For decades, the United States has been a centerpiece of the global economy. Even in the aftermath of the Great Recession, foreign businesses have looked to the U.S. for investment opportunities and talent. According to a recent study from the Brookings Institution, 5% of American employees, or more than 5.6 million people, worked for foreign-owned businesses as of 2011.

Foreign direct investment — an investment by a foreign company either through acquisition of an existing business or by starting new company-owned operations — is a critical part of many metro area economies. In the Bridgeport, Connecticut metro area as many as 13.6% of employees worked for a foreign-owned business. Based on figures provided by the Brookings Institution, these are the 10 metro areas with the highest share of the workforce employed by foreign-owned establishments.

 

Click here to see the ten cities where foreign companies create the most jobs

Many of the cities with the highest shares of employment from foreign businesses have large concentrations of businesses in a specific industry. In an interview with 24/7 Wall St., Devashree Saha, an associate fellow with the Brookings Institution’s Metropolitan Policy Program and a co-author of the study, said that foreign direct investment “tends to be attracted to these places … [largely because of] the strong industry clusters that are in these areas.”

For example, Bridgeport is home to a number of leading financial firms and investment institutions. Similarly, the automotive manufacturing industry in Detroit, the energy industry in Houston, and the technology industry in the San Jose metro area also draw in foreign businesses.

Yet not every metro area with a high concentration of jobs in foreign-owned businesses has a notable industry cluster. In fact, foreign direct investment, “pervades every sector of the economy, and it can be found in pretty much every geographic location,” Saha said.

While foreign investment can bring new jobs to an area, such as through the opening of a new factory or office space, this is hardly the only potential benefit. According to Brookings’ Saha, foreign investment “tends to be associated with higher wages, increases in trade, research & development spending, and productivity spillovers,” such as growth in human capital.

Some, although not all, of the metro areas with the highest share of jobs in foreign businesses also derive a significant share of their economic output from exports. In two of these metro areas, San Jose and Detroit, exports accounted for more than 20% of output, among the most of any large metro area. Houston and Greensboro, too, derived more than 19% of their output from exports.

Productivity was also higher in some of the metro areas with the highest share of jobs from foreign-based employers. These include three of the 10 most productive major metro areas in 2011. San Jose was the nation’s most productive metro area, with a GDP per worker of nearly $150,000. However, some of these metro areas had low productivity measures. The Charleston, South Carolina metro area was among the least productive of the 100 largest metro areas, with a GDP per worker of less than $73,000.

Based on the recent report, “FDI in U.S. Metro Areas: The Geography of Jobs in Foreign-Owned Establishments,” , 24/7 Wall St. reviewed the 10 metro areas with the highest share of private employees in foreign-owned enterprises. The report was published as part of the Global Cities Initiative, a joint project between Brookings and JPMorgan Chase (NYSE: JPM). Figures on foreign business employment, as well as the method of investment by these companies, is also from the report. Data on exports and output is from the Brookings Institution study, “Export Nation 2013,” which utilizes data from 2012. Figures on productivity, patent activity and educational attainment are from Brookings’ 2013 study, “Patenting Prosperity: Invention and Economic Performance in the United States and its Metropolitan Areas.” Figures from this study are for 2011. Data on per-worker output from this study are in base-year 2005 dollars.

These are the 10 cities where foreign companies create the most jobs. 

10. Allentown-Bethlehem-Easton, Penn.-N.J.
> Pct. employees at foreign companies: 6.9%
> Total employment by foreign businesses: 20,776 (47th lowest)
> 2009-2012 annual export growth: 4.7% (28th lowest)
> 2012 total exports: $4.3 billion (27th lowest)

Foreign-owned businesses accounted for 6.9% of private employment in the Allentown metro area in 2011. Additionally, a large share of area jobs brought by foreign direct investment to the area came from newly opened businesses. While exports accounted for nearly 13% of the area’s output in 2012, more than most major metro areas, export growth has been weak in recent years. Between 2009 and 2012, exports grew by just 4.7% per year, lower than in nearly three-quarters of the 100 largest metro areas. Overall output grew at an even slower pace, just 1.3% per year, in that three-year period.

