Foreign direct investment in Indiana.

• Author: Hall, Tanya J.

Foreign direct investment (FDI) is one way to measure the scope and degree of a region's globalization (exports being another). FDI contributes financially to the state's economy and often provides job opportunities for local residents. This article provides an overview of the recent historical data from the Bureau of Economic Analysis (BEA) on FDI trends nationally, in the Midwest and Indiana specifically, as well as "real-time" FDI announcements made between 2009 and 2011 for planned investments in new and expanded plants and equipment. For a more detailed analysis, read Capturing the Flag: Foreign Direct Investment in Indiana, available at www.stats.indiana.edu/topic/exports.asp.

Historical FDI (2007-2009)

FDI data from the BEA cover U.S. businesses newly acquired or established by foreign direct investors. In 2009, the United States had nearly 5.3 million workers employed at enterprises where a foreign investor or company had at least a 50 percent stake, otherwise known as a majority-owned U.S. affiliate (MOUSA). Slightly more than 23 percent of these MOUSA workers were employed in the Midwest. In 2009, Indiana ranked 14th among states (same as 2008), with 131,400 workers employed at MOUSA firms (see Table 1). From 2007 to 2009, MOUSA employment declined in the U.S. by 5.5 percent, a trend mirrored in most Midwestern states except Missouri and Iowa.

TABLE 1 Majority-Owned U.S. Affiliate Employment in Midwestern States, 2009 Geography MOUSA Employment Change since U.S. Rank (in thousands) 2007 United States 5,279.7 -5.5% n/a Illinois 250.8 -10.6% 5 Ohio 211.2 -11.3% 8 Michigan 134.8 -11.7% 13 Indiana 131.4 -11.9% 14 Tennessee 16.3 -16.5% 15 Minnesota 92.2 -6.1% 20 Kentucky 87.0 -6.4% 21 Missouri 85.5 3.8% 22 Wisconsin 74.6 -9.0% 25 Iowa 46.0 1.1% 29 Source: Bureau of Economic Analysis The Origin of FDI

European countries accounted for 52.2 percent of the nation's MOUSA employment in 2009 followed by "other countries" (such as Middle Eastern and Latin American countries) at 26.3 percent and Japan (12.5 percent). The Midwest, as a whole, followed similar trends with a slightly stronger presence from Japan and other countries compared to the nation, and less from Europe and Canada. At the individual country level, Japan held the largest share of MOUSA employment in Indiana at 26.9 percent (35,300 jobs). In the U.S. and Midwestern states, the United Kingdom was the dominant European country creating FDI jobs. Among Indiana's neighboring states, Illinois had the largest employment presence from France and the United Kingdom (see Figure 1).

FIGLIRE 1: Midwestern States' Majority-Owned U.S. Affiliate Employment by Source, 2009 Canada 9% France 10% Germany 11% Netherlands 6% Switzerland 8% United Kingdom 17% Japan 13% Other 26% Note: Table made from pie chart. Source: Bureau of Economic Analysis FDI Employment

During the Great Recession MOUSA employment rolls declined nationally by 5.5 percent or 308,500 workers, reducing its MOUSA employment concentration to about 5 percent of total private employment in 2009. In Indiana, MOUSA firms accounted for 5.6 percent of...