Economic Development Profession Perception of U.S. FDI Competitiveness

I thought it would be interesting to end 2009 by conducting a survey that assessed two important things – 1) the strength of Brand America through the eyes of the economic development industry and 2) their sense of readiness to effectively compete for foreign direct investment. The survey was executed in December of 2009 and members of three LinkedIn economic development groups were invited to participate. I would like to thank those members who took the time to respond. Your support is greatly appreciated.

The total responder count was 81 started and 51 completions. For perspective, this was not designed as a rigorous, well-controlled survey. However, the results can be considered directionally informative. The following conclusions are my interpretation of the results.

For perspective, most of the responders were economic professionals (85%) and involved in branding their community, region or state (73%). Consequently, the survey results should be reasonably reflective of the economic development profession perspective.

In previous blog posts I have talked about the importance of relevance, competitiveness and authenticity in creating and sustaining a strong brand promise. I was amazed at the change in the world perspective of Brand America in 2009. It has been both remarkable and unprecedented. I think it reflects, to a large degree, the world’s expectation Brand America will begin more consistently “walking the talk” of it’s promise.

To understand how the economic development profession felt about Brand America, a question was asked about the perceived relevance, competitiveness and authenticity of Brand America’s promise. The question was asked on a 5-point scale, the data are presented below as top 2 box (most favorable) and bottom 2 box (least favorable) scores.

Based on these data, there appears to be room for improvement across all three key attributes of a great brand. As a professional community, we clearly have some hard work ahead to help ensure Brand America is viewed as the most desirable location in the world to invest capital.

Today’s global economy is more interdependent than ever. The most recent financial crisis has brought that point home loud and clear. Communities, regions and states that focus on competing only for domestic capital investment may be limiting their upside potential for economic prosperity. Going forward, foreign direct investment will likely be an increasingly important source of economic growth, much like servicing international markets has become an increasingly important source of sales growth for private sector companies. The better we understand what the foreign direct investor needs, and how to effectively communicate with them about the benefits of our respective locations, the more successfully we can compete with other countries for an increased share of foreign direct investment inflow.

Almost half (48%) of the responders report to have a specific plan for foreign direct investment attraction, retention and/or expansion. Having an aligned plan and executing against it is important, because the cost of effectively competing for foreign direct investment inflow can be significant and budget straining (if not breaking). Strategic choices on WHO to target and HOW to reach tem need to be made. If a specific plan is not in place, then consideration should be given to creating one. And, if a plan is in place it would probably be a good idea (post the global economic crisis) to revisit it and ensure the plan is still robust.

It is generally recognized that the needs of a foreign direct investor differ from a domestic investor (80% believe this to be true). This implies that programs designed to promote your location for domestic capital investment need to be adjusted to effectively compete for foreign direct investment. There are clearly additional considerations and more moving parts when competing for foreign direct investment. But, to be successful the differences need to be specifically identified and addressed.

Most economic development professionals recognize the increasing importance of foreign direct investment to create a sustainable economic portfolio (60% responders indicated foreign direct investment will play a key role in the future for their area). However, it is not uniformly the case (28% indicated foreign direct investment would not play a key role and 12% were undecided).

Pursuing foreign direct investment is an important strategic choice that has meaningful resource commitment implications. The choice to proactively compete or not needs to be a conscious one and not made by default. Often, if the exercise cannot be adequately resourced locally, consideration should be given to collaborating in a regional or state level program as a way of participating at a lower investment level. But, even that choice has implications on resource allocation and should be made consciously.

While the importance of competing for foreign direct investment is understood, the economic development professional community does not feel prepared to effectively compete. This suggests it might be an area for continued education or to reach out for expert counsel in order to ensure the greatest chance for success. Two good sources for additional information are IEDC and Invest in America.

There is also room for improvement in mastery of place branding as a tool to effectively compete for an increased share of foreign direct investment. The complexity of place branding increases dramatically when you think about reaching capital investors in foreign markets with sufficient reach and frequency of your message. The channels of communication are different than your home market, and the resources for help are less well understood.

Overall, it would appear the economic development professional community is not in a bad place with respect to competing for an increased share of foreign direct investment inflow.

  • The need to do so is understood.
  • The awareness it is not exactly the same as competing domestically is established.
  • The opportunity for sharpening the saw on general knowledge of the foreign direct investor unique needs, and the opportunity to build even stronger branding skills is acknowledged.

