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Eastern NC Foreign Direct Investment Project. Brent Lane, Director UNC Center for Competitive Economies Kenan Institute of Private Enterprise University of North Carolina Kenan-Flagler Business School Applied scholarship to strengthen local, regional and state economic development strategies.

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slide1

Eastern NC Foreign Direct Investment Project

Brent Lane, Director

UNC Center for Competitive Economies

Kenan Institute of Private Enterprise

University of North Carolina

Kenan-Flagler Business School

Applied scholarship to strengthen local, regional and state economic development strategies

The Carolina Center for Competitive Economies (C3E)

Kenan Institute for Private Enterprise

eastern nc foreign direct investment prospects
Eastern NC Foreign Direct Investment Prospects

Project Summary:

Identify foreign direct investment (FDI) opportunities in the region’s targeted industrial clusters

Key Assumption:

ENC can build FDI advantage by establishing relationships in Emerging Economies

project tasks
Project Tasks

Task One: NCER Targeted Industry Clusters Characterization

Task Two: Targeted Clusters’ FDI Pattern Assessment

Task Three: Targeted Clusters FDI Prospect Identification

Task Four: Identify Specific Country/Cluster Thought Leaders

key research issues
Key Research Issues
  • Extent of Foreign Direct Investment (FDI) in NCER’s targeted cluster
  • Established FDI relationships/patterns
  • Leading emerging foreign companies for target cluster
  • Countries where emerging FDI prospects are concentrated
  • “Thought leaders” guiding future FDI decisions in those countries
research team
Research Team

Principal Investigator:

  • Brent Lane, UNC Kenan Flagler Business School

Senior Research Advisor:

  • Michael Luger, Dean, Manchester School of Business

Strategic Analysts:

  • Poi-Jui Lung, UNC MBA student
  • Swami Shanmugasundaram, UNC MBA student
  • Amit Sahai, UNC MBA student
  • Leonid Okneanski, UNC MBA student

The Carolina Center for Competitive Economies (C3E)

Kenan Institute for Private Enterprise

core concepts
Core Concepts

Industry ClustersForeign Direct InvestmentEmerging vs. Developed EconomiesCapital Markets in Economic Development

industry cluster
Industry Cluster

A cluster is a theoretical network of interdependent buyers and suppliersIndustry clusters consist of industry sectors (NAICS) that exhibit significant input-output linkagesC3E uses a defined set of 43 national industry clusters as a means of studying a regional economy’s strengths

advanced manufacturing cluster definition
“Advanced Manufacturing” Cluster Definition

Constituent Industry Sectors

  • Metalworking Machinery
  • Special Industry Machinery
  • General Industrial Machinery And Equip
  • Electrical Equipment & Supplies
  • Measuring & Controlling Devices
using clusters in economic development
Using Clusters in Economic Development

Identify “Targets of Opportunity”

Clusters suggest regional comparative advantage

Denser clusters offer greater value proposition

  • Emerging growth companies
  • Expansion of existing firms
  • Focused recruitment based on defined advantage
foreign direct investment
Foreign Direct Investment

FDI can take many forms….

  • Physical facility/subsidiary in another country
  • Acquisition of US firm
  • Investment in US firm
  • Joint venture/strategic alliance with US firm
  • Intellectual property license
fdi motives
FDI Motives

Transplanted home-bases:

  • top management, R&D, and production

Scanning units:

  • R&D units with limited development capability

Market-seeking units:

  • access customer concentration

Resource-seeking units:

  • access specialized inputs
fdi drivers
FDI Drivers
  • Company maturity/scale
  • Export orientation
  • Geographic relevance
  • Resource advantage
  • Exchange rate
  • Cluster value proposition
emerging vs developed economies
Emerging vs. Developed Economies

No fixed definitions; often politically motivated

“Economist” magazine:

Argentina Brazil Chile China

Colombia Czech Rep. Egypt Hong Kong

Hungary India Indonesia Israel

Jordan Malaysia Mexico Morocco

Pakistan Peru Philippines Poland

Russia Saudi Arabia Singapore South Africa

S.Korea Taiwan Thailand Turkey

advanced manufacturing
Advanced Manufacturing

Where are they now?

  • 1,355 advanced manufacturing firms in EUS

Where are they from?

  • 178 of these are FDI
fdi prospect criteria
FDI Prospect Criteria

Where are the next ones?

  • Advanced manufacturing cluster sector
  • Headquarters or sole location
  • Annual revenues > $10 million
  • 12,150 worldwide
  • Emerging vs. Developed economies
findings
Findings

Advanced Manufacturing is predominantly a developed economy industry cluster

  • majority (6,537) of AM companies are in Developed Economy countries
  • sizable minority (816) of AM companies are in Emerging Economy countries
findings1
Findings

  But not all Developed Economies have established AM FDI patterns in EUS

  • Germany, England, Japan and Switzerland lead AM FDI in Eastern US
  • Italy, France, Spain, Portugal not yet active in FDI in the cluster
findings2
Findings

  Minimal AM FDI from Emerging Economies to date

  • 816 prospect companies in 18 countries
  • only 7 AM EUS FDI locations from Emerging Economies
  • only Israel has been source of more than one
findings3
Findings

Both Emerging and Developed Economies have substantial populations of Advanced Manufacturing FDI prospects without established patterns of Eastern US location preferences

AM FDI strategy should address both certain Developed and Emerging economies

emerging economies
Emerging Economies

Most FDI prospects with least established FDI patterns in the Advanced Manufacturing cluster:

1.      China 11.  Mexico

2.      South Korea 12.  Russia

3.      India 13.  Hong Kong

4.      Malaysia 14.  Saudi Arabia

5.      Brazil 15.  Slovakia

6.      Singapore 16.  Argentina

7.      Hungary 17.  Turkey

8.      Taiwan

9.      Poland

10.  Czech Republic

developed economies
Developed Economies

Most FDI prospects with least established FDI patterns in the Advanced Manufacturing cluster:

1.      Italy 5.     Netherlands

2.      France 6.     Australia

3.      Spain 7.     Norway

4.      Finland 8.     Ireland

9. Portugal

next steps
Next Steps
  • Specific prospect identification and qualification
  • Market “thought leaders” targeting
  • Capital market “gate keepers” identification
  • Additional clusters application
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