By Judy Nagel, Envision Board Member
What are the key signals of social mobility? Labor, education, technology, healthcare and social protections – and FDI: foreign direct investment. A key indicator of positive social mobility is the investment by foreign countries in American businesses, and this particular indicator has taken a startling downward shift. Until 2020, the US led in FDI with China a distant second. All that has changed now, and FDI is definitely a signal we need to watch.
In 2020, investment inflow into the United States dropped from $251 billion to $134 billion. By contrast, China increased its FDI inflow from $140 billion to $163 billion. The drop in FDI began before COVID-19, as a gradual turning of the tide. The US reached its highwater mark in 2015 at $440 billion FDI, and since then we’ve seen a steady decline; that decline accelerated in 2020.
Of course, FDI tanked globally in 2020 due to COVID-19. China managed to get the virus largely under control early on, with fewer than 100,000 cases and 4,800 deaths by year’s end. The United States, with a much smaller population, had 20,000,000 cases and nearly 350,000 deaths. By mid-June 2021 COVID-19 deaths in the United States had increased to 600,000, and FDI continues to lag.
What does this mean for Wisconsin and, in particular, the Greater Green Bay area? Ten percent of Wisconsin jobs are the result of foreign investment, and they are concentrated in the manufacturing sector (45%), according to the Organization for International Investment. That comes to about 352,300 FDI jobs in Wisconsin, supporting 12% of our state’s GDP. It’s important to note that the average salary for FDI jobs is $74,200, whereas the average salary for all Wisconsin jobs is $50,400.
We feel the impact here in Brown County. Twenty-nine foreign owned companies in our county employ 915 citizens. Investments have been made by thirteen countries, including Japan, Italy, Australia, Hong Kong, France, Netherlands, Canada, England, Switzerland, Sweden, Finland, Germany and Brazil. If we factor in the average FDI salary, this is an economic impact of $67,893,000. Since FDI salaries are generally larger than the average state salary, FDI companies contribute more per investment dollar to our local GDP (gross domestic product). FDI is definitely a signal worth watching in our area.
What will be the trickle-down effect of FDI investment in Wisconsin? Will China become the new world leader in FDI, or will the United States be able to recover? This is an indicator we might consider the “canary in the coal mine.”