08 Nov What is FDI?
Unless you work in international business or foreign relations, you probably have no idea what these three letters mean. Here’s a quick lesson. F-D-I stands for foreign direct investment. Basically, it’s an investment made by a company or person in one country (say, South Africa) in business interests in another country (say, the U.S.). It’s usually in the form of either establishing new business operations or acquiring business assets.
Worldwide, the U.S. is still the largest recipient of FDI, while nationwide, California tops the list. That means more foreigners are investing in business in the U.S. than in any other country in the world (China is second.) The finance sector dominates foreign investment, but manufacturing, IT, healthcare, real estate, and telecommunications are also attracting foreign dollars. There are many reasons why investors are drawn to the U.S., but primary among them are: (1) we have one of the most open markets and investment climates in the world, and (2) we have an entrepreneurial culture of innovation and risk taking. That would also explain why California is the most attractive state for FDI.
Why is FDI so important to the U.S. economy? Well, foreign investment builds new factories, funds research and development, and employs 6.4 million Americans in well-paying jobs. (Organization for International Investment, 2016 Report). Average salary for FDI jobs is $80,000, compared to the national average of $60,000.
While you might think this has nothing to do with you, think again. FDI isn’t just for big business, like oil and gas giant, Shell (a Dutch company), and multi-million dollar EB-5 investors. Your neighborhood European bakery, that Brazilian online crafts shop you like to buy from, and that Greek restaurant down the street may have been started by foreigners with less than a $100,000 investment on an E-2 visa.
- Just for fun, here are a few companies you might not have guessed are now foreign owned:American Beverage Corporation (Dutch)
- Anheuser-Busch/Budweiser (Belgian)
- Trader Joe’s (German)
- Ben & Jerry’s, Breyer’s, and Good Humor (British-Dutch)
- French’s Mustard (no, not French, it’s British!)
- Frigidaire (Swedish)
- Reebok (German)
By Nina Gibbs, Managing Director
Savi Global provides business planning and advising, marketing strategy, and translation and interpretation services to American companies working globally and to internationals starting business in the U.S. For more tips, advice, and resources for your global business, subscribe to Savi Global’s monthly eNewsletter.