Pandemic Resilience and Innovation: How the U.S. Regained its Foothold in Global Investment


The United States reclaims its top spot for global FDI.

Foreign Direct Investment (FDI) has long been a driving force behind economic growth and development in the United States. After a substantial downturn in 2019 and 2020 due to the COVID-19 pandemic, FDI inflows into the United States bounced back sharply in 2021 and 2022 and continue to show strong trends halfway through 2023. In 2021, FDI inflows were at $388 billion and an increase of 11.2%. While 2022 growth was less substantial, it was still quite strong, attracting $285 billion. As we examine U.S. FDI trends since 2019, it becomes evident that the landscape of international investments has witnessed both challenges and opportunities. As the United States has reestablished itself as the global leader in FDI, we discuss some of the key factors influencing FDI inflows into the United States and shed light on the evolving investment scenarios.

Source: UNCTAD

1. Policy and Regulatory Environment

The policy and regulatory environment plays a crucial role in attracting foreign investors. Since 2019, the United States has made efforts to improve its business-friendly climate through initiatives such as tax reforms, deregulation, incentives and industry cluster development. Even prior to 2019, The Tax Cuts and Jobs Act of 2017 reduced corporate tax rates, making the United States more competitive on the global stage. These measures have incentivized companies to invest in the country, leading to increased FDI inflows. Moreover, while the Biden administration’s Semiconductors and Science Act (CHIPS Act) was primarily aimed at domestic growth and keeping U.S. companies at home, it also spurred international investment into the country’s value and supply chains. Not only does the CHIPS Act provide $52.7 billion for American semiconductor research, development, manufacturing and workforce development, but it also importantly includes $500 million in provision of international information communications technology security and semiconductor supply chain activities. Certainly, strengthening the U.S. semiconductor cluster is leading to more international companies investing in the United States as evidenced by Taiwan Semiconductor’s recent announcement to build a second semiconductor factory in Arizona and raise its investment there from $12 billion to $40 billion.

2. Technological Leadership – Increasing Tech Innovation

The United States has been a pioneer in technological innovation, a factor which continues to draw FDI into the country. Industries such as advanced manufacturing, artificial intelligence, biotechnology, and clean energy have been the focus of foreign investors seeking access to cutting-edge research, skilled talent, and market opportunities. The United States remains an attractive destination for companies wanting to establish research and development centers or collaborate with American firms on technological advancements.

3. Reshaping Global Supply Chains – Returning to the United States

Trade tensions and disruptions in global supply chains have had a significant impact on FDI inflows into the United States since 2019. Heightened uncertainties surrounding trade policies and the on-going U.S.-China geopolitical disputes have prompted some companies to reconsider their supply chain strategies. As a result, several businesses have shifted or expanded their operations to the United States to mitigate risks and gain proximity to the large consumer market. While several investment decisions are being reshaped by U.S.-based companies, the ancillary effect is strengthening and building supply chains in and around U.S. soil which, over time, will draw more foreign investment into the country. Some brief examples include:

  • Generac Holdings, a manufacturer of power generators, relocated production from China to the United States in response to the pandemic. The company now sources more components from suppliers in the United States and Mexico, manufacture more generators in the vicinity of their headquarters near Milwaukee, and operates a newly-built facility in Georgia. In addition, they have announced intentions to establish a new plant in Trenton, South Carolina.
  • Though Apple is a U.S. company, their announcement to increase purchasing chips from the Taiwan Semiconductor Manufacturing Company likely contributed to Taiwan Semiconductor’s decision to increase its investment in the United States to have closer access to one of its largest customers. Their new Arizona plant is expected to begin production in 2024.

Additionally, recent data from Dodge Construction Network indicates that the construction of new manufacturing facilities in the United States has experienced a significant rise of over 100% in 2022. Several massive chip factories are being built in Phoenix, including two by Intel located just outside the city. Moreover, numerous aluminum and steel plants are being erected throughout the south, such as in Bay Minette, Alabama (Novelis); Osceola, Arkansas (U.S. Steel); and Brandenburg, Kentucky (Nucor). In Buffalo, New York the increase in semiconductor and steel output is boosting orders for air compressors produced at a previously closed Ingersoll Rand plant.

4. Near-shoring Activities

Nearshoring allows companies to establish operations closer to their target markets, reducing geopolitical risks associated with having operations in more distant locations. Again, the net effect of the rapid rise of nearshoring activity strengthens and re-draws supply chains into North America thus increasing FDI into the United States across value chains. According to a survey of over 300 SME supply chain professionals conducted by software company Capterra, “88% of small and midsize supply chain professionals have plans to switch at least some of their suppliers to ones closer to the U.S. 45% plans to switch all of them.” In particular, Mexico has become a popular choice for global companies due to various factors including its proximity to the United States. Additionally, Mexico has deepened its trading relationship with the United States through its signing of the updated United States-Mexico-Canada Agreement (USMCA), which offers multiple benefits and tax reductions by increasing trade with the United States.

5. COVID-19 Pandemic

The COVID-19 pandemic brought unprecedented challenges to global economies, including the United States. However, despite the initial disruptions, the U.S. economy demonstrated resilience, attracting FDI inflows amid the crisis. The pandemic accelerated the digital transformation, and sectors such as e-commerce, telemedicine, and remote work gained prominence. Foreign investors recognized the opportunities arising from these sectors and channeled investments into technology-driven industries.

6. Strategic Investments and Partnerships:

In recent years, strategic investments and partnerships have played a crucial role in shaping FDI inflows into the United States. Cross-border collaborations, joint ventures, and mergers and acquisitions have facilitated technology transfers, knowledge sharing, and market access for both domestic and foreign companies.

Source: UNCTAD

According to the 2023 World Bank Report, the United States received the most greenfield investments and was the top recipient of FDI inflows, with $285 billion in 2022.

Since 2019, the United States has continued to be an attractive destination for foreign investors, despite global challenges and uncertainties. The country’s robust economy, technological leadership, policy reforms, and resilient business environment have contributed to the sustained inflow of FDI. As we move forward, understanding the evolving dynamics of FDI inflows will help shape policies and critical business decisions that further strengthen the United States’ position as a global investment hub.

How Tractus Can Help

Tractus has been assisting companies with making informed decisions about where to invest and how to expand their businesses around the globe for more than 25 years. As the investment environment in the United States continues to evolve, our partners and senior management leverage their decades of experience to identify opportunities for growth and guide your business towards success. Contact us today to learn more.

Authored by

Michael Hirou is Tractus’ USA Country Manager based in our Los Angeles, California office. Sreehari Marar is a Senior Consultant based in New York City.

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