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Good Things Come in Small Packages: The Impact of Foreign-Owned SMEs on the U.S. Economy

January 6, 2021

Samantha Luban is an Economic Research Analyst at SelectUSA

From the corner coffee shop to the boutique where you bought holiday presents, small businesses are an essential part of both local communities and the national economy. Small businesses comprise 99 percent of all companies in the United States, which may not be new information to most readers. However, less known is the prevalence and impact of foreign-owned small businesses.  

SelectUSA’s latest analysis shows that small, foreign-owned firms have a substantial impact on the U.S. economy, directly and indirectly supporting 5 million U.S. jobs, $350 billion in employee compensation, and $1 trillion in output

The impact of small foreign-owned businesses extends far beyond each firm’s individual economic activity. SelectUSA set out to quantify this impact in our latest research report, Foreign Direct Investment (FDI) from Small Businesses: Understanding the Behavior and Impact of Foreign-Owned SMEs on the U.S. Economy. In 2016, such businesses supported five million U.S. jobs, either directly or indirectly, or four percent of all U.S. jobs.   

In our analysis, we found that over 2.7 million of those jobs were directly created by small foreign-owned firms operating here, while the other 2.3 million were indirect and induced jobs supported by the ripple effects of small foreign-owned firms. Together, these jobs generated roughly $350 billion in employee compensation and over $1 trillion in output.

The three sectors where FDI from small businesses had the largest economic impact are manufacturing; wholesale trade; and professional, scientific, and business services. Combined, these top three sectors comprised 60 percent of all U.S. employment supported by small business FDI as of 2016.  

The report also found that small multinational enterprises are among the most productive group of firms in the world, surpassing the productivity of large multinational enterprises and high-growth firms. Unfortunately, these productivity advantages do not necessarily translate into higher resiliency, as the survival rate of small foreign-owned firms investing in the United States between 1990 and 2016 was 37 percent. 

The substantial economic impacts and productivity spillovers uncovered in our latest report are why we cannot take the existence of small foreign-owned firms in our economy for granted. However, in order to transform into resilient and thriving businesses, these companies often require some assistance, which SelectUSA and economic development organizations (EDOs) are uniquely suited to provide. SelectUSA will continue to support small businesses investing in the United States and assist EDOs seeking to attract more FDI from small foreign-owned companies. And the next time we’re on our way to our beloved coffee shops, restaurants, gyms, salons, or boutiques, let’s take a moment to appreciate the levels of investment that help support our favorite places.  

For more information see other reports from SelectUSA 

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New Mexico Pushes Reshoring Effort in Response to COVID-19

December 28, 2020

This post contains external links. Please review our external linking policy.

Melinda Allen is an Interim President for New Mexico Partnership.

New Mexico has one of the best track records in the United States when it comes to cultivating innovation. New Mexico has seen everything from the invention of nanotechnology at Los Alamos National Labs in 1972, to the first nicotine patch being developed at NM Tech in the early 1980s, to Virgin Galactic’s work to produce commercial spaceflights. This history of innovation and a world-class manufacturing environment has positioned the state to benefit from a newly emerging trend.

The economic ripple effects of COVID-19 are creating a global shift for supply chain and manufacturing companies, opening new pathways to re-shore and near-shore Asia-based manufacturing, a strategy that could provide cost efficiencies and quicker inventory turnaround for businesses.

The New Mexico Partnership, the organization tasked by the state with business recruitment, is actively pursuing Asia-based operations that have the potential of scaling up its production and supply chain operations within the United States.  This effort is primarily focusing on China, Korea, Japan and Taiwan. This approach has received a warm reception from companies that are looking for ways to overcome operational challenges highlighted by COVID-19.

Promoting the state’s successes in the technology and advanced manufacturing industries, the New Mexico Partnership is quick to showcase the $6.5 billion in research and development which is largely fueled by the state’s two national laboratories (Sandia and Los Alamos), the Air Force Research Laboratory, and three research universities. Another highlight is the state’s success in manufacturing and leading the nation in global export growth in 2019. Manufacturers like Intel, Admiral Cable, and Raytheon, all of which have established facilities within the state, are all key players in the growth of these industries.

