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News Release

Last modified: Tuesday, April 1, 2008

IU report reveals foreign direct investment in Indiana

FOR IMMEDIATE RELEASE
April 1, 2008

Editors: For a complete copy of the report, contact George Vlahakis at 812-855-0846 or gvlahaki@indiana.edu.

BLOOMINGTON, Ind. -- A new Indiana University report indicates that Indiana will gain more than 5,000 jobs created by foreign direct investment (FDI) announced in 2007 -- mostly in the automotive manufacturing industry.

"Those new jobs account for about 3.5 percent of all the jobs these foreign companies provide in Indiana -- that's significant job growth, much faster than the state's overall work force growth," said Timothy Slaper, co-author of the report and director of economic analysis for the Indiana Business Research Center at IU's Kelley School of Business.

In 2005, about 140,000 Hoosiers worked for businesses in which a foreign investor or company had at least a 50 percent stake. Manufacturing accounted for 92,000, or about two-thirds, of Indiana's FDI jobs. These businesses, called majority-owned U.S. affiliates (MOUSA) represent 4.4 percent of total private industry employment in Indiana.

Auto manufacturing employment accounted for 36 percent of this foreign direct investment in Indiana, compared with 15 percent nationwide.

Indiana ranked 13th nationally for employment by majority-owned U.S. affiliates in 2005, according to Bureau of Economic Analysis (BEA) data.

The IBRC produced the report, "Foreign Direct Investment in Indiana," for the Indiana Economic Development Corp. (IEDC).

"Foreign direct investment plays a significant role in Indiana's economy, perhaps a more significant role than for the rest of the nation," the report said. "Indiana will continue to gain manufacturing employment from FDI at a far greater proportion than the nation as a whole."

Indiana and the nation shed manufacturing jobs generally at the same rate between 2000 and 2003 and MOUSA manufacturing employment followed the national trends. But since 2003, Indiana's MOUSA manufacturing employment has diverged from the national decline and is trending upward.

The report incorporates data from multiple sources, including BEA, the United Nations, the Organisation for Economic Co-operation and Development, the Indiana Chamber of Commerce, IEDC and the OCO Monitor database.

Other highlights from the report include:

• Indiana ranked eighth nationally for the gross value of property, plant and equipment of majority-owned affiliates in 2005.
• Parent companies from Europe account for 65.4 percent of Indiana's majority-owned U.S. affiliate employment. Asian and Pacific countries accounted for 24.4 percent and Canadian firms, 6 percent.
• The United Kingdom is the No. 1 source of majority-owned U.S. affiliate employment. Its firms employ 32,400 Hoosiers. Japan contributes the second-greatest number, 32,000, and Germany, 25,100.
• After manufacturing, the second largest MOUSA employment by a single sector was wholesale trade. About 13,700 Hoosiers worked for such wholesale firms. Majority-owned U.S. affiliate employment in Indiana was distributed rather evenly across other industries.
• Majority foreign-owned manufacturing jobs represent 15.7 percent of total private manufacturing in Indiana. "Indiana's share is larger than the United States and most of the Midwest," report authors note. "Only Michigan, Kentucky and Tennessee have greater manufacturing shares than Indiana."
• In 2007, FDI-related jobs were more evenly spread among industries and activities in the United States than in Indiana. No more than 15 percent of FDI jobs are in any one manufacturing industry or business activity in the United States. Indiana lagged the nation with regard to research and development FDI jobs.

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