Promoting Foreign Direct Investment in The United States Christopher Clement International Investment Specialist Invest in America
FDI in the U.S. Economy 5.2 million $40 billion $55 billion $190 billion $408 billion Workers Employed by U.S. Affiliates of Foreign Firms in the U.S. in 2009 Amount U.S. Affiliates of Foreign Firms spent on R&D in the U.S. in 2008 Amount U.S. Affiliates of Foreign Firms Reinvested into the U.S. Economy in 2008 Size of FDI Flows into the U.S. in 2010 (preliminary) Amount of Wages Paid to Employees of U.S. Affiliates of Foreign Firms in 2008 30 percent 18 percent U.S. Affiliates of Foreign Firms Pay on Average 30 percent Higher Wages and Salaries than U.S. Establishments U.S. Affiliates of Foreign Firms Generate over 18 percent of all U.S. Exports 2
Swedish FDI in the U.S. #11 $34.3 billion 181,500 #15 Investor in the United States, by Stock FDI (ultimate beneficial owner, 2009) Size of Swedish FDI stock in the U.S., 2009 Number of U.S.-based employees of Swedish firms, 2008 (most recent available) Fastest growing investor nation in the United States, by Stock FDI CAGR Source: U.S. Bureau of Economic Analysis 3
U.S. FDI Trends Top 10 FDI Positions, 2009 24% $557.9b 11% $259.6.1b 9% $119b 11% $251.2b 5% $119b 4% $88.4b 2% $47.5b 2% $45.4b 12% $271.9b 2% $48.4b Source: Department of Commerce, Bureau of Economic Analysis FDI by Ultimate Beneficiary Owner 4
U.S. FDI Trends Top 10 FDI Growth Markets, 2009 38% $45.4b 28% $3.8b 45% $34.2b 51% $47.5b 43% $11.6b 31% $2.4b 35% $5.5b 34% $2.3b 63% $24b Source: Department of Commerce, Bureau of Economic Analysis FDI by Ultimate Beneficiary Owner Note: Numbers denote 5 year compound annual growth rate and total investment position in United States 41% $2.6b 5
Total FDI Stock in U.S. by Industry, 2009 $2.3 trillion distributed into Professional & Technical services 2% Food 3% Other 22% Manufacturing 34% Finance and Insurance Real estate 13% and Rental and Leasing 2% Depository Institutions 5% Chemicals 26% Other manufacturing 31% Wholesale trade 14% Information 6% Retail trade 2% Source: Department of Commerce, Bureau of Economic Analysis Primary and fabricated metals 6% Transportation equipment 12% Electrical equipment, appliances, and components 3% Computers and electronic products 7% Machinery 12%
Fastest Growing FDI Manufacturing Sectors 73% 52% 42% 33% 23% 12% All Manufacturing Computers & Equipment Communications Custom Steel Electrical Pharmaceutical Source: Bureau of Economic Analysis 7
FDI in the U.S. Industry Perspective Top 10 FDI Growth Sectors in the United States (Compound annual growth rate in FDI position between 2005 and 2009 and dollars in 2009 on a historical cost basis) Miscellaneous Store Retailers 94% $6.991 billion Educational Services Copper, nickel, lead and zinc ore Computers and Peripheral Equipment Beverage and Tobacco Products Petroleum Refining (excluding oil/gas extraction) Communications Equipment Other Services (excl. public sector and private households) Steel Products from Purchased Steel Oil and Gas Extraction 89% 73% 73% 66% 57% 52% 50% 42% 39% $3.573 billion $7.517 billion $19.464 billion $55.031 billion $6.556 billion $10.865 billion $3.856 billion $5.613 billion $35.347 billion Source: Bureau of Economic Analysis 8
Swedish FDI in the United States Recent Greenfield Announcements March 2011 Neonode, a leading provider of optical touch screen solutions and small to midsize hand-held devices, announced plans to invest $1.4 million in a new California office to help it meet demand for its touch screen technology. The new facility is expected to create 6 jobs. March 2011 Volvo Construction Equipment announced plans to invest $100 million in a new heavy equipment manufacturing facility in Pennsylvania. The firm expects to create over 450 new jobs. February 2011 Electrolux announced plans to invest $2.5 million to expand its Customer Care Center Georgia. The expanded office will help the company maintain customer service standards to its growing customer base, creating about 225 new jobs. February 2011 Nolato, a plastics firm, announced plans to invest $23 million to add liquid silicone injection molding as one of its capabilities at its Wisconsin manufacturing facility. The firm expects to hire about 55 employees. Source: fdi Markets 9
The U.S. A Great Return on Investment Strategic Market & FTAs Center for Global Innovation and Entrepreneurship Strong Intellectual Property Right Protections A Leader in Higher Education Productive Workforce Open to People, Cultures, and Ideas 10
Strategic Market & FTAs The United States has Implemented or Entered into Force 14 Free Trade Agreements With a Combined Population of Over 560 Million Consumers and a Combined GDP of $5 Trillion Dollars Source: USTR; CIA Factbook Free Trade Agreement Bilateral Investment Treaty Both 11