New Mexico’s workforce incentives have also received a lot of interest helping to put the state at the front of the pack. The three most popular programs include:

  • Job Training and Incentive Program (JTIP) – The Flagship New Mexico Job Training Incentive Program (JTIP) funds on-the-job and classroom training for newly-created jobs in expanding or relocating businesses by reimbursing employers for 50-75% of employee wages for up to 6 months.
  • Local Economic Development Act (LEDA) – LEDA is a discretionary, cash-grant incentive program that can be used towards reimbursing the costs associated with land, building and infrastructure improvements. Funding awards are determined on a project-by-project basis.
  • High Wage Job Tax Credit (HWJTC) – Employers are eligible to receive a tax credit for each new high-wage economic-base job (paying over $40,000 in a rural area or $60,000 in a metro). The credit equals 8.5% of the wages and benefits paid for each such job created. Credits in excess of tax liability can be refunded to the employer as cash.

Our cost of doing business, these incentives, and more, can help companies relocating to New Mexico save 15-30 percent on operating costs, relative to other regions in the United States in which many companies are concentrated.

More information about all that New Mexico has to offer and the New Mexico Partnership can be found at nmpartnership.com.

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Robots and the Economy: The Role of Automation in Productivity Growth

December 22, 2020

This post contains external links. Please review our external linking policy.

Kara Mazachek is an Economic Research Analyst at SelectUSA

Bar graph showing industrial robot installations growing steadily from 2009 to 2018
Source: International Federation of Robots, World Robotics 2019, Accessed February 12, 2020, https://ifr.org.

Innovation in manufacturing is key to global industry competitiveness. In honor of this year’s Manufacturing Day, SelectUSA highlighted the positive impact of industrial robots on productivity growth by releasing a report: Robots and the Economy: The Role of Automation in Driving Productivity Growth.

Robots and manufacturing

Automation is a form of technology that mechanizes a repetitive process, thereby reducing the need for human assistance; As you’re likely aware, automation can describe anything from self-checkout lanes at the grocery store to  automated teller machines (ATMs) at the bank. It is important to study the impact of automation in the workplace and how this technological change might alter companies’ fundamental production processes.

The report found that, globally, the sectors with easily automated labor and the financial resources to overcome the cost barriers associated with industrial robot adoption are naturally the sectors that deploy the most robots. These industries are the automotive and other transportation manufacturing, metal and electrical/electronic manufacturing, chemical manufacturing, food and beverage manufacturing, and wood and paper manufacturing industries. Meanwhile, the education, construction, utilities, textile manufacturing, mining and quarrying, and agriculture, forestry, and fishing industries face more barriers to robot adoption and deploy the fewest robots. Though some industries have been slow to adopt robots, there has been an increase in automation worldwide. Within the United States, industrial robot installations increased at a 10.28 percent compound annual growth rate (CAGR) in the past decade, from 15,170 in 2008 to 40,373 in 2018. The vast majority of U.S. automation is in manufacturing, which represented 82.3 percent of industrial robot installations across all U.S. industries in 2018.

Impact of robots on productivity growth

Another conclusion of the report is that adopting robots has generally led to growth in productivity, but the effects have varied by industry and over time. Among all industries, a one percent increase in robot density correlated with an increase in productivity of 0.8 percent. The largest productivity gains were made in industries where companies were in the early stages of adopting robots. These industries saw a 5.1 percent increase in productivity with an increase in industrial robot density of one percent. Over time, there were still gains in productivity resulting from the use of robots, though they were smaller than the initial increase.

As one might expect, the number of hours worked by employees decreases with robot adoption. As with the productivity trend, if an industry had not previously adopted robots, it saw a larger decrease in hours worked when first implementing robots. These industries saw a 2.7 percent decrease in hours worked with an increase in industrial robot density of one percent.

Investment in manufacturing

Global multinational companies have consistently selected the United States as a destination for their manufacturing operations. In fact, foreign direct investment (FDI) in manufacturing in the United States represented 40.1 percent of all FDI in the United States in 2019, and automation plays a key role in attracting that investment and creating jobs. Our goal in writing this report was to help understand how SelectUSA can better support our clients and continue supporting manufacturing investment into the United States. Following this most recent Manufacturing Day, we want to draw attention to how automation helps keep the United States competitive as a destination for manufacturing FDI and reshoring.

