Despite growing concerns about the ability of the United States to continue attracting high-quality foreign direct investment (FDI), it remains the largest recipient of FDI in the world. Our latest report noted that, while the United States cannot afford to rest on its laurels, a few megatrends—the shale gas revolution lowering energy prices, rising wages and slowing growth in emerging markets and U.S. advantages in advanced manufacturing processes—bode well for long-term U.S. competitiveness.
In this regard, state and local policymakers and economic development practitioners are rightfully grappling with the question: What does a smart strategy to attract, retain and maximize the economic development potential of high-quality FDI look like? After all, multinationals are expected to invest over $1.6 trillion outside their home countries in 2014 alone, a good chunk of that destined for U.S. market.
Surprisingly the answer is hidden in plain sight: strong industry clusters.
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