That is a question more and more economic development agencies around the world are asking themselves. It was also one of the main topics at the International Economic Development Council (IEDC) 2024 Leadership Summit, which took place in Phoenix, Arizona from February 4 to 6, 2024.
FDI Center’s managing director, Andreas Dressler, moderated a panel discussion with senior representatives from Choose New Jersey, the Greater Phoenix Economic Council (GPEC), and the Brampton Economic Development Office. The aim of the session was to provide the audience of leaders of economic development organizations (EDOs) with practical advice to structure and enhance their own FDI attraction strategies.
Some key topics and learnings from the discussion included:
- FDI attraction should start with a clear definition of the location’s strengths and a focus on specific target segments. EDOs cannot approach the global market with too broad of an offering and should concentrate on carefully selected areas where they have clear advantages. For example, Choose New Jersey is focusing on attracting semiconductor design rather than manufacturing, since the state may not fulfil the property and utility requirements of large chip fabs.
- FDI attraction requires a long-term approach. The FDI market is extremely competitive and there are few – if any – quick wins. In many countries, it takes time to build the relationships required to attract FDI. TSMC’s plan to build a $40 billion plant in Phoenix was the outcome of many years of developing and nurturing relationships by GPEC and its partners in the region and state.
- FDI attraction works best as a coordinated approach among different levels of government. Although national, state and local agencies have their own priorities, working together on international initiatives avoids duplication and is more effective in terms of sharing resources and knowledge.
- In-market representation can be highly effective. A local presence in key markets provides cultural understanding and helps open doors. Representation can come in different forms, including setting up own offices or contracting with third parties.
- Promotional material and content need to be localized. This applies to the EDO’s website and other promotional materials. It is not enough to simply translate materials into other languages – they should also be thoroughly checked by a native speaker with subject matter understanding.
- Don’t overlook so-called “second tier” markets. Most EDOs are focused on big countries such as the UK, Germany, India, Japan or Korea and these markets often feel crowded. Smaller markets such as Poland, Finland or Thailand have a growing base of expanding companies that are often easier to engage with.
- Diasporas can be powerful multipliers. For example, the Brampton Economic Development Office focuses some of its investment attraction activities on specific parts of India or countries in Africa where it can leverage contacts through the diaspora in Brampton. This also allows the agency to hire native speakers in Brampton to contact and engage with corporate decision makers from their home region or country.
- ESG and SDG considerations are growing in importance. Companies from around the world are paying close attention to the impact of their activities, both at home and when setting up a presence overseas. EDOs can highlight the ESG/SDG credentials of their location and provide support that is aligned to corporate goals such as gender equality or carbon footprint reduction.
- Smaller EDOs can play globally too. While FDI attraction requires the right resources, there are many ways for smaller agencies to play a role and be successful in FDI attraction. However, before embarking on international activities, they should be clear about the requirements and have realistic expectations about the outcomes.
The points above provide useful advice for agencies looking to build or boost their FDI attraction activities. However, there is no “one-size-fits-all” approach to FDI attraction, and each EDO must develop a strategy that reflects its objectives for FDI attraction, the resources available and the characteristics of the location.