Read the report to understand how automation increases productivity across firms and industries, but also supports a healthy U.S. business ecosystem! 

For more information For more information on industrial robots and productivity growth, check out our recent report on robots and the economy. To learn more about how SelectUSA supports FDI in all industries, sign up for our email updates and visit SelectUSA.gov for resources such as FDI fact sheets, interactive data tools, and informative reports.

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Economic Diversification: A Necessary Priority for EDOs

December 21, 2020

This post contains external links. Please review our external linking policy.

Kara Mazachek is an Economic Research Analyst at SelectUSA

Circle chart showing the top 5 Traded Clusters. Largest to smallest is Business Services, IT, Marketing, Jewelry, Music.
Source: U.S. Cluster Mapping Tool. http://clustermapping.us/ Accessed 10/2020.

One thing we learned in 2020 is that plans can change very quickly and that the future is never certain – even in business and the economy. As economic development organizations (EDOs) reevaluate their strategic plans, it may be difficult to identify a clear path forward. State and local EDOs, especially those with a strong concentration in only a few key industries, need to implement economic diversification strategies to ensure their economies can continue to provide job opportunities and sustainable economic growth.

Industry diversification enables an economy to be more adaptable and sustainable because the community’s well-being is not directly tied to one sector’s success. It prevents declining property values, provides a defense against unemployment and poverty, and overall, protects other industries within the economy. Diversification allows businesses of all sizes and in other industries to thrive. Additionally, as the economy grows, diversification creates ripple effects, providing room for new businesses to set up operations.

The metropolitan statistical areas (MSAs) of Orlando, Florida; Austin, Texas; and San Jose, California are great examples of economic diversification. Not only do these MSAs have the highest employment growth over the last ten years when compared to other MSAs, but they all have some of the strongest industry clusters in the country for multiple industries.

Bar chart showing top clusters by employment.
Source: U.S. Cluster Mapping Tool. http://clustermapping.us/ Accessed 10/2020.

Austin, Texas had a 41 percent increase in employment over the past decade. According to the latest available data from the U.S. Cluster Mapping Tool, the MSA specializes in business services, information technology, jewelry and precious metals, marketing, design, and publishing, and music and sound recording industries. Not only does Austin’s economy support five large industries, but these industries also support smaller, linked industries like the nonmetal mining, performing arts, education, distribution and ecommerce and financial services industries.  Excerpt visuals from the U.S. Cluster Mapping Tool are available below.

Orlando, Florida has a similar story. The economy had strong clusters in four industries in 2017: environmental services, hospitality, performing arts, and video production. In turn, these industries strengthen the communications and transportation industries. It may be no surprise, then, to learn that total employment in the Orlando metro area has increased 33 percent over the past ten years, based on estimates from JobsEQ.

Doughnut chart showing traded vs. local clusters.
Source: U.S. Cluster Mapping Tool. http://clustermapping.us/ Accessed 10/2020.

San Jose, California also saw a 32 percent increase in employment over the past ten years. The business services, education, information technology, marketing, design, and publishing, and music and sound recording industries dominate the economy and also support the medical devices, lighting, distribution and ecommerce, and communications industries.

In addition to developing a diversified economy, one way to enhance a local economy is through attracting foreign direct investment (FDI). Not only did FDI support the creation of 7.8 million U.S. jobs in 2018, but foreign-owned companies also spent $66.9 billion in research and development and accounted for 24 percent of all U.S. goods exports. The presence of foreign subsidiaries not only generates money into the local economy but also creates jobs for U.S. workers.

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Swiss Companies, U.S. Jobs, Global Response

June 23, 2020

This post contains external links. Please review our external linking policy.

Edward T. McMullen, Jr. is the U.S. Ambassador to Switzerland and Liechtenstein

A lot has changed in the course of just a few months in 2020. One thing that has not changed: The U.S.-Swiss business relationship remains strong and is a critical part of our overall bilateral ties. In fact, I have been impressed by the innovation and efficiency of Swiss and American companies, working together to find a solution to the pandemic. Switzerland and the United States have a long tradition of cooperation in business and research; we are natural partners, who share common values such as entrepreneurship, the rule of law, freedom, and democracy.

