totaling $34.9 billion. dollars of capital spending, according to data from fDi Markets, an information provider held by the Financial Times that tracks inception foreign direct investment or cross-border investment that creates new jobs and facilities.
“There is certainly a lot of uncertainty right now in the United States,” says Nancy McLernon, head of the Global Business Alliance, a trade association representing the largest foreign multinationals in the United States. “But when I talk to the leaders of my member companies, they feel optimistic.”
Yet the shock of 2020 has led many US cities and states to redouble their efforts to attract foreign capital, no longer satisfied that the size and dynamism of the country’s economy is enough to convince foreign leaders to choose the United States for their next investment dollar. .
This increasingly competitive rush for foreign capital prompted the FT and Nikkei – two of the world’s leading columnists on cross-border investing – to compile the inaugural Investing in America Rankings, a tally based on data from the best cities in the United States. United for foreign companies to do business.
Many of the metrics that the FT and Nikkei have used to measure cities are the same that a national company would consider when deciding where to invest: skilled labor, 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 succeeds – and that success starts with its workforce,” says Tim Ingle, chief financial officer of Toyota North America, which moved its US headquarters to the Dallas area in 2017 and this year paved the way for a $1.3 billion battery plant near Greensboro, North Carolina – an investment that was complemented by an additional $2.5 billion announced in August .
But the FT and Nikkei also looked at attributes that would specifically appeal to overseas investors. How many international flights depart from nearby airports? To what extent do local economic development authorities assist businesses with requirements such as visas once they have set up shop? How many foreign-born nationals live in the region? (For more details, read our methodology.)
unsung heroes
The top 20 cities in the FT-Nikkei rankings secured almost a third of all new FDI projects announced in the United States 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 secured more than 70 new projects from the region over the past decade, according to data from fDi Markets.
Other cities did surprisingly well despite not winning flagship projects – Jacksonville, Pittsburgh, Kansas City – because they created a business environment where foreign businesses can thrive.
Toyota’s investment is a sign that North Carolina has become something of a hub for such cities, joining others in the Southeast with business-friendly labor laws and low corporate taxes. The state has three in the top 20 of the FT-Nikkei rankings — Charlotte, Raleigh and Greensboro — with leaders citing the state’s lower cost of living as a key factor.
Kim Sneum Madsen, chief executive of Danish technology group Umbraco, said his company chose Charlotte for its US headquarters in 2020 after considering five other cities, including Chicago, Austin and Philadelphia, due to low cost of life as well as an airport with several non-stop flights to Europe and fewer large technology groups competing for talent.
“I have to admit that I didn’t know Charlotte before,” says Sneum Madsen.
Other small US cities have become targets for foreign investors due to low living costs, including lower taxes and cheap rent. Louisville, Kentucky, which finished 30th on the FT-Nikkei overall 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 of the cost of space in New York, Boston or San Francisco, according to CommercialEdge data. , a real estate information platform.
Similarly, the small town of Taylor, Texas, secured the biggest FDI commitment of the past year: a $17 billion chip deal with Samsung. The production site will cover more than 5 million square meters, which will favor cheap real estate and low operating costs.
“The ideal location is probably something you’ve never heard of,” says Didi Caldwell, president of Global Location Strategies, a site selection consultancy.
big is beautiful
Still, the largest and most cosmopolitan cities in the United States fared well in the FT-Nikkei rankings. In addition to Miami, three of the top five cities are among the largest and wealthiest cities in the United States: New York, Boston, and Houston.
Despite higher costs of doing business, these metropolitan centers shine in terms of deep talent pools, openness to expatriates 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, an FT-owned business location specialist, meaning companies have multiple pipelines for training and recruiting. . Houston has the largest seaport in the United States in terms of shipping tonnage, and more than half of Miami’s population is foreign-born, most of any major US city.
“We have all the infrastructure for international,” says Susan Davenport, senior vice president and director of economic development for the Greater Houston Partnership, a trade association. “We have this great talent base and we like the fact that we are an international city. We celebrate that.
Increasingly, however, cities and regional development agencies have been forced to become more proactive in securing large foreign investments that in the past went almost unsolicited.
Not only are foreign companies looking for tax breaks and incentive programs, they are also increasingly looking for ‘follow-up’ – the term used to refer to a range of services, including visa and navigation assistance. in the unknown regulatory hurdles offered to companies once they arrive. in the United States — provided by some municipalities.
Savannah, Georgia is a good example. In May, Hyundai announced it would build a $5.5 billion electric vehicle factory in neighboring Bryan County. But that deal only came about after the state spent years courting South Korean companies, including Kia, which built its first-ever US assembly plant in the town of West Point. . In addition to identifying a large plot of land for the factory, the regional authorities had vocational training programs ready to ensure a skilled workforce.
“FDI is about relationships,” says Pat Wilson, Commissioner of the Georgia Department of Economic Development. “These are long-term relationships. These are investments in the future.