The United States: An Attractive Business Climate #1 #2 #4 #5 IESE Business School s 2009-2010 Venture Capital and Private Equity Index France: #14 Germany: #10 UK: #2 AT Kearney s 2010 FDI Confidence Index France: # 13 Germany: #5 UK: #10 World Economic Forum s 2010-2011 Global Competitiveness rankings France: #15 Germany: #5 UK: #12 World Bank 2010 Ease of Doing Business Report France: #26 Germany: #22 UK: #4 12
U.S. Most Attractive for Venture Capital and Private Equity 13
U.S. Strengths in Venture Capital and Private Equity Strengths Strong innovation and entrepreneurship culture Fully developed and robust VC/PE ecosystem Outlook Strong industry with new investment and growth opportunities The number of players will continue to shrink: less funds will be able to raise follow-on funds Opportunities New innovation and fast growth segments such as clean-tech, cloud computing, wireless security Collaboration with China 14
The United States: World Leader in Research & Development Other 66% U.S. 34% In 2010, 34% of all R&D in the world took place in the United States Almost 50% of all researchers in the developed world work in the U.S. Approximately 45% of Nobel prize winners in the fields of Chemistry, Medicine, and Physics completed their winning research in the U.S. Sources: OECD, www.nobelprize.org 15
Strong Intellectual Property Right Protections #3 The International Property Rights Index s 2011 comparison of Intellectual Property Rights Protections (Behind Finland and Sweden) Of the more than 244,000 patents granted by the U.S. Patent Office in 2010, over 50 percent were granted for residents of foreign countries. The U.S. received more patent applications than any other country. Source: USPTO 16
Center for Global Innovation and Entrepreneurship #1 World Economic Forum s 2010-2011 Global Competitiveness rankings for Innovation 8 The U.S. is Home to Eight of the Top Ten Knowledge Economy Regions of the World 22 Among Business Week s Top 50 Information Technology companies, 22 are U.S. firms 565,000 In 2010, an average of 565,000 new businesses were created in the U.S. per month Sources: World Economic Forum; World Knowledge Competitiveness Index 2008 (Centre for International Competitiveness); National Science Foundation Science and Engineering Indicators 2010; Kauffman Index of Entrepreneurial Activity 1996-2009; 17
Maintaining Competitiveness Created March 2007 Primary U.S. Government Mechanism to Manage Foreign Investment Promotion What We Do: 1. Facilitate Business Inquiries 2. Act as Ombudsman 3. Connect Investors with U.S. States 4. Provide Policy Guidance 5. Educate Investors 6. Provide Guidance to U.S. Economic Development Organizations 18
Facilitate Business Inquiries Invest in America provides actionable information to foreign firms to help them Incorporate a business in the U.S. Understand basic U.S. tax and legal concepts Learn about incentives available to businesses in the U.S. Connect with U.S. state, city, or regional economic development offices to learn about investment opportunities Apply for a business-related visa Foreign investors can communicate with Invest in America staff by phone or email in Washington, DC, or meet with members of the U.S. Foreign Commercial Service in 77 countries around the world. 19
Act as Ombudsman 20
Educate Investors Industry/University Cooperative Research Centers Programs (I/UCRC) National Energy Technology Laboratory (NETL) Funding Opportunities Renewable Energy Tax Credit Loan Guarantee Program ARPA-E Funding Opportunities Updated Guide Available at http://www.investamerica.gov/ Contact Invest in America with questions 21
Myths About the U.S. Market Myth: All foreign investment in the United States is subject to undue scrutiny. Facts: CFIUS has the authority under a voluntary review mechanism to review individual FDI transactions to determine their effects, if any, on national security. The overwhelming majority of FDI in the United States does not result in a CFIUS review. Where CFIUS reviews have been conducted, risk mitigation assurances are requested for only a few transactions per year 22
Myths About the U.S. Market Myth: U.S. laws and business culture make it difficult to do business Facts: According to the World Bank s Ease of Doing Business Index, the U.S. ranks as the one of the world s best economies for doing business and ranks #5 overall The United States has clear rules governing business, which make for a predictable market. Foreign firms receive the full benefit of this transparency, as foreign and domestic firms are treated equally. 23
Contact Information Christopher Clement International Investment Specialist Invest in America U.S. Department of Commerce Tel: 202-482-0929 Email: christopher.clement@trade.gov Web: http://www.investamerica.gov 24