Why FDI Matters

One of the events years ago that inspired creation of the Global Chamber^® was a public meeting in Phoenix that featured a prominent Arizona businessperson standing up and declaring that “foreign companies are not welcome in Arizona because they take away jobs.” And yet nothing could be further from the truth. Part of our mission is to dispel wrong thinking like this.

In March of this year, the U.S. Commerce Department held the annual SelectUSA Conference, which attracted companies from all over the world. The intent was to give them plenty of reasons to do business here, because it’s good for everyone. And there is data to prove it.

The Brookings Global Cities Initiative has reported why foreign direct investment matters. When foreign firms invest in the U.S., they contribute inordinately and positively to the economy. Overall foreign-owned operations account for 5 percent of private sector employment. That’s not insignificant, but most interesting is what this Foreign Direct Investment (FDI) looks like in an average U.S. community…

• 5.0% of employment
• 6.7% of compensation
• 12.0% of productivity growth
• 15.2% of capital investment
• 18.9% of corporate R&D
• 20.3% of export

These companies pay more than local companies (6.7 percent of compensation versus 5 percent of the jobs), and more than 20 percent of an average region’s exports come from these companies, bringing dollars and jobs.

We at Global Chamber talk all the time about increasing exports, and one of the most important ways may be to simply attract foreign direct investment — which provides a positive bump.

So if you ever hear someone complain about foreign companies investing in your town, state or country, let him know he owes the foreign owners of those companies a big hug. When communities welcome foreign direct investment, they’re welcoming higher-paying jobs, tax dollars going to road and schools, more R&D and increased exports. Welcome FDI!

Doug Bruhnke is the CEO and founder of Global Chamber^®