Foreign Direct Investment

Value Chain
All Technologies

Challenge: Local investment for an emerging economic cluster can be limited by a lack of job opportunities, capital, and expertise. Businesses in a new economic cluster can find it difficult to locate the new employees, investors, and customers needed for new businesses to thrive. For this reason, new economic clusters should be active in building connections to foreign investment and locating exporting opportunities.

Solution: Foreign direct investment (FDI) occurs when a company based in another country makes an investment in the United States by establishing operations or acquiring business assets. FDI increases capital in the economy, encourages transfer of technology and expertise, creates job opportunities for the local workforce, and fills gaps in the local supply chain. Strategies for state leaders include conducting FDI missions in foreign countries, inviting industry leaders to in-state conferences and tours, and providing business incentives. Foreign direct investment (FDI) is commonly used by governments to fill business gaps and inject jobs and capital into the state economy. Through more strategic stakeholder engagement, state and local leaders can attract investment from foreign companies and build a global customer base.

Examples: The Massachusetts–Israel Innovation Partnership offers a creative model for facilitating global connections. Launched in 2011 following the governor’s trade mission to Israel, the partnership grew from an industry research collaborative to a joint FDI partnership. Major Israeli companies have expanded operations to the state and Massachusetts companies have invested in Israeli intellectual property and R&D operations. As of 2015, more than 200 Israeli founded companies have made a home in Massachusetts. These businesses accounted for $9 billion in direct revenue, $18 billion in total economic impact, and 4 percent of the state GDP, as well as 9,000 direct jobs and 27,000 indirect and induced jobs.

The Texas International Business Accelerator (TIBA) provides critical assistance to foreign firms looking to invest in the Lone Star State. While the United States is known globally for its open business environment, investing in a new country is always a legal, logistical, and cultural challenge. TIBA eases that transition by providing technical assistance and practical local market knowledge to help clients set up investment projects and succeed at establishing operations. Many of TIBA’s clients are small- and medium-sized enterprises that are overlooked by consulting firms. Since its inception in 2011, TIBA has brought over $136 million in FDI to Texas.