California and Texas ranked among the states with the highest FDI attraction in the United States, according to a report by the Department of Commerce.
By state, Missouri led this indicator in 2023. However, its value is not disclosed due to confidentiality requirements.
Then, California ranked second ($12.8 billion), followed by New Jersey ($12.1 billion) and Texas ($10.1 billion).
In total, spending by foreign direct investors to acquire, establish or expand businesses in the United States reached $148.8 billion in 2023. These figures come from preliminary statistics recently released by the U.S. Bureau of Economic Analysis.
FDI attraction in the United States
California is the most populous state in the United States. In 2023, its economy accounted for 14% of the country’s GDP. It also ranked as the fifth largest economy in the world at the end of 2023.
California’s economy is diversified. It includes sectors such as high technology, commerce, entertainment, manufacturing, government, tourism, construction and services. The proportion of these components is similar to the composition of the national economy.
On the other hand, the Texas economy is highly dependent on key industries. These include the oil and gas industry, chemical production, technology equipment manufacturing and telecommunications.
Comparative advantages
California and Texas attract investment for a variety of other reasons. California is home to Silicon Valley, a hub for many technology companies. This creates an attraction for advanced technology. Also, the state has access to venture capital funding and a large pool of technology workers.
Texas’ infrastructure adds a further attractive factor. It has several ports and an extensive network of roads, highways and freight rail. In addition, its entrepreneurial ecosystem is strong, hosting several Fortune 500 companies.
Finally, Texas’ proximity to Mexico is relevant. Multinational companies can take advantage of the existing trade base between the two. By doing so, companies reduce costs and use Texas as a platform to serve other markets in North America.