FDI: Foreign Direct Investment

fi-Plan Partners is an investment, wealth management and financial planning firm located in Birmingham, AL serving clients across the nation. www.fiplanpartners.com

Hey everybody ashley paige here with another file and economic moment we’re delighted that you’ve joined us today our topic today is foreign direct investment it’s the part of the trade talks you haven’t heard about but we want to cover with you it was an excellent article over the weekend with some great research on this we wanted to share with you authored by

Gary cohen who is a professor of supply chain management the university of maryland but his point was with the midterm election coming up we spent so much time talking about foreign trade on the tariffs part of it we’ve somewhat ignored what is that what’s called the fdi or foreign direct investment that’s when another company in another country actually builds a

Plant here we’re very familiar with that we’ll go through that with a little more example in just a moment from 2001 to 2015 four trillion with a t4 trillion of investments have been made in the united states with plants here by companies that are domiciled outside of the united states most of the trade talk that you’re hearing around the midterm election is that

Me i’m a us company say selling to a into china or china selling in to me that’s where the tariffs is what we’re talking about in foreign direct investments is a component of this really has nothing to do with it but let’s talk about since 2001 how important that’s been we just mentioned the absolute number for trillion it’s not only the absolute number it’s been

The quality of it from 2001 to 2015 the average wage in those companies is 24% higher than private sector us across the board much higher the benefits are also much higher what it’s also done in an ancillary way is a lot of these companies that have located here in the united states are superb in technology that’s had a tendency to raise the bar if you will in us

Manufacturing the other thing that’s really important for small and owner-managed businesses is that since 2001 and up to 2015 there’s been a 68 percent rise in that period of orders that have been placed with smaller mid-sized companies so if you have a company say somewhere in the state supplying a larger one that’s a huge increase so when you hear this in the

Midterm elections it’s not just about the tariffs where i’m selling to another country and they’re selling to me we can’t get too defensive in this tariff talk because we don’t want a lot of the foreign direct investment that comes in the united states too slow if you look for example in our own state of alabama just think back to the mid 1990s when we started a

String of very successful foreign manufacturers that came into this state if you go in our state from south to north all the way from mobile to huntsville it has transformed the landscape evening of a state like where we live in alabama you really can’t ride through anymore a midsize lord sized alabama city without a large foreign manufacturer dominating it with

The employment that it brings with the wages that it brings with the tight tolerance on manufacturing standards that is right it’s been transformative so we have to make sure that tariffs are fair you know we can’t go back to world war two and have a tariff on a product fires like 30 percent anybody would argue that’s unfair but at the same time we need to balance

That component with what the foreign direct investment is and we have to watch that so we hope this has been helpful to you another component to look at in the foreign trade if you have any questions about that feel free to call us or follow us on facebook linkedin twitter you guys are sharing this a lot with others where you really appreciate that and we hope you

Enjoy them thanks so much and have a great week you

Transcribed from video
FDI: Foreign Direct Investment By Fi Plan Partners