In my nearly three years as Ambassador, I’ve been honored to meet with Swiss companies of all sizes that are supporting jobs in the United States. During the pandemic, I’ve been excited to learn about U.S.-Swiss corporate partnerships working towards vaccines and treatments, Swiss companies that have increased production of critical healthcare equipment, and the companies that have changed their operations to produce resources for the global response. Not only did these companies take swift and decisive action in support of COVID-19, they also increased their U.S. footprint, with operations in many states across the country, thereby providing many more jobs to Americans. The current Administration’s adoption of strong economic growth policies, including low corporate tax rate, and drastic reductions in regulations greatly aided Swiss investors’ pursuit in their U.S. expansions. Our SelectUSA representative and I are in regular contact with these companies and others to assist whenever needed.

For example, Lonza, one of the world’s leading suppliers to the pharmaceutical, biotech and specialty ingredients markets, recently announced a partnership with Massachusetts-based biotechnology firm Moderna to jointly manufacture vaccines to combat the coronavirus. Our Embassy team and SelectUSA have worked with Lonza for several years, and I salute their work in this field. I and SelectUSA Investment Specialist Sandor Galambos visited the Lonza facility in Greenwood, South Carolina in May 2019 to celebrate the progress of a $46 million expansion. The event marked the ceremonial groundbreaking of the project’s second phase. Governor McMaster attended the event as well.

In a fast-track procedure, Swiss multinational healthcare company Roche Diagnostics received emergency approval from the U.S. Food and Drug Administration to sell to labs the first commercially approved test for the coronavirus in the United States. I am grateful that Roche Diagnostics’ top-notch technology has been made available to millions of Americans and people around the world.

As part of my engagement with company principals in Switzerland, I will visit the Hamilton Medical facility in the coming weeks to witness the terrific work the company is doing for humanity. Hamilton Medical ramped up its production of ventilators at its Reno, Nevada, facility to meet the needs of the United States and more than 100 other countries. These efforts are not only beneficial in supporting global health care heroes, but also supporting hundreds of additional jobs in the United States and providing skills training to U.S. workers. President Trump mentioned Hamilton’s role in ventilator supplies at White House press briefings, and Vice President Pence welcomed the delivery of Hamilton ventilators to the national stockpile on April 8.

Firmenich, the world’s largest privately-owned fragrance and taste company, has increased its production capacity to produce hand sanitizer gel for hospitals, as well as for medical and emergency services across the United States. President of Firmenich North America Matthew Furner told me, “We all have an obligation to lead our business responsibly. We at Firmenich are proud that this is always

central to how we do business.” Mr. Furner joined the Swiss delegation to attend the SelectUSA Investment Summit in Washington, D.C., in 2019. He was a featured guest on a panel at the SelectUSA Investment Summit to hear from CEOs on the state of the industry and the myriad opportunities in the United States for potential investors in the food and beverage and agriculture sectors.

These are just a few examples of the many ways the U.S.-Switzerland partnership, led by innovative Swiss and American companies, is helping fight the global pandemic. You can follow our team at @USEmbassyBern to learn about more examples. And when this fight is over, Swiss companies will continue to create jobs and support innovation in the United States, just as so many U.S. firms do in Switzerland.

It is my honor to be a part of those efforts. I salute the entire team at the Embassy and our partners at SelectUSA as we continue to grow this partnership.

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STOPfakes Roadshows Deliver Critical Intellectual Property Information to U.S. Businesses

May 5, 2020

By Benjamin Hardman, Senior International Trade Specialist, Office of Standards and Intellectual Property

StopFakes.gov logo roundThe need for U.S. businesses to be vigilant about protecting their intellectual property has never been greater. Many well-known U.S. brands are being knocked off by cheap counterfeits and pirated goods, mainly made in China, and marketed through e-commerce platforms.

