Redefining Foreign Direct Investment Part II: FDI Alliances - A Power In Numbers

Redefining Foreign Direct Investment Part II: FDI Alliances – A Power In Numbers

July 24, 2013
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In recent years, a growing trend has emerged with several cities, regions or even countries joining forces in order to promote foreign direct investment (FDI) for one or more of the alliance members.  Such alliances rally local and regional stakeholders around a competitive identity and help to communicate a consistent message to the outside world.

A critical advantage of this approach is the ability to leverage, fortify and market the breadth of resources available in the region or group.  Each place is able to focus on its strengths while allowing the region/group as a whole to present a more complete “product” for sale.  In many cases, one community cannot provide all of the resources needed to support particular business and economic activities.  Therefore, joining forces with a neighboring community might just provide a greater level of attraction with benefits ultimately devolving to both communities.

Unifying under a regional brand/concept is more conducive to marketing and catching the attention of international investors.  As such, the process can bring attention to places that would not necessarily get it otherwise.

At the same time, the joint FDI promotion approach helps to portray a more stable investment environment:  Developers, business owners and other investors are more likely to be attracted to places where their investment will have broad support among local and regional leaders and key partners.

A few examples of this approach include:

  • The Consider Canada City Alliance of eleven economic development agencies from Canada’s large cities have joined together to promote Canada as an ideal destination for global trade and investment.  As a united force – Toronto, Montréal, Vancouver, Ottawa, Calgary, Edmonton, Halifax, Québec City, Winnipeg, Waterloo Regionand Saskatoon  – reach out to international companies regarding business expansion and improve Canada’s ability to attract new investment and trade opportunities.
  • East Invest is a regional investment and trade facilitation project for the economic development of Armenia,Azerbaijan, Belarus, Georgia, Moldova and the Ukraine, launched in the framework of the European Eastern Partnership initiative.  The project targets business support organizations and SMEs from these six Eastern Partnership countries who have the potential to develop mutual cooperation and investment relations with theEuropean Union.
  • The Greater Toronto Marketing Alliance (GTMA) is a public-private partnership that serves as the key point of contact for businesses looking to explore opportunities in the Greater Toronto Area (GTA). The partnership brings together the 29 municipalities and regions in the Greater Toronto Area, the provincial government ofOntario and the federal government of Canada, several not-for-profit organizations and a broad cross section of private sector corporations.
  • The Albuquerque-Bernalillo County Trade Alliance is a collaborative effort between the respective Economic Development Departments of the City of Albuquerque and the Bernalillo County Commission to promote the metro-area as a strategic location for FDI.
  • The Trade Development Alliance of Greater Seattle’s FDI Working Group is an initiative of the economic development community of Greater Seattle and Washington State.  The group works to increase inbound investment and partnerships by coordinating investment attraction efforts and activities as well as providing assistance to inbound investors.  Participating organizations include:  Columbia River Economic Development Council, Economic Alliance of Snohomish County, Tacoma-Pierce County EDB, Economic Development Council of Seattle and King County, Kitsap Economic Development Alliance, Port of Seattle, Port of Tacoma, Trade Development of Greater Seattle, Washington Biotechnology and Biomedical Association, Washington Clean Tech Alliance, Washington Economic Development Commission, Washington State Department of Commerce, Washington State China Relations Council and the World Trade Center Tacoma.

To some it may seem counter intuitive for one agency to cooperate with another group with which they are in competition for the same “prize” (i.e. a decision by the prospect to locate a new facility in the agency’s catchment area).  But on reflection, it becomes clear that those entities who have embarked on cooperative foreign investment attraction programs understand that in this field two plus two makes five, not four.

In a word, leveraging the overall assets of a larger geographical area, even if there is internal competition among the participants, ultimately brings greater success to all of the members of the consortium.

This is another example of how foreign direct investment attraction continues to be redefined and reapproached to better address the way prospects look at potential locations.  Developing such consortia takes open thinking and a willingness to take risks, but the potential payoff mitigates those concerns.