Foreign Direct Investment

Building or acquiring business assets beyond a firm's home country borders is known as foreign direct investment (FDI). Under the right circumstances, FDI can provide significant advantages for both the investing firm and the host country or region. Attracting FDI can be an integral part of a community's economic development strategy.

What is the Challenge?
FDI is, however, risky for the investing firm and often controversial for the host. Skepticism of FDI grew in the 1980s, culminating in the purchase of Rockefeller Center by Japanese interests. Today there is understandable concern about foreign firms purchasing U.S. firms only to strip their technologies and brands and shutter U.S. operations. So while some states and regions in the U.S. have enthusiastically embraced FDI as part of their economic development strategies, other states have not. At the national level, the U.S. government was until recently prohibited from any activities designed to attract foreign investment to the U.S.

Successes around the country have led to reconsideration of previous views of FDI, and most states are now actively seeking investment from overseas, many with attractive financial incentive packages. While the state of Washington and the Puget Sound region have had active programs to promote international trade and logistics activity, efforts to attract FDI have been inconsistent. Local economic development efforts can build on those programs to promote their specific advantages. FDI attraction quickly comes down to the level of individual firms and their strategic needs. Local communities will find that they have assets that meet the global strategic needs of international businesses and can compete for investment.

What Can We Do?
In September 2007, the Prosperity Partnership convened a task force to begin shaping a new strategy to attract FDI to the Puget Sound region. Representatives of the Department of Community Trade and Economic Development (CTED), as well as individuals from outside the Puget Sound region, participated in the task force with an eye toward increasing investment in other areas of the state. The Task Force met three times during the fall of 2007, under the leadership of Bill Stafford, President of the Trade Development Alliance of Greater Seattle, to learn more about how FDI works and what the state and region can to do to attract more.

Attracting Foreign Direct Investment To Your Community, an FDI toolkit, reflects the results of research and discussions associated with those meetings and presents an outline of how to proceed to create an FDI attraction strategy.

Contact
For more information, contact Eric Schinfeld, 206-971-3053.