In a recent feature in Business Facilities magazine, Illinois was lauded for being one of the most significant economies—not in our nation—but in the world. A big part of the growth in Illinois' economy is foreign direct investment, meaning foreign held businesses are growing in Illinois and Illinois is uniquely positioned to attract more non-US businesses. Read the full article here
Below is an excerpt of the article:
Foreign direct investment (FDI) is key to the economic renaissance underway in Illinois and a vital strategy for Intersect Illinois, the public-private partnership which works with companies and connects them with state funding resources. Illinois ranks first in the Midwest as a destination for foreign investment. More than 1,890 foreign firms call Illinois home and they employ more than 319,000 Illinois residents. More than 80 foreign consulates are located in IL.
With the world’s 17th largest economy, Illinois is strategically located at the heart of the country, at the crossroads of commerce that puts businesses, people and goods within a four-hour flight of the entire North American market—not to mention non-stop service to more than 65 international destinations. That’s just one reason why 39 Fortune 500 companies and 440+ major corporate headquarters call Illinois home.
Illinois has proven to be a natural choice for international employers looking to expand in the North American market. The state’s more than 1,900 foreign companies contribute more than $100 billion to the states GDP—and include such notable firms as Novartis, Ricoh, Bombardier, Siemens and BP. Illinois ranks fifth in the nation for number of employees supported by U.S. subsidiaries.
Illinois’ world-class infrastructure includes eight foreign trade zones and five international airports. In addition, the state’s seven Class I railroads, third largest interstate highway system in the country and third largest intermodal port in the world provide unparalleled access to global markets. This allows international companies to reach their global customers and operations seamlessly, this has helped Illinois become the largest exporting state in the Midwest and the fifth largest exporting state in the U.S.
The state’s international population includes more than 40 distinct ethnic communities with populations over 35,000 and more than 80 foreign consulates help to facilitate employee relocation for global firms.
Illinois corporations also benefit from top-notch digital infrastructure; reliable, low-cost energy; abundant water; and natural resources. One of Illinois’ tremendous strengths is the diversity of industries prevalent there. The state is particularly strong in advanced manufacturing, agribusiness and food processing, financial services and life sciences. In fact, more than 290,000 workers are employed in advanced manufacturing.
Every state likes to say they’re innovative—but in Illinois, the facts speak for themselves. The state’s highly educated workforce of 6.4 million people is supported by more than 200 higher education institutions providing a multitude of degrees and certificate programs. The state also is home to the 10th top engineering school in the U.S.
International relationship building has been crucial to Intersect Illinois’ foreign investment strategy. Over the past year, Intersect Illinois has built strong international relationships while promoting the state’s assets. Intersect has taken part in jobs missions to China, Japan, Germany, Poland and Italy and hosted multiple delegations from these countries that have directly resulted in investment in Illinois.
Read the complete article on the Business Facilities magazine web site.
The top 25 countries are indexed annually by A.T. Kearney through a survey of global business executives that ranks markets that are likely to attract the most investment in the next three years. This year's report keep the US at the top of the list with some interesting changes in overall trends of foreign direct investment. The full report is available on the A.T. Kearney web site here, and it well worth the read. Below is an excerpt of the report detailing the US position in the report:
"The United States maintains its top ranking in the Index for the seventh consecutive year, although by not as wide a margin as last year. The country’s continued attractiveness is likely in large part due to its sustained and robust economic expansion in recent years. The economy grew by 2.9 percent in 2018, compared with an average of 2.2 percent across developed markets. That said, the International Monetary Fund (IMF) forecasts slowing US economic growth in the medium term, which is consistent with declining investor optimism about the near-term US economic outlook.
Several US policies in recent years, including the Tax Cuts and Jobs Act and a sustained effort to weaken the regulatory requirements on companies, are aimed at improving the investment environment, likely contributing to the country’s sustained appeal to foreign investors. Other policy measures, however, have injected considerable uncertainty and disruption in the economy over the past year. Trade policy is the most notable example, including the still-unfinalized USMCA to replace the North American Free Trade Agreement (NAFTA) and the imposition of tariffs across a broad set of Chinese exports. Similarly, 2018 reforms in the operation of the Committee on Foreign Investment in the United States (CFIUS)—which greenlights or rejects foreign investments into the United States on national security grounds—will pose additional complications for FDI moving forward, particularly from China.
FDI inflows to the United States fell 18 percent in 2018 from the year prior, according to UNCTAD— part of a broad-based decline in inflows to developed markets. Part of the fall was due to fewer megadeals involving US-based companies in 2018 than in 2016 and 2017. That said, the United States remains a key market for cross-border M&A, with some of the largest deals focused on natural resources, such as upstream oil and gas development, midstream infrastructure such as pipelines, and metals and mining. The pharmaceutical and biotechnology sector was also involved in some of the largest M&A deals in 2018, including the French pharmaceutical firm Sanofi’s acquisition of Bioverativ, which specializes in treatments for hemophilia and other rare blood disorders, for $11.6 billion."
The conclusion of the research touches on the business implications of where foreign direct investment is headed, what it means for our economies, and how companies can keep a competitive edge:
"Today’s global operating environment is replete with paradoxes. Even as digital technologies enable greater global connectivity than ever before, global integration is becoming more challenged, and there is an ongoing shift toward regionalization of economic activity and interconnectedness. In addition, while country-level politics are characterized by populism and nationalism, more globally-minded cities are rising in importance in terms of both economic prowess and political leadership. And despite high levels of geopolitical risk, the global macroeconomic outlook remains relatively strong—although it is weakening relative to recent years. Each of these paradoxes, ultimately, is indicative of the rise of the age of multi-localism.
Understood in this context, the mixed signals that investors present in this year’s FDI Confidence Index results are less anomalous than they appear at first glance. Indeed, many of the seeming inconsistencies can be explained by the fact that the localization trend that emerged in last year’s Index has gained strength. This emphasis is likely to continue in the coming years, which will sustain the importance of FDI to profitability and competitiveness as companies seek to become local players in the markets in which they operate.To compete in this environment, companies will need to enhance regional supply chains and devolve management and operations to the local level. And countries seeking to improve their competitiveness in attracting FDI should therefore focus on engaging in more regional economic integration and fostering the dynamism of their largest cities."