Transcript Slide 1

Achieving Long-term
Competitive Advantage
Presented to:
Regional Border Economic Development Forum
San Diego, CA
Lorna H. Wallace,
Research Fellow
Regional Economics
(310) 570 4619
www.milkeninstitute.org
February 24, 2006
Determinants of Inbound
Foreign Direct Investment (FDI)
1. Market Access
2. Labor – availability and quality (not simply low
labor costs)
3. Infrastructure
4. Regulatory Environment
5. Incentives
6. Information Availability
7. Quality of Life
8. Clusters of Firm Activities
Foreign Direct Investment
in the U.S.
Top 10 States by Employment, 2003
Rank
1
2
3
4
5
6
7
8
9
10
State
California
New York
Texas
Illinois
Florida
Pennsylvania
New Jersey
Ohio
Michigan
North Carolina
Total
Employment
(Ths.)
561.0
382.6
339.3
254.9
248.9
227.7
223.2
208.6
205.0
204.6
5,253.0
% of U.S.
Total
10.68
7.28
6.46
4.85
4.74
4.33
4.25
3.97
3.90
3.89
100
Foreign Direct Investment
in California
Employment, 1999-2003
Thousands of Employees
Percent Change, Year Ago
760
Employment (L)
Percent Change (R)
740
20
15
720
10
700
5
680
0
660
640
-5
620
-10
2000
1999
2002
2001
2003
Origin of FDI – Baja California
Japan, 5%
U.K., 2%
U.S., 88%
Korea, 1%
Spain, 1%
Cayman Islands, 1%
Other, 2%
California Exports to
Mexico
1997-2003
US$ Billions
18
Percent Change, Year Ago
30
CA Exports to Mexico (L)
Percent Change (R)
16
20
14
10
12
0
10
-10
1998
1997
2000
1999
2002
2001
2004
2003
California Exports to Top
10 Countries
Ranked by 2004 Value, US$ Billions
Rank
1
2
3
4
5
6
7
8
9
10
Country
Mexico
Japan
Canada
China
Korea (ROK)
Taiwan
U.K.
Hong Kong
Singapore
Netherlands
All Others
California Total
2003
14.9
11.8
11.2
5.5
4.8
4.4
4.4
4.2
3.4
3.4
26.1
94.0
Percent Share of CA Share of CA
Change
Exports
Exports
2004 2003-04
2003
2004
17.2
15.9
15.8
15.7
13.3
13.3
12.5
12.1
12.1
7.8
11.9
11.0
6.8
25.2
5.8
6.2
5.9
22.3
5.1
5.4
5.4
20.7
4.7
4.9
5.2
19.4
4.6
4.7
5.1
22.5
4.4
4.7
4.2
23.5
3.6
3.8
3.8
11.8
3.6
3.5
30.9
18.4
27.7
28.1
110.0
17.0
100.0
100.0
Most Attractive
Global Business Locations
Responses from Multinational Enterprise Executives
1.
2.
3.
4.
5.
6.
7.
8.
9.
China (87%)
India (51%)
United States (51%)
Russian Federation (33%)
Brazil (20%)
Mexico (16%)
Germany (13%)
United Kingdom (13%)
Thailand (11%)
10. Canada (7%)
Internationalization of R&D
•In 1993, Motorola established the 1st foreign-owned R&D lab
in China
•The Indian R&D activities of General Electric employs some
2,400 workers
•In the Baja California Electronics and Automotive
Manufacturing Cluster
•More than 25% of the plants surveyed were engaged in R&D
•1/5th did product design
•More than 1/10th had developed a patent
• More than 1/3rd had ISO 9002 Certification
In Conclusion
In conclusion, the issue of competitiveness is very much “en vogue.”
Is northern Mexico/southern California a desirable global platform?
How does the Border Region measure up re: 8 Determinants of fdi?
Isabela Project – innovative sources of financing for small business owners.
Increasingly economic development means the ability
to attract and retain high-quality jobs in high-tech
growth industries – all of which demand welltrained human capital.