Foreign Direct Investment

The percentage of each state’s workforce employed by foreign companies.

WHY IS THIS IMPORTANT? Foreign direct investment (FDI) includes significant investments by foreign companies, such as construction of production facilities or ownership stakes taken in U.S. companies. FDI not only creates new jobs, it can also lead to an infusion of innovative technologies, management strategies, and workforce practices. For example, some have argued that Japanese automobile plants in the Midwest spurred American companies to adopt more modernized manufacturing practices.15 Foreign direct investment has been on the rise in the United States and around the world since the 1970s. In the United States, incoming FDI has grown from $134 billion for all of the 1970s to $312 billion in just the first half of the 1990s (in constant 1992 dollars), and from .32 percent of GDP to .69 percent.

THE RANKINGS: With the exception of Hawaii, which has the top score because of its proximity to Asia, most states that score well are on the East Coast. This is in large part because most FDI comes from Europe and Canada. In 1996, Europe accounted for two-thirds of all FDI in the United States, with Asia accounting for less than 15 percent. European companies have invested in East Coast states in part because of their proximity to their corporate headquarters, and because of the access to densely populated markets.

STATES BY RANK
Rank	State	Score
1	Hawaii	8.8%
2	South Carolina	6.7%
3	North Carolina	6.2%
4	Massachusetts	5.4%
5	New Jersey	5.3%
6	Georgia	5.2%
7	Connecticut	5.1%
8	Tennessee	5.1%
9	New Hampshire	5.1%
10	Maine	4.8%
11	Kentucky	4.8%
12	Virginia	4.4%
13	New York	4.3%
14	Delaware	4.3%
15	Indiana	4.2%
16	Pennsylvania	4.2%
17	Ohio	4.2%
18	Rhode Island	4.1%
19	Illinois	4.0%
20	California	3.8%
21	Maryland	3.6%
22	Minnesota	3.6%
23	West Virginia	3.5%
24	Alaska	3.5%
25	Colorado	3.5%
26	Texas	3.5%
27	Utah	3.4%
28	Michigan	3.4%
29	Florida	3.2%
30	Kansas	3.2%
31	Washington	3.2%
32	Vermont	3.2%
33	Nevada	3.1%
34	Alabama	3.1%
35	Oregon	3.0%
36	Missouri	3.0%
37	Arkansas	3.0%
38	Louisiana	2.9%
39	Arizona	2.7%
40	Wisconsin	2.5%
41	Wyoming	2.5%
42	Iowa	2.4%
43	Oklahoma	2.3%
44	New Mexico	2.1%
45	Nebraska	2.0%
46	Idaho	2.0%
47	Mississippi	1.8%
48	North Dakota	1.4%
49	South Dakota	1.4%
50	Montana	1.0%

	U.S. Average	3.9%

ALPHABETICALLY
State	Rank	Score
Alabama	34	3.1%
Alaska	24	3.5%
Arizona	39	2.7%
Arkansas	37	3.0%
California	20	3.8%
Colorado	25	3.5%
Connecticut	7	5.1%
Delaware	14	4.3%
Florida	29	3.2%
Georgia	6	5.2%
Hawaii	1	8.8%
Idaho	46	2.0%
Illinois	19	4.0%
Indiana	15	4.2%
Iowa	42	2.4%
Kansas	30	3.2%
Kentucky	11	4.8%
Louisiana	38	2.9%
Maine	10	4.8%
Maryland	21	3.6%
Massachusetts	4	5.4%
Michigan	28	3.4%
Minnesota	22	3.6%
Mississippi	47	1.8%
Missouri	36	3.0%
Montana	50	1.0%
Nebraska	45	2.0%
Nevada	33	3.1%
New Hampshire	9	5.1%
New Jersey	5	5.3%
New Mexico	44	2.1%
New York	13	4.3%
North Carolina	3	6.2%
North Dakota	48	1.4%
Ohio	17	4.2%
Oklahoma	43	2.3%
Oregon	35	3.0%
Pennsylvania	16	4.2%
Rhode Island	18	4.1%
South Carolina	2	6.7%
South Dakota	49	1.4%
Tennessee	8	5.1%
Texas	26	3.5%
Utah	27	3.4%
Vermont	32	3.2%
Virginia	12	4.4%
Washington	31	3.2%
West Virginia	23	3.5%
Wisconsin	40	2.5%
Wyoming	41	2.5%

Source: Bureau of Economic Analysis, 1996-1997 data.

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