#137 – Inside Our Industry – Amid Rebound, U.S. Regains Position as World Leader in FDI

Posted on | Inside Our Industry

Last week we shared a lead in from AreaDevelopment.com that touched on foreign direct investment (FDI) and how the influx of FDI into communities could mean more job opportunities. We couldn’t resist another post regarding FDI and its effect on the manufacturing sector, that appeared on AreaDevelopment.com that was penned by Brian Jones, President & CEO of Gray Construction.

Amid Rebound, U.S. Regains Position as World Leader in FDI
Brian Jones, President & CEO, Gray Construction  |  AreaDevelopment.com  |  Q4 2022

A pair of studies shows the U.S. at the top of the rankings for foreign direct investment (FDI) behind a surge of Asian and European investment in technology, chemicals, information and communication, and financial services.

According to Kearney’s Global Business Policy Council’s 2022 Foreign Direct Investment Confidence Index and for the tenth consecutive year, the U.S. is the world’s No. 1 destination for FDI.

After unseating the Netherlands as the top recipient in 2019 and buttressing this position until the onset of the Covid-19 pandemic, the U.S. fell into second place behind China as America struggled to manage the crisis. But much has changed in a year. The pandemic is waning, and experts are characterizing current economic hardships as a slow squeeze rather than the sharp contractions of the pandemic’s worst days. While the U.S. regains its No. 1 spot, China now finds itself hampered by an untenable zero-COVID policy and increasingly bellicose rhetoric on Taiwan that have scared away businesses fearful of lost revenues from shutdowns, a shortage of available workers, unreliable supply chains, and high-profile military posturing. And with the White House taking a much more aggressive tack at curbing Beijing’s advanced technology industry, investors are likely to be even more reluctant to bank on Chinese enterprises.

Know Your Customer
Across the East China Sea, the foreign leader in FDI inflows to the U.S. is no stranger to American business enterprises. Japan tops the field in U.S. investment, with more than $690 billion in FDI inflows to the U.S. in 2021. In second place is the Netherlands with nearly $630 billion, followed by our northern neighbor Canada in third with $528 billion. Mexico, despite sharing nearly 2,000 miles of one of the world’s busiest borders, did not appear in this ranking.

By industry, analysis of recent inbound FDI indicates that investment has been focused primarily in manufacturing, with 42.4 percent of all inward FDI stocks for the U.S. concentrated in the sector. Wholesale trade and the finance and insurance industry accounted for 9.7 percent and 12.5 percent, respectively.

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