The trade secrets of our most innovative companies are increasingly targeted for theft with tradecraft more commonly seen in state-sponsored espionage. The creative genius of American artists, authors, inventors, engineers, and other creators is stolen and sold for pennies on the dollar. America’s comparative advantage, our ingenuity, is under attack, and we must do everything we can to uphold and strengthen American businesses, so they may protect themselves and advance our global competitiveness.

Since 2005, the International Trade Administration’s STOPfakes program has served as an important mechanism in harnessing the IP resources of various U.S. Federal agencies through a singular channel, providing guidance to U.S. businesses and consumers.

The STOPfakes Roadshows are an essential component to our program’s success, delivering critical intellectual property information to the audiences that need it most: start-ups, entrepreneurs, small and medium-sized businesses, independent creators, and inventors.

STOPfakes conducts 8 to 10 roadshows each year in partnership with local U.S. Export Assistance Centers, bringing the program to cities across the country. The information at STOPfakes roadshows is provided by IP experts from multiple government agencies. Their presentations of timely and invaluable information during the one-day seminars allow for the best means of advancing U.S. IP interests.

  • The International Trade Administration identifies mechanisms for obtaining intellectual property protection in export markets;
  • The U.S. Patent and Trademark Office provides information about how to protect patents and trademarks;
  • The U.S. Copyright Office discusses the importance of copyright protection to businesses;
  • The U.S. Customs and Border Protection explains how a registered trademark or copyright can be recorded with Customs to facilitate the seizure of infringing goods at the U.S. border;
  • The Federal Bureau of Investigation or a local Assistant U.S. Attorney discusses how to protect trade secrets and identify internal and external threats;
  • The U.S. Department of State highlights the role diplomacy and our diplomatic missions play in advocating for U.S. businesses overseas; and
  • The Small Business Administration advises on the potential use of grants and loans to help with the costs of obtaining IP protection before exporting.

Stopfakes medley of Intellectual Property images

In addition to the regular roadshow partners listed above, the Minority Business Development Agency, Export-Import Bank, and Patent and Trademark Resource Centers are also frequent participants. Our whole-of-government approach provides many resources to assist U.S. businesses with acquiring and protecting their intellectual property.

In 2018, the STOPfakes team expanded the opportunities available to businesses at the roadshows to include three signature offerings:

  • First, participants can sign up to talk one-on-one with the speakers for 10-minute sessions.
  • Second, participants can apply for copyright registration. U.S. Copyright Office staff will be on site to facilitate the application process required to register a work online. The fee is $55 for most works and takes approximately 20 minutes.
  • Third, participants can apply for copyright and trademark recordation. On-site assistance is made available by U.S. Customs and Border Protection staff. The fee for Trademark recordation is $190 per international class of goods, and the fee for copyrights are $190 per application. The registration process takes approximately 40 minutes.

For more information regarding the STOPfakes programs or to learn more about our resources and upcoming roadshows, please visit: www.STOPfakes.gov.

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ITA Connects Smart City Technology Exporters to Southeast Asia

April 22, 2020

This post contains external links. Please review our external linking policy.

By: ITA’s Industry & Analysis Office of Health and Information Technologies

Deputy Chief of Mission at U.S. Embassy Singapore Daniel Bischof (middle), U.S. Department of Commerce staff, presenters, and participants at an ASEAN Smart Cities Third Country Training Program event in Singapore, December 2019.

Deputy Chief of Mission at U.S. Embassy Singapore Daniel Bischof (middle), U.S. Department of Commerce staff, presenters, and participants at an ASEAN Smart Cities Third Country Training Program event in Singapore, December 2019.

Today, nearly 300 million people living in the 10 countries comprising the Association of Southeast Asian Nations (ASEAN) reside in urban areas, and this number is set to increase to more than 500 million by 2050. Like cities in the United States and elsewhere, ASEAN cities are increasingly looking to use digital technologies as part of their smart city efforts to address a wide range of urbanization challenges.

The International Trade Administration (ITA) is spearheading programming that connects U.S. smart city technology providers and experts with ASEAN cities to promote U.S. exports, increase U.S.-ASEAN best practices exchanges, and assist ASEAN cities in their development needs.

