Why Companies Choose the United States: Beyond Incentives

April 12, 2013

Rebecca Moudry is a Manager with SelectUSA, part of the International Trade Administration.

With the largest economy in This chart shows that businesses are looking increasingly at proximity to markets, market growth potential, availability of skilled workers, and industry climate as reasons to choose a location to set up shop. Financial incentives matter less now than in the past, according to the study done by fDi Markets.the world, the United States has always been a natural choice for companies from around the world to invest and grow. But with increasing global competition, what are the drivers that continue to rank the United States as the largest recipient of foreign investment in the world?

Reading many local U.S. news stories, it may sometimes appear that financial incentives are the decisive factor in many international or domestic business location decisions, but business location experts and companies themselves indicate that incentives, though important, are seldom the sole or even primary driver in a company’s strategic decision regarding where to locate operations.

According to information collected by fDi Markets, financial incentives (including tax or funding incentives) have played a minor role in company location decisions over the last nine years and are decreasingly important. Between 2003-2006 only about 10 percent of foreign companies that invested in the United States identified incentives as a primary motive or determinant for their U.S. investment decision. From 2007 through 2012, that number dropped to just below six percent of companies citing incentives as a motive for investment.

Proximity to customers and the growth potential of the U.S. market continue to be the most important motives cited by companies of why they invest in the U.S. In the last few years, the availability of a skilled workforce has grown as a critical determinant for company location; from 2003-2006 to 2007-2012, that factor grew by nearly 70 percent. In 2007, companies began citing a favorable business climate as a motive for investing in the U.S. some 152 percent more than in 2003-2006.

SelectUSA, located within the International Trade Administration of the U.S. Department of Commerce, leads the federal government efforts to promote the United Sates as the premier global investment destination and facilitates investment in the United States. SelectUSA provides information assistance to the global investment community, serves as an ombudsman for investors, and advocates for U.S. cities, states, and regions competing for global investment.

Contact SelectUSA at www.SelectUSA.gov or +1-202-482-6800.

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