Over the last several months, the World Trade Center San Diego (WTCSD) team has spearheaded a project to identify the foreign direct investment (FDI) trends in San Diego in preparation for the launch of a new regional trade and investment strategy. The results of that research provided valuable insights, including validation of the importance of the local life sciences sector, which has attracted $10.9 billion in foreign investment in the last five years.
Key findings in San Diego FDI trends
- 96 percent of foreign direct investment is through mergers and acquisitions (M&As)
- Top countries for FDI into San Diego: United Kingdom, Switzerland, Spain, Israel, and France
- 70 percent of all FDI into San Diego over the last five years was in the life sciences
- China ranked #1 in venture capital investment (VC)
- Japanese firms employ more San Diegans than any other country
What does the data say?
In five years, San Diego attracted a total of $15.6 billion of foreign investment, encompassing both mergers and acquisitions (M&As) and greenfield investment activity. To develop a strategy from this, WTCSD has focused on understanding three key variables: the types of investment, the global origin of that investment, and the industry in which those investments are concentrated. The vast majority of foreign investments are in the form of M&As (96 percent), similar to other metros around the United States. While economic development organizations are often pressured to spend incentive dollars attracting new businesses, the distribution of FDI between M&A and Greenfield investing has led WTCSD to focus on developing a more refined plant to attract/support M&A as part of the new regional trade and investment strategy.
Life sciences and tech sectors attracted over $13.7 billion of FDI into our region, playing a vital role in our economy both domestically and internationally. WTCSD will continue to work closely with partners such as Biocom and Connect to promote investment in these two sectors.
Understanding the regional implications of global markets helps WTCSD target specific countries and industries in our investment attraction efforts. Our analysis found that Switzerland, Spain, and the United Kingdom play a significant role in both greenfield and M&As investments.
Impacts of COVID-19 on global trade
While much of the world has been on hold as we come to understand what a “new normal” amidst COVID-19, trade disputes, and political elections really means, there are sectors that continue to invest. The United Nations Conference on Trade and Development anticipates global foreign investment to decrease by 40 percent due to COVID-19, and expect a recovery to initiate in 2022. Considering this, San Diego’s domestic and international competitive advantage lies in the life sciences with companies such as ResMed, Amplyz Pharmaceuticals, Thermo Fisher Scientific, Illumina, and others are bringing San Diego’s life changing innovations to the global market with and through their groundbreaking work. These sectors are proving to the world their value and as we emerge from this crisis highlighting the region’s robust strengths in life science will continue to drive US investments as pressures global to localize supply chains increases.
About World Trade Center San Diego
World Trade Center San Diego operates as an affiliate of the San Diego Regional Economic Development Corporation. WTC San Diego works to further San Diego’s global competitiveness by building an export pipeline, attracting and retaining foreign investment, and increasing San Diego’s global profile abroad. sandiegobusiness.org/wtcsd
In 2014, San Diego Regional EDC (EDC) launched the Go Global: San Diego’s Global Trade and Investment Initiative report, a joint project supported by the Brookings Institute and JPMorgan Chase as part of the Global Cities Initiative. This report highlighted the importance of elevating San Diego’s global competitiveness within the global economy as a means to creating a thriving and resilient economy back home. Now that the 5-year report has ended, the WTC San Diego is planning to launch the new Go Global report in early 2021.
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