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FOREIGN DIRECT INVESTMENT IN THE CAROLINAS:

Challenges & Opportunities August 18, 2016


FDI TRENDS


2017 GLOBAL TRENDS

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• Global FDI flows fell 13% in 2016, reaching an estimated US$1.52 trillion - Weak economic growth/lackluster increase in global trade - Cautious optimism for 2017 • Greenfield FDI projects (value) rose by 5%, due to a handful of very large projects in a few countries. • The vast majority of countries registered declines, especially in manufacturing projects. • FDI flows to Europe fell 29% to US$385 billion. This decline was tempered by modest growth in flows to N. America (6%) and a sizeable increases in other developed economies, principally Australia and Japan. Source: UNCTAD


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2017 GLOBAL TRENDS • Good news: Brexit and US political changes ended up not having significant impacts on US and UK FDI flows • Too many strong economic reasons to invest in US and UK from market size to innovation capabilities • FDI (compared to international trade) with uncertainties about international trade policies might become more important preferred international growth mode in light of increasing protectionism


2017 A.T. KEARNY FDI CONFIDENCE INDEX

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2017 A.T. KEARNY FDI CONFIDENCE INDEX

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FDI INTO THE US, WHY SO IMPORTANT?

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FDI INVESTMENT INTO THE US BY TOP SOURCE COUNTRY 2012-2016

Source: FDI Markets

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FDI INVESTMENT INTO THE US BY TOP INDUSTRY 2012-2016

Source: FDI Markets

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FDI GREENFIELD PROJECTS INTO NORTH AND SOUTH CAROLINA 2012Q2 2017 580 Projects - $22 b Investment - 58,491 Jobs • Industrial Machinery responsible for 14% of all projects since 2012, 18% in 2017 so far • Over half of all investments were investments in new facilities (as opposed to expanding existing sites) • Danish investors created, on average, the largest projects in terms of investment (with 7 projects)

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FDI PROJECTS INTO THE CAROLINAS: BY REGION 2012 – 2016 (BY NUMBER OF PROJECTS)

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FDI PROJECTS INTO THE CAROLINAS: BY COUNTRY 2012 – 2016

Source: FDI Markets


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FDI PROJECTS INTO THE CAROLINAS: BY INDUSTRY 2012-2016

Source: FDI Markets


COMPARING TOP FDI PEERS ATTRACTIVENESS

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10 is highest performance relative to peers, 1 is lowest

Peer states: GA, KY, TN, AL, PA, MA Sources: CNBC, Forbes, Tax Foundation, Milken Institute


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SUPPLY CHAIN GAPS CAROLINAS Industry

National Annual Revenue Outlook to 2020

Metal Coating Plastics Material and Resin Mfg Life Sciences: Other Basic Organic Chemical Mfg Emerging Technologies: Water-based coatings, Bioplastics

Key Source Countries: - For automotive, plastics, chemicals, metals and food mfg: Germany, Japan, Canada; - For Life sciences: UK and Switzerland

2.0% 2.3% 3.2%


IDENTIFYING LEADS – SUSTAINED GROWTH • Sustained: 2 or more years of growth over a 6-year period • 1% of companies add net new growth 2 or more times over a 5 year period • These companies are responsible for ¾ of net new jobs • Top 5% of companies by employment growth create 66% of jobs in any given year • Gazelles make up less than 1% of businesses , yet account for over 70% of job creation


IDENTIFYING LEADS - IS BIGGER BETTER? • In 2000 there were a total of 25.5 million Americans employed by public companies, by 2010 this number had fallen to 20.3 million (a loss of 21%) • In 2000 the average publicly traded company employed 4,969 workers, by the end of the decade the average workforce fell by 35% to 3,226

Almost half of all large companies ($1B+) in 2025 will be new ones, many will be faster-growing gazelles that will generate the bulk of new jobs and value added in the global economy (Source: McKinsey&Company)


INTELLIGENT LEADS START HERE

FDI in the Carolinas