There has been an increase in foreign direct investment (FDI) in the U.S. as a result of new federal trade and industrial policies. Some foreign companies have committed to investing billions of dollars to set up or increase U.S.-based manufacturing. Kara Jones, PhD, of the University of South Carolina, published her analysis in the academic journal Contemporary Economic Policy (citation below).
Foreign Direct Investment occurs when a business or individual from one country purchases, builds, or expands a business in another country. In nearly every case, the investor intends to operate there for the long term and earn profits. Below, you can see four examples of FDI in the United States that have been announced since the beginning of 2025:
Three major FDI announcements for the U.S.
- 4 March 2025 — Taiwan Semiconductor Manufacturing Company (TSMC), $100 billion
- 24 March 2025 — South Korea’s Hyundai Motor Group, $21 billion
- 24 March 2025 — French shipping and logistics company CMA CGM, $20 billion
- 6 July 2026 — Toyota Motor Corporation, $3.6 billion
Jones found that while FDI increases the number of jobs, it has no significant effect on people’s income in America’s rural areas.
Jones based her analysis on data from a major $1.2 billion investment in Troup County, Georgia. She also gathered and analyzed data across U.S. counties from 1995 to 2019. Evidence showed that rural investments were accompanied by higher wage growth, the housing supply subsequently expanded, and there were more business establishments.
FDI Just One Component
According to Jones’ findings, state and local governments that aim to increase both incomes and employment should consider FDI as just one component of a wider development strategy. FDI is not likely, by itself, to guarantee higher incomes. There must be supporting policies alongside FDI that expand housing markets and strengthen rural labor.
Jones said:
“If the goal is simply to create jobs, FDI attraction strategies can succeed in a wide range of rural contexts. But if the goal is to raise local incomes, then the returns to public spending on FDI incentives will be uneven as in many cases, the income benefits will diffuse to surrounding counties and diminish local gains.”
Citation:
Jones, Kara. “Reindustrialization Meets Rural Reality: The Limits of Foreign Direct Investment-Led Development.” Contemporary Economic Policy, 2026, advance online publication. Wiley, https://doi.org/10.1111/coep.70047
