Attracting the 'Right' Investment Can Boost State Economies
Foreign direct investment, or FDI, is a vital component of states’ economies, helping build new industries and supporting nearly 6.4 million jobs nationwide.
But attracting foreign investment is increasingly difficult, said experts during Thursday’s “Best Practices in Attracting Investment” session, presented by the State International Development Organizations, or SIDO, at the 2016 CSG National Conference in Colonial Williamsburg, Virginia.
“It’s tough,” said David East, head of economic products at Bureau van Dijk, which collects data on nearly 200 million companies for economic development analysis. “There’s less investment out there. Competition is becoming fierce.”
The U.S. ranks among the top countries worldwide as a location for foreign investment, thanks to its availability of workers and investment opportunities. Despite that, states courting foreign investors cannot simply cast a wide net because fewer FDI opportunities exist in today’s market, said East.
Researching companies to identify those interested in investing and cultivating relationships with prospective investors are key strategies for attracting FDI.
“Up to 70 percent of foreign investment is linked to the existing investment base,” said East. “Let your (existing) investors do the talking for you.”
Virginia used a collaborative approach to convince Rolls-Royce to locate an aircraft engine components manufacturing facility near Richmond. The state pitched the development of the Commonwealth Center for Advanced Manufacturing, or CCAM, a state-of-the-art research facility to train students for high-skill jobs in surface engineering, adaptive automation and additive manufacturing; and to provide industry-specific research solutions for Rolls-Royce and other advanced manufacturers in the state.
“It’s a potent public-private partnership,” said CCAM President and CEO Will Powers. The center brings together academic institutions and private corporations such as Airbus, Canon and Siemens.
“Virginia produces 1,000 engineers every year,” said Powers. The ability for member companies to access that kind of talent pool through the CCAM network is key, he said. Member industries also can leverage the research capacity of CCAM to help reduce research and development costs while maintaining intellectual property rights.
Virginia also is reaping the benefits of CCAM. In addition to new jobs created by participating companies—Rolls-Royce committed to providing 500 new jobs—the center also is helping to build a skilled future workforce for the state.
“Workforce development mechanisms here in the U.S. are broken,” said Powers, but the efforts of CCAM, such as a new apprenticeship program, help students gain the on-the-job skills needed for high-tech manufacturing jobs.
According to Powers, public-private partnerships have helped fuel Virginia’s success. “I don’t think there’s an invisible hand in all this …” he said. “I think there are a lot of hands at the table to help make these programs move forward.”