My last blog post on barriers to foreign direct investment in Brand America led to some great feedback. Virtually everybody who contacted me reinforced the importance of becoming more competitive for FDI inflow attraction. They liked the idea of having a robust market research study to better understand what potential foreign direct investors like and dislike about Brand America. The benefit of creating a “product development” plan (i.e. public policy reforms, infrastructure investment, asset creation) based on the data felt intuitively right to them. So much so, that the post catalyzed discussion around creating a consortium to pursue fielding a robust market research project to secure these data.
In addition, I received a copy of recent supplemental testimony by Rick Weddle to the U.S. Senate Committee on Banking, Housing & Urban Affairs Subcommittee on Economic Policy, submitted on December 19, 2009.
Rick is a remarkable economic development expert with a notable track record of leadership and success. He is President and CEO of the Research Triangle Foundation of North Carolina, owner and developer of The Research Triangle Park. Rick’s biography is an inspiring read.
Rick basically informed the Subcommittee that Brand America is at risk of being out marketed and the situation needs to be addressed. Rick’s testimony has some interesting data compiled by the IEDC that helps illustrate the challenge. I am going to share a couple of his charts with you, but I really want you to read his entire testimony for a full understanding of his recommendation.
Share of global FDI dollars have declined from a peak of roughly 45% to about 20%. In part this reflects other countries developing into profitable markets that attract multinational company investment to build capability and capacity to serve a growing middle class with increasing disposable income. It also reflects remarkable changes in telecommunications, reductions material weight and improved transportation options making it easier and cost effective to service U.S. consumer demand from international locations. This trend is likely to continue and arguably accelerate over the foreseeable planning horizon. Competition for foreign direct investment is and will continue to increase. When I talk about this in presentations, I point out that whenever I was faced with a business situation where total category dollar growth was stagnant (or declining) and competitive options were increasing the solution was always to differentiate your product and support it with an effective branding effort. I believe the solution for Brand America’s declining FDI inflow share challenge is no different.
Another sobering set of data Rick shared with the Subcommittee was the targeted investment being made by countries competing with Brand America. Many countries have well conceived and well funded initiatives to convince potential foreign direct investors that their location is the best choice to do business from. In the U.S. we do not have a comparably funded effort.
On a positive note though, Rick identifies the Invest in America program as a capability that can potentially be leveraged for Brand America to become even more competitive. I am a fan of the Invest in America program and believe Rick is definitely on target in his thinking.
I have no doubt the Subcommittee was impressed with Rick and that they listened carefully to his perspective and recommendation. Hopefully they will be in a position to take action and will work diligently to resource a strategically focused effort to help Brand America become even more competitive. Reversing the declining FDI inflow share trend will have a positive effect on economic recovery and vitality.
You can download a copy of Rick’s testimony. I encourage you to read it. I know you will be impressed.
I’d like to think it is easy to get people to believe that better marketing Brand America is a right thing to do. But, it is only a first step. To create a sustainable solution, there also needs to be an effective product development component that further differentiates Brand America from the competition. And, the focus of the product development effort needs to be informed by data identifying the most important improvement opportunities as seen through the eyes of the foreign direct investor community. If the coalition I mentioned earlier takes shape, perhaps the data needed will become available and further encourage the Subcommittee to take action on Rick’s recommendation.
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