ITA’s work is part of the U.S.-ASEAN Smart Cities Partnership announced by Vice President Mike Pence in 2018. This multi-year program is a whole-of-government effort to promote collaboration between the two regions. To date, ITA has organized a variety of events to advocate for trade-enabling policies to connect U.S. technology providers to ASEAN cities.

Best Practices in Smart Cities

In December 2019, the United States and Singapore co-hosted a five-day workshop on Smart Cities in Singapore featuring a range of sessions on smart city planning. Debra Lam, Managing Director for Smart Cities and Inclusive Innovation at the Georgia Institute of Technology, reinforced the idea among the 24 participants that “all cities can be smart because it is a continuous improvement process.” As the former Chief Innovation & Performance Officer for the city of Pittsburgh, she was able to draw on her real-world experience. She encouraged cities to harness the power of emerging technologies rather than prematurely banning them, as blocking new technology can limit opportunities for future growth.

With each participant focused on one priority project that they hoped to develop in their city, ITA and experts from the region led interactive sessions for participants on:

  • planning and tailoring their smart city build-outs;
  • developing strategies to finance and sustainably fund their priority smart city projects;
  • adopting standards and project procurement best practices; and
  • mitigating cybersecurity risk.

Throughout the week, ITA connected ASEAN participants with U.S. industry partners such as Cisco Autodesk, and New York based Xylem to learn about innovative technology solutions to real world problems.

Industry Engagement

This past January, ITA led a delegation of Indonesian municipal officials to DistribuTECH, a leading energy and utilities trade show in San Antonio, Texas. U.S. companies participating and exhibiting at DistribuTECH had an opportunity to meet with key decision makers in Indonesia’s power sector, opening market prospects for technology and solutions critically needed in that nation. During the show, officials from Sumatra and Java discussed best practices with U.S. public and private sector representatives to facilitate development of Indonesia’s smart cities and smart grid infrastructure.

In recent months, ITA has continued extensive industry outreach to raise awareness of Southeast Asian smart city business opportunities and to plan for future programming.

Looking Towards the Future

During the next few years, ITA will continue to organize sector specific smart cities programs at trade shows focused on water, safety and security, transportation, cybersecurity, and waste management, among others. In addition, ITA will lead expert advisor delegations to ASEAN cities to engage with municipal governments on specific challenges they are facing and advocate for U.S. smart cities solutions that address those challenges.

If you are interested in connecting with us on future U.S.-ASEAN Smart Cities programs, please email USASCP@trade.gov.

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Global Outlook: United States Remains the Largest Destination for FDI in the World

March 17, 2020
Kara Mazachek is an Economic Research Analyst at SelectUSA.

The United Nations Conference on Trade and Development (UNCTAD) released the latest issue of its Global Investment Trends Monitor in January. With this release, the Investment Research team at SelectUSA was excited to analyze the latest global 2019 numbers and better understand a few of the key global foreign direct investment (FDI) trends during the last year!

In 2019, global FDI flows totaled $1.39 trillion, which was a one percent decrease from $1.41 trillion in 2018. These global flows reflect both mergers and acquisitions (M&As) and greenfield investment activity. This slight decline in FDI flow accompanied global patterns of slowed economic growth and policy uncertainty. While there is great country-specific variation in trend, FDI flows to developed countries decreased six percent to a historically low level of $643 billion. Simultaneously, flows to developing countries were constant at $695 billion. Announced greenfield projects, an indicator of future trends, overall performed better than cross-border M&As in 2019. Globally, announced greenfield projects decreased 22 percent, compared to a 40 percent decrease in announced cross-border M&As.

UNCTAD Blog 031720

In contrast to larger declines in other developed economies, the United States received consistent inward FDI between 2018 and 2019, with $251 billion in inflows in 2019. These preliminary estimates indicate that the United States is still the largest destination for FDI in the world, with inflows at least $100 billion greater than those of any other destination market. Germany, Japan, and the Netherlands were the largest source markets of FDI flows to the United States, while U.S. inflows from Canada and the broader European Union (EU) significantly declined.

Overall, the EU saw a 15 percent decrease in FDI inflows to $305 billion. Despite being the top destination for FDI in Europe, the United Kingdom’s FDI inflows fell by six percent as it approached Brexit. France and Germany also were in the top 10 destination markets for FDI inflows at $52 billion and $40 billion, respectively.

