The information in this report comes from the data collected by Jon Haveman, Ethan Jennings, and Howard Shatz at the Public Policy Institute of California in their article “California and the Global Economy: Recent Facts and Figures, 2006 Edition”, and the California Business Investment Services website, unless otherwise noted.  

The United States economy greatly benefits from foreign direct investment (FDI). U.S. affiliates of foreign companies employed 5.3 million Americans in 2003 (4.7% of private industry employment). A whopping 41% of those jobs are concentrated in the manufacturing industry. Increased investment and competition from FDI leads to higher productivity growth, a key ingredient that increases U.S. competitiveness abroad and raises living standards at home. The inflow of foreign capital also decreases the cost of borrowing money for domestic entrepreneurs. Indirectly, American companies can use foreign multinationals’ distribution networks and knowledge about foreign tastes to export into new markets.[1]

Foreign direct investment plays a pivotal role in California’s successful economy especially. The state’s stable expanding economy, the sixth largest in the world,[2] provides great opportunities for foreign firms and investors across multiple industries. California’s large (36.8 million people in January 2005), diverse, and growing population (expected six million person increase by 2015) proves to be an enticing consumer market and plentiful labor force for both domestic and foreign businesses.