Indiana receives more foreign aid, Kelley study says

An IU report released Monday indicates that Indiana has been one of the nation’s top beneficiaries of foreign direct investment in this decade.

Firms in which a foreign investor or company had at least a 50 percent stake accounted for 4.6 percent of Indiana’s total private sector employment in 2006, ranking the state ninth nationally and well-above the U.S. average of 3.5 percent, according to an IU press release.

The Indiana Business Research Center at the Kelley School of Business did the study for the Indiana Economic Development Corp. The study is based on the most recent data available from the Bureau of Economic Analysis and federal direct investment announcements made between 2006 and 2008, according to a press release.

“Lots of global corporations are looking to invest in the United States – we’re one of the largest markets globally,” said Matt Kinghorn, an economic analyst for Indiana Economic Development Corp. and co-author of the report in a statement. “Indiana’s continued success in capitalizing on that trend and drawing more than its fair share of foreign investment will be a real plus for the state.”

The report stated that employment in Indiana tied to foreign investments grew “markedly” from 2004 to 2006. Indiana’s increase of 14,000 jobs exceeded those of all its neighboring states.

Between 2002 and 2006, employment grew at an annual rate of 2.7 percent. Indiana was one of only 20 states to see positive growth over this period, during which the national annual rate declined by 0.4 percent a year.

Indiana’s total employment growth rate during the same time period was just 0.5 percent annually.

“This shows the potential that foreign firms have to be a continued source of growth in Indiana. They are adding jobs here at a much faster rate than are domestically grown firms,” Kinghorn said in a statement.

Manufacturing jobs continued to be a big part of the story, accounting for 64.8 percent of employment in the state, the second highest share nationally behind Arkansas. Foreign-owned U.S. affiliate manufacturers employed 95,900 Hoosiers, accounting for one of every six manufacturing jobs in the state.

Indiana’s high concentration of foreign direct investment jobs in manufacturing might leave the state more vulnerable in light of the current economic downturn.

“You’re always looking for economic diversity, but manufacturing’s been such a strength for Indiana that the state must always pursue opportunities in this sector,” Kinghorn said. “The demand for goods is down now, and foreign manufacturers are going to be subject to the same pressures as domestic manufacturers.”