9. Charleston-North Charleston-Summerville, S.C.
> Pct. employees at foreign companies: 7.2%
> Total employment by foreign businesses: 17,198 (44th lowest)
> 2009-2012 annual export growth: 12.2% (10th highest)
> 2012 total exports: $4.0 billion (24th lowest)

The share of private employment from foreign-owned companies in the Charleston area rose by 1.3 percentage points between 1991 and 2011, from 5.9% to 7.2%. Nearly 39% of these jobs were from foreign-owned businesses established through foreign direct investment made prior to 1991. This figure was exceptionally high, suggesting that foreign companies have been in the region for a long time. While approximately 25% of jobs in foreign-owned companies came from mergers and acquisitions since 1991, roughly 37% came from newly opened foreign businesses, among the highest rates in the country. The Charleston metro area recorded a 12.2% annual export growth rate between 2003 and 2012, more than all but a handful of metro areas.

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8. San Jose-Sunnyvale-Santa Clara, Calif.
> Pct. employees at foreign companies: 7.3%
> Total employment by foreign businesses: 57,640 (15th highest)
> 2009-2012 annual export growth: 10.5% (15th highest)
> 2012 total exports: $34.6 billion (10th highest)

Roughly 40% of jobs in foreign-owned businesses within the San Jose metro area from foreign investments made through mergers and acquisitions activity since 1991. Given the prominence of Silicon Valley, it is not surprising that technology’s share of employment in the San Jose metro area led the nation, at 25.7% of all jobs as of 2011. Additionally, San Jose led the nation’s 100 largest metro areas in patents awarded with 9,237, or 10.29 patents per 1,000 workers. GDP per worker, a rough indicator of worker productivity, was the highest of any major metropolitan area in 2010 and 2011. Area exports have also been on the rise. Total exports rose by 10.5% on average in the three years between 2009 and 2012, among the faster growth rates in the nation.

7. Providence-New Bedford-Fall River, R.I.-Mass.
> Pct. employees at foreign companies: 7.5%
> Total employment by foreign businesses: 44,273 (27th highest)
> 2009-2012 annual export growth: 7.3% (39th highest)
> 2012 total exports: $8.8 billion (40th highest)

Employment in foreign-owned businesses in the Providence metro area jumped considerably in the last two decades, from 3.2% of all jobs in 1991 to 7.5% in 2011. Yet despite the considerable investment by foreign businesses, Providence’s economy is not especially vibrant. Between 2003 and 2012, the area’s economy grew at a compound rate of just 0.3% per year, among the slowest rates of any major city. Similarly, foreign investment did not seem to contribute to higher productivity, as Brookings’ Saha said it typically does. Worker productivity was relatively middling, at just over $91,000 per worker in 2011. Additionally, just 10% of the population had a bachelor’s degree in a lucrative science, technology, engineering or mathematics (STEM) field, placing Providence just above the median for all large metro areas.

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6. Detroit-Warren-Livonia, Mich.
> Pct. employees at foreign companies: 7.8%
> Total employment by foreign businesses: 124,420 (10th highest)
> 2009-2012 annual export growth: 20.4% (2nd highest)
> 2012 total exports: $40.0 billion (8th highest)

The Detroit metro area has been a hotspot for foreign investment in recent decades, with foreign-owned enterprises accounting for 7.8% of private sector employment in 2011. Just over half of all employment by foreign-owned businesses came from companies that entered the Detroit economy through mergers and acquisitions conducted since 1991, the fourth highest such rate in the country. Exports have also been particularly strong, growing about 20% per year between 2009 and 2012, despite negative overall output growth during that time. The export share of total growth increased seven percentage points between 2003 and 2012, from 13% to 20.8%. A a resurgent automotive manufacturing sector has likely contributed much to export’s growth.

5. Houston-Sugar Land-Baytown, Texas
> Pct. employees at foreign companies: 8.0%
> Total employment by foreign businesses: 178,005 (4th highest)
> 2009-2012 annual export growth: 13.6% (7th highest)
> 2012 total exports: $77.8 billion (3rd highest)

More than 178,000 Houston area workers were employed by foreign-owned companies as of 2011, more than in all but three other cities. Just over half of all employment by foreign-owned businesses came from companies that entered the Detroit economy through mergers and acquisitions since 1991, the fourth highest such rate in the country. Much of the foreign investment in Houston is likely related to the area’s energy cluster, which includes a number of the world’s major energy companies. Houston demonstrates many of the benefits of foreign investment. Houston area employees were among the most productive in the nation, with a GDP per worker of nearly $125,000 in 2011. Additionally, Houston was both a large and growing exporter. The area had $77.8 billion in exports in 2012, more than all but two other metro areas. Between 2009 and 2012, exports grew at an annualized rate of 13.6%, among the highest rates in the nation.

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4. El Paso, Texas
> Pct. employees at foreign companies: 8.8%
> Total employment by foreign businesses: 18,540 (47th lowest)
> 2009-2012 annual export growth: 12.1% (11th highest)
> 2012 total exports: $3.3 billion (19th lowest)

Few metro areas have experienced as much growth as El Paso in recent years. Between 2003 and 2012, the area’s economy expanded at an annualized pace of 2.7% per year, better than most of the nation’s 100 largest metro areas. Exports, too, rose considerably, growing at an annualized rate of 6.4% in that time. This growth has especially picked up following the recession. Between 2009 and 2012, exports grew by 12.1% per year, among the highest rates in the U.S. Major foreign-owned employers in the area include data and call centers, as well as automotive manufacturing companies. According to the BorderPlex Alliance, a local nonprofit promoting business investment in the region, the area is home to facilities for numerous major automotive suppliers. However, many of these businesses likely provide supplies for U.S. based companies because 2012 manufacturing export totals were relatively low, at just more than $2.2 billion.

3. Worcester, Mass.
> Pct. employees at foreign companies: 9.0%
> Total employment by foreign businesses: 24,624 (44th highest)
> 2009-2012 annual export growth: 8.7% (28th highest)
> 2012 total exports: $4.9 billion (39th lowest)

According to the Worcester Executive Office of Economic Development, Worcester has turned away from its manufacturing roots in recent decades to become a leader in information technology, biotech, and healthcare. With more than 13 colleges and universities in the area, a young, educated workforce is the hallmark of this metro area. More than 33% of the area’s population had a bachelor’s degree as of 2011, while nearly 13% had a degree in science, technology, engineering or math, both higher than the vast majority of metro areas. Between 1991 and 2011, the share of employment by foreign businesses rose by 4 percentage points. Much of this was due to expansion, as 60% of area workers in foreign-owned businesses were employed by companies that entered the market prior to 1991.

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2. Greensboro-High Point, N.C.
> Pct. employees at foreign companies: 9.0%
> Total employment by foreign businesses: 27,036 (40th highest)
> 2009-2012 annual export growth: 5.2% (35th lowest)
> 2012 total exports: $7.9 billion (46th highest)

The Greensboro metro area has developed a vibrant economy that entices both foreign and domestic investment, attracting Ralph Lauren manufacturing centers, APAC Customer Services, Volvo, and the Mack Truck headquarters, among other businesses. Between 1991 and 2011, job in foreign-owned businesses grew from 5.2% to 9.0% of total employment. Unlike many other major metro areas, newer businesses accounted for an especially large share of employment by foreign-owned businesses. Just 29% of employment by foreign businesses was by companies that first entered the area market before 1991, less than in most of the nation’s largest metro areas.

1. Bridgeport-Stamford-Norwalk, Conn.
> Pct. employees at foreign companies: 13.6%
> Total employment by foreign businesses: 50,694 (19th highest)
> 2009-2012 annual export growth: 3.2% (11th lowest)
> 2012 total exports: $8.1 billion (44th highest)

Unlike other regions on this list, the Bridgeport metro area recorded some of the lower export growth rates in the country, despite foreign-owned establishments accounting for nearly 14% of private employment in 2011, a roughly 6 percentage point increase from 20 years earlier. However, the Bridgeport metro area is one of the nation’s leaders in productivity, with GDP per worker of $132,000 as of 2011. Major foreign-owned companies in the area include large investment banks UBS AG and the Royal Bank of Scotland, as well as financial news and data firm Thomson Reuters. Such businesses likely continue to attract foreