The good news is that foreign direct investment is rebounding from the Great Recession, totaling $194 billion in 2010, and $1.7 trillion over the last ten years. That compares with a high of $328 billion in 2008. According to a new U.S. Commerce Department report, majority-owned affiliates of foreign companies employed between 5 million and 6 million Americans, including 2 million in manufacturing. In addition, these jobs typically pay 30 percent more than non-foreign direct investment jobs (of course, given the relative smallness of the statistical pool, it’s being compared against millions of McJobs).
Foreign direct investment is the rare area where Washington state doesn’t particularly stand out. In 2008, FDI accounted for around 91,000 jobs here (47,000 in Oregon; nearly 18,000 in Idaho). Other states have gone aggressively after FDI: South Carolina, with its German connection, counted 107,000 FDI jobs; more populous North Carolina, especially thanks to Research Triangle Park, posted 207,000; Massachusetts, with about Washington’s population, 189,000 FDI jobs.
Why? Part of the reason is likely Washington’s robust export-focused economy and the ability of its high-end clusters to draw world talent. Thus, state leaders lack the economic urgency of the Carolinas, which were trying to replace rapidly declining jobs in tobacco, textiles, apparel and furniture. Yet another reason comes back to the bad news in this report.
Aside from Japan, little foreign direct investment comes from Asia. In fact, Switzerland, the United Kingdom, Japan, France, Germany, Luxembourg, the Netherlands, and Canada accounted for 84 percent of FDI in the United States in 2010. With Washington’s focus toward Asia, it’s not surprising that this is one area where we don’t punch above our weight.
Investment by American companies in Asia has been huge, by contrast. China demands that U.S. companies establish plants and even research facilities in country, rather than simply buying American goods (thus, huge trade deficit). American multinationals have added 2.4 million jobs overseas while cutting 2.9 million at “home” since the start of the Great Recession.
Today’s Econ Haiku:
His head’s in the cloud
In this case a compliment
For hard-pressed Ballmer