FDI inflows to developing Asia made up one-third of global FDI flows in 2019, despite its FDI value declining six percent from 2018. Hong Kong drove much of this drop as its own inflows fell by 48 percent amid divestment and unrest. However, Hong Kong remained the sixth-highest destination market in the world for FDI. Inflows to China saw almost no change from 2018 to 2019, leaving China the second-highest destination market for FDI in the world at $140 billion, followed by Singapore at $110 billion.

Lastly, despite these trends in other parts of the world, the Latin America and Caribbean region saw inflows increase by 16 percent, reaching $170 billion in 2019. Within the region, Brazil’s inward FDI flows increased by 26 percent to $75 billion, cementing itself as the fourth-largest recipient of FDI in the world. UNCTAD gives some of the credit for this jump to Brazil’s new privatization program, which launched in July 2019 as an effort to revitalize the economy.

What does this mean for 2020? The global outlook is optimistic! UNCTAD projects that global FDI flows will increase slightly during the next year alongside continuing high corporate profits and growing international trade. UNCTAD also expects GDP growth and capital investment to increase globally. While UNCTAD noted a 22 percent decrease in global greenfield FDI announcements from 2018 to 2019, the opposite was true for the United States. Data from fDi Markets indicated that the value of greenfield FDI announcements into the United States totaled $91.7 billion in 2019, a 26.9 percent increase from 2018.

With consistently strong U.S. growth in greenfield FDI and a positive global forecast, SelectUSA is excited to welcome and facilitate even more greenfield investment in the United States throughout 2020.

About SelectUSA
Housed within the U.S. Department of Commerce’s International Trade Administration, SelectUSA promotes and facilitates business investment in the United States. To learn more about SelectUSA’s services, the U.S. business and investment climate, and how FDI benefits the U.S. economy, visit selectusa.gov and follow @SelectUSA on Twitter.

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Application Process Opens for U.S. Industry Groups Seeking Awards for Projects that Address Barriers to U.S. Exporters

February 11, 2020

By Brad Hess, Director, Market Development Cooperator Program, Office of Industry Engagement

The International Trade Administration (ITA) invites U.S. trade associations, professional societies, standards developing organizations, and other non-profit industry groups to apply for financial and technical assistance for projects that remove trade barriers to U.S. exporters. Applications for the Market Development Cooperator Program (MDCP) awards are due April 27, 2020.

ITA is conducting a series of conference calls to provide further information on how to compete successfully for a 2020 MDCP award. Potential applicants can check the requirements to determine their eligibility to apply for the program.

Pitch Ideas Now to ITA Officials
Prior to the February 27 MDCP notice being published on grants.gov, applicants will have the chance to brainstorm project ideas with ITA officials.

Interested industry groups should contact Jessica.Dulkadir@trade.gov to discuss their ideas. ITA will also include trade professionals in this initial phase that can give potential applicants useful feedback.

2020 Funding Focus is Removing Trade Barriers
Historically, 30-40 percent of MDCP projects have included a strong focus on removing trade barriers. For the 2020 competition, ITA wants all projects it funds to have such a focus.

An MDCP applicant must propose a project that creates or sustains U.S. jobs by increasing or maintaining exports (priority 1 listed below). In addition, a successful applicant must show how its proposed project will address any two of priorities 2-6 below.

  1. Create or sustain U.S. jobs by increasing or maintaining exports.
  2. Address non-tariff barriers to U.S. exports such as discriminatory regulations, local content requirements, onerous standards or conformity assessment procedures, and other measures that may be unreasonably trade restrictive.
  3. Secure strong intellectual property rights protection and combat counterfeiting and piracy.
  4. Counter discriminatory trade policies such as “indigenous innovation” or “localization.”
  5. Participate in the formulation and encourage the adoption of standards that are industry-developed, market-driven, science-based, and internationally recognized.
  6. When appropriate, encourage the development of aligned regulatory requirements that avoid unnecessary costs on businesses.

