Directforeigninvestment in Connecticut rebounds in 2022
Jul. 11—The direct foreign investments made in Connecticut companies in 2022 represents an increase of 48 percent over the level made in 2021. Direct foreign investment in companies around the nation as a whole decreased by $185.1 billion, or 51 percent, from $362.6 billion in 2021 to $177.5 last year.
The foreign direct investment level in the United States in 2022 was below the annual average of $298.8 billion for for a seven-year period that ended in 2021.
Economists and business experts say continued foreign direct investment is vital to the U.S. economy.
"Foreign capital investment brings in further investment from other sources, which translates into jobs," said David Cadden, a professor emeritus at Quinnipiac University's School of Business.
Fred Carstensen, a professor at the University of Connecticut School of Business and the director of the state Center for Economic Analysis, said an example of the importance of foreign investment in the state's economy is the expansion of Dutch semiconductor equipment maker ASML in Wilton.
The company announced last year that it would invest $200 million over two years to expand its operations in Wilton and create 1,000 new jobs in the process.
"It hugely important because it creates high-wage jobs," Carstensen said.
While direct foreign investment grew in Connecticut between 2021 and 2022, the state was ranked 22nd out of 36 states and the District of Columbia that reported direct foreign investment data for at least one of the two years. There were 14 states that did not report any direct foreign investment data for either 2021 or 2022.
Carstensen said there is not enough nuance in the data released by BEA to really draw detailed conclusions about where the increase in foreign direct investment will take Connecticut.
"One hopes that it is going to result in growth in Connecticut and not having these local companies being acquired and moved out of states," he said. "But nevertheless, these numbers are moderately encouraging. Connecticut looks like it might be getting on a better economic trajectory."
Donald Klepper-Smith, an economist with South Carolina-based DataCore Partners, said the increased foreign direct investment in Connecticut is evidence that the state's economy "continues to bounce back from the COVID induced recession."
The foreign companies that are purchasing Connecticut firms is part of an effort by the acquiring companies "to achieve economies of scale," Klepper-Smith said.
"Economies of scale lead greater productivity and greater profitability," he said.
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