NEW YORK, Nov. 13, 2017—Today, the Partnership for New York City released “Global Business, Local Benefit: Foreign Contributions to the New York Economy”, a report on the economic contributions of foreign international business operations to the city and state with recommendations for diversifying and expanding Foreign Direct Investment (FDI).
New York City is the nation’s most important destination for foreign companies, which are largely European-based and concentrated in the retail sector. The 5,000 foreign companies in the city account for $81 billion or 11 percent of the city’s economic output and 298,000 jobs. While this is far more than any other U.S. city, New York is underperforming in comparison to other global cities such as London and Singapore, where there are significant programs to identify and incentivize FDI. London for example, saw $65.6 billion in FDI over the past 10 years, compared to New York’s $30.6 billion.
The analysis found that global companies invest significantly in New York, citing the talent pool, proximity to customers and innovators and a predictable regulatory and political environment as key factors in the city’s value proposition. On the other hand, aging and inadequate infrastructure and lack of affordable, quality educational options are cited as negative factors by foreign companies considering further investment in the city. Federal reduction in corporate tax rates would encourage FDI, while further restrictions on trade and immigration policies will damage prospects for additional FDI activity.
Projections show that FDI in the city is expected to continue to grow at its historic rate of about 4 percent annually over the next five years, with the potential to create 211,000 jobs and $20 billion in economic activity. But there are opportunities to scale up this investment by diversifying the countries of origin to include emerging economies of Asia, Africa and South America, and by focusing on proactive recruitment of businesses in high growth sectors like technology and life sciences.
“New York has enjoyed steady but lackluster growth in foreign business activity over the past decade. It is clear we can do better,” said Kathryn S. Wylde, President and CEO of the Partnership for New York City.
“Understanding the impact of FDI on New York is a critical starting point for reinvigorating the city’s strategy. A.T. Kearney was delighted to be involved in this project, and we hope the data and recommendations are able to help New York better compete with other global cities,” said Jim Singer, Partner, A.T. Kearney.
“New York City beckons as a leading global center for finance, art, culture, media and innovation. But greater investment in our regional infrastructure and a rejuvenation of public education would go a long way to wooing multinationals that have not already made significant investments in the city,” said Jason Stevens, President and Chief Executive Officer of Mitsubishi International Corporation.
“The Partnership has released this important report at a critical moment in our economy’s future,” says Douglas L. Peterson, President and Chief Executive Officer of S&P Global. “Foreign direct investment has been a bedrock of U.S. economic growth for decades and New York has been one of its premiere destinations. However, we are now competing with the likes of Silicon Valley, Denver, Nashville and global cities for high paying jobs and talent. Global leaders have recognized the importance of attracting business to their cities and New York must continue to do the same. By proactively partnering with politicians and the private sector, New York City can send a strong message that it is open for business and welcomes quality, high growth job creators. This report showcases some important policy ideas to achieve this goal.”
“New York plays a preeminent role in attracting trade and capital from around the globe to the U.S.” said Patrick Burke, President and CEO of HSBC USA. “At HSBC, we’re seeing that this investment increasingly comes from higher growth economies in Asia. America continues to be the top destination for cross-border M&A activity from China and outbound direct investment. The composition of investments from China is in sectors like healthcare, infrastructure, and technology, in which the U.S. excels. Continued economic development efforts for catalyzing investment from emerging markets in key sectors can further propel FDI. The Partnership for New York City’s report is yet another demonstration of how FDI can ignite economic activity in our city, state and country.”
“New York will always be a place where foreign companies need to invest and have operations, but we could do so much more to promote the city, its talent and diversity to benefit our economy. Other places, like London, are promoting their city as a place to do business, which has markedly impacted FDI. New York City could be doing the same to attract business to our area,” said Philip Ryan, Chairman of Swiss Re Americas.
Global political and economic challenges prompted the Partnership to update its 2008 report on FDI. As well as conducting 45 interviews with global business leaders, it also commissioned an extensive quantitative analysis by A.T. Kearney to understand the impact of investment on the city and state. The report is available for download here.