Examples of Successful Trade Barrier Removal Projects
It takes time to address and remove trade barriers. This is why MDCP projects must last a minimum of three years. Realistically, most projects need even more time to remove trade barriers like discriminatory standards or regulations. The International Association of Plumbing and Mechanical Officials (IAPMO) was able to help Indonesia establish a new plumbing code and implement a conformity assessment regime in just three years.

IAPMO advised Indonesia officials on establishing a national plumbing code then openedPhoto and Caption for MDCP Blog 020920 a lab to certify compliance of products with the new code. Indonesia’s newly adopted national plumbing standard, SNI 8153:2015, requires a lab certification of plumbing products. This allows architects, planners, builders, and building owners the certainty they need to choose the right products for the right applications.

Prior to the MDCP project and the adoption of the plumbing code, low quality plumbing products not up to standard were prevalent throughout the country. The shoddy products made urban living miserable for most residents. Their widespread use also made it hard for high quality U.S.-made products to compete. Now all plumbing products must conform to the same high standards.

A more detailed description of the IAPMO project is available at trade.gov/mdcp on the Addressing Trade Barriers page. Highlights of several other current and past MDCP trade barrier projects are available on this page as well.

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FDI in High-Tech: Innovation and Growth in The United States

February 5, 2020

Kara Mazachek is an Economic Research Analyst at SelectUSA

Following SelectUSA’s participation in the Consumer Electronics Show (CES), it is the optimal time to look at how foreign direct investment (FDI) in high technology, or high-tech, supports innovation and growth in the United States.

What is high-tech?
SelectUSA defines the high-tech sector as an industry that relies on a skilled and educated workforce, acts as an innovative producer in our economy, and creates and utilizes advanced technologies. Perhaps unsurprisingly, the high-tech sector’s share of workers in science, technology, engineering, and mathematics (STEM) occupations is more than twice that of the national average.

This industry is quite large and growing consistently, according to data from the Bureau of Economic Analysis (BEA). In 2018, high-tech companies contributed $8.3 trillion of economic value in the United States, accounting for nearly 23 percent of U.S. gross domestic product (GDP). Additionally, high-tech companies employ approximately 20 million U.S. workers. The U.S. high-tech industry also continues to grow, especially in fields such as the data processing, hosting, and related services sub-industry, which had a compound annual growth rate (CAGR) of 57.9 percent from 2013 to 2018.

How has FDI impacted the U.S. high-tech sector?
FDI supports the high-tech industry in the United States and helps it thrive. Specifically, the inward position of FDI in the U.S. high-tech sector was $2.0 trillion in 2018. That’s 46 percent of total FDI in the United States! It also steadily continues to grow: the five-year CAGR for FDI in the high-tech sector was 10.1 percent between 2013 and 2018. This growth is faster than the comparable all-industry FDI CAGR average of 9.8 percent.

High-Tech FDI in US for the Feb 5 Blog Post

The United States sees tangible results from high-tech FDI. According to BEA, foreign-owned companies in high-tech industries have steadily increased their annual U.S. research and development (R&D) spending over recent years to $48.7 billion in 2017. High-tech FDI also accounted for $169.5 billion of total U.S. goods exports in 2017. Additionally, foreign-owned U.S. affiliates in the high-tech sector directly supported more than 2.1 million U.S. jobs in 2017.

So, what does this mean for the high-tech sector?
All these data points further confirm that high-tech investment are important drivers of growth for the U.S. economy. As FDI into this sector continues to grow, the United States will see advanced innovation, continue to employ millions of highly skilled and educated workers, and further the competitiveness of our high-tech sector. To maintain success in high-tech and all other sectors, SelectUSA will continue to help global business investors and U.S. economic developers to succeed in the U.S. economy.

To learn more about how SelectUSA supports FDI in all industries, sign up for our email updates and visit SelectUSA.gov for resources such as FDI fact sheets, interactive data tools, and informative reports. You can also read our previous report on FDI in high-tech.

About SelectUSA
Housed within the U.S. Department of Commerce’s International Trade Administration, SelectUSA promotes and facilitates business investment in the United States. To learn more about SelectUSA’s services, the U.S. business and investment climate, and how FDI benefits the U.S. economy, visit selectusa.gov and follow @SelectUSA on Twitter.