It is often said that awareness is half the battle, so as a professional community we are well on the way to success.

As I look forward, 2010 may be the year that competing for an increased share of foreign direct investment is a main topic for many economic development organizations. This would be a good thing. Even an aligned decision to not invest in a foreign direct investment attraction plan is better than not taking a definitive position. I believe Brand America has the potential to be stronger because of these conversations and look forward to them occurring. I am hopeful the Strengthening Brand America Project plays an increasingly important role as part of the solution.

If you would like to help me make the Strengthening Brand America Project in 2010, there are three ways I would ask you to consider –

  1. Share your expertise and experience by leaving a comment on the blog posts. Your perspective adds critical context and helps improve the overall understanding of the blog post subject.
  2. Help increase awareness of the website by sharing the address with your colleagues and recommending it as a reference on effective place branding. The more economic development professionals we can get to access the website, the faster we can get more globally competitive. You can share the website link via email or through your favorite social media channel.
  3. If you have a website or a blog, add www.StrengtheningBrandAmerica.com to your blog roll. The link will help this project and will further strengthen your own site’s search engine visibility.

Thank you in advance for considering playing an active role in helping build awareness of the Strengthening Brand America Project. It has been a pleasure to serve you in 2009 and I look forward to providing you even better service in 2010.

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4 Comments so far

  1. Sara Dunnigan

    January 4, 2010

    “Whether you think you can or whether you think you can’t, you’re right.” Henry Ford coined this phrase and I think it’s right for this post. Just think – if WE don’t think we can compete – how can we expect our clients to think we can? The fact remains that the US (and each of our respective communities)offers something unique for international businesses.

    Our job as marketers and sales people if to help those companies solve a problem. To do that, we have to become much more intimate with our clients, expand our understanding of the trends and issues facing industry and create value.

    The old days of finding a company to “buy” what we have are gone.(needle in a haystack)Now we need to find/create a product (community)that our customers want. That means defining our customer first and focusing like a laser. It means knowing our product RELATIVE to the competition.

    I would challenge the selection of the subjects for this research – because really our brand isn’t what WE say it is, it’s what THEY say it is. What are your existing foreign affiliated businesses saying about you?

  2. Don Iannone

    January 4, 2010

    Ed,

    Great stuff. Thanks for sharing all this.

    Having a plan for FDI is essential. Personal relationships are also essential in working successfully in the international business field. I would focus attention on international students in American colleges and universities, get to know them, engage them, and get to know their parents, who in many cases are successful business people in their home countries. In my work, I have met dozens at schools like Earlham in Richmond, Indiana, Oberlin College, and others.

    Take care and bets wishes for the 2010. And we need to take some pictures together this winter! The fall got past us. Don

  3. Tom Blaha

    January 4, 2010

    An insightful take on a timely topic. Most of us in economic development have learned quite awhile ago to view the global economy as ‘opportunity,’ but unfortunately, some still see it as ‘threat.’ Our Wood County[Ohio] Economic Development Commisison has participated in trade missions through the Ohio Department of Development to Europe and Japan. Most recently (last month) we have just returned from a trip to Torino and Milano set up by the Automotive Communities Program of the Center for Automotive Research. We gave a presentation about our county to a “Summit” organized by the American Chamber of Commerce in Italy with over 80 companies attending in Torino. We also were able to meet with the procurement/purchasing folks from Fiat to see if Fiat’s relatonshhip with Chrysler presented any more/new opportunity for FDI(suppliers, etc.) in our region because of Chrysler’s footprint

  4. Ray De Winkle

    January 12, 2010

    I had the good fortune to begin my economic development career twenty years ago with an organization that had an FDI strategy from day one (The Right Place, Inc., (Grand Rapids, MI) http://www.rightplace.org). Last year I moved to lead GreaterFindlayInc., (Findlay, OH) http://www.greaterfindlayinc.com) which had a very successful FDI strategy pursuing Japanese auto manufacturers. So, FDI has always been in my genes as an economic development practitioner. The United States is still the largest market in the world, with the most stable governance structure – therefore, we should be confident in our ability to compete for FDI. The science and the art converge in finding the right target markets to pursue, where your community can offer a significant value proposition. Like most economic development strategies, it’s a long-term game. If you, your community/board, and budget aren’t prepared for a sustained initiative, it is better to not start. Starting and then stopping without sustained and consistent follow-through does much more damage. The opportunity is there if you do your homework and planning appropriately.

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