Foreign direct investment in North Carolina

In late June, the Brookings Metropolitan Policy Program released a geographic analysis of 'foreign direct investment' (FDI) in US cities from 1991 to 2011.  The chief purpose of the report is to encourage cities to think about FDI with greater sophistication - not as a golden ticket to generating new jobs, because it doesn't reliably do that, but as one component of a balanced economic development strategy.  Three North Carolina metro areas receive special attention in the report.

Why does foreign direct investment matter?  According to the study, foreign companies tend to pay higher wages ($77K compared to $60K for the average worker in 2012) and account for outsize investment in capital (15.2% of US investment) and research & development (18.9%) compared to their share of US employment (5%).  The report advises,

"policymakers should recognize FDI as inextricably bound up with industry clusters - geographic concentrations of skilled workers, innovation assets, infrastructure, and supply chains.  High quality FDI is drawn to such clusters and strengthens them further with infusions of knowledge, technology, and ideas. Clusters also accelerate spillovers and integrate new investors into the economy, ensuring that footloose companies put down roots."

In North Carolina, the report estimates that foreign owned enterprises (FOEs) accounted for 6.1% of private employment in 2011, or just over 200,000 jobs.  These are concentrated around Charlotte; Greensboro-High Point; and Raleigh-Cary.  Greensboro has one of the highest proportions of FOE jobs (9%), concentrated in the grocery, auto parts manufacturing, and pharmaceutical industries.

FDI isn't intrinsically good or bad for the environment.  For example, much FDI along the Gulf Coast reflects expansions in shale gas and petrochemical industries; those may leave a legacy of contamination and public health problems.  One aspect of FDI in North Carolina may be very good: the most significant foreign presence consists of companies headquartered in Belgium, Germany, England, Japan, and Switzerland.  Several of these countries have relatively high standards for pollution control and environmental management, and strong expectations of corporate responsibility.  But the most salient point is the report's own: local governments should think about FDI as a component of building industry clusters.  By extension, a strategy focused on clean, sustainable clusters will tend to improve public health and quality of life in the metro area; a strategy focused on clusters with large environmental externalities won't.