Latest NewsJune 20, 2014
Puget Sound Region Has Great Potential for Foreign Direct Investment
New Global Cities Initiative Research on Foreign Direct Investment
SEATTLE — Today, the Brookings Institution released a first-ever metro-level analysis of foreign direct investment’s role in the Puget Sound region’s economy as part of its Global Cities Initiative, a joint project of the Brookings Institution and JPMorgan Chase. The report analyzes the types of foreign-owned businesses located in the Puget Sound region, which includes the Seattle metropolitan area as well as the Bremerton metropolitan area, outlines the region’s sources of foreign investment and shows that 66,341 jobs are supported by FDI locally.
The report finds that the Puget Sound region—while increasing the number of jobs in foreign-owned enterprises between 1991 and 2011 by about 63%—still falls below the U.S. average. Other findings from the report include:
- 66,341 jobs in foreign-owned establishments (FOEs) in 2011, up from 40,737 in 1991; 68% of those are in service-related industries and the other 32% in goods-related industries
- In 2011, 4.5% of the total private employment in the Puget Sound region is in FOEs, up from 3.5% in 1991
- The top five industries by jobs in FOEs are: wireless telecom carriers, other heavy construction, computer systems design, aircraft products and parts, and restaurants
- In 2011, approximately 25,000 jobs entered foreign ownership via mergers and acquisitions while 19,000 entered via new business openings
- The top five source countries, by jobs in FOEs, are: Canada, Japan, Germany, England, and France
“As a region, we do a solid job when it comes to exports, but as the numbers indicate, we have room for improvement when attracting foreign direct investment. That’s why our work as part of the Global Cities Initiative pilot project is so vital,” said Tacoma Mayor Marilyn Strickland. “By learning directly from foreign-owned businesses what the key drivers of their success are, we’ll be better able to develop a strategy and implementation plan that will make the Puget Sound region a hub for global investment.”
Since April 2014, the Puget Sound region has been part of a Global Cities Initiative pilot program to create and implement metropolitan plans to secure and sustain FDI. The FDI in U.S. Metro Areas report will help the region’s Global Cities Initiative team design its plan to maximize the amount, quality and economic benefits of FDI in the region and integrate FDI into an overall smart economic global trade and investment strategy.
The Trade Development Alliance of Greater Seattle and the Economic Development Council of Seattle and King County are leading this effort for the Puget Sound region, in partnership with a coalition of business, education, and government leaders including: other regional economic development organizations; Puget Sound Regional Council; King, Pierce and Snohomish Counties; Washington State Department of Commerce; University of Washington’s Global Business Center; the Cities of Seattle, Tacoma, Everett and other regional cities; ports; and a number of other stakeholders.
“Tens of thousands of salaries in the Central Puget Sound are paid by foreign-owned companies, and these new findings point the way to even greater economic opportunity and prosperity,” said King County Executive Dow Constantine. “It’s more important than ever that we establish a global brand for our region, and build those connections that can bring new investment and jobs to our region.”
While the United States remains the world’s top destination for foreign investment, its position has been steadily eroding. Between 1999 and 2012, the U.S. share of global FDI inflows dropped from a high of 26 percent to just 12 percent. However, metropolitan areas are the country’s strongest magnets for global investment. Understanding the Puget Sound region’s FDI starting point will help the region fully leverage FDI to advance its economic development.
“The Puget Sound region is already home to many global brands and foreign owned firms, including several here in Kitsap County,” said Ed Stern, Poulsbo City Councilmember and President of the board of the Economic Development District of the Puget Sound Regional Council. “The Brookings Institution’s new data will help us make more informed decisions as we craft a strategy to attract more foreign investment to the region in a way that supports our economic development goals and shared values.”
According to the Brookings report, the benefits of FDI extend well beyond the millions of jobs supported. For example, U.S. affiliates of foreign companies pay well above average wages. These companies strengthen U.S. trade, producing more than one-fifth of all U.S. goods exported. Additionally, nineteen percent of all corporate research and development expenditures in the United States come from foreign-owned companies. Finally, 48 percent of total FDI flows in 2012 went to manufacturing industries, helping to shore up the nation’s eroding production base.
“As perhaps the most internationally tied region in the U.S., the Puget Sound region has all the attributes necessary to be a global leader in FDI,” said Troy McClelland, President and CEO of Economic Alliance Snohomish County and Port of Everett Commissioner. “We have some ground to make up, but everyone who is a part of the Global Cities Initiative is dedicated to moving the region towards that goal.”
While metro areas have traditionally focused on attracting greenfield investment, this new data shows that most FDI enters regions through mergers and acquisitions, providing cash infusions that help local businesses expand and increasing access to new global distribution networks to boost exports. In the average year, mergers and acquisitions account for 87 percent of all FDI inflows into the United States.
“This new data allows U.S. metro areas, for the first time, to better grasp FDI sources and trends, and its impact on local economies,” said Brad McDearman, Brookings fellow and director of metro trade and investment. “As part of the Global Cities Initiative, the Puget Sound region is now at the forefront of U.S. metro areas seeking to position themselves as more globally fluent and competitive regions by developing a metropolitan global trade and investment plan.”
Read more at: http://www.brookings.edu/MetroFDI.
Launched in 2012, the Global Cities Initiative is a five-year joint project of Brookings and JPMorgan Chase aimed at helping city and metropolitan leaders become more globally fluent by providing an in-depth and data-driven look at their regional standing on crucial global economic measures, highlighting best policy and practice innovations from around the world, and creating an international network of leaders who ultimately trade and grow together. For more information please visit http://www.brookings.edu/projects/global-cities.aspx or www.jpmorganchase.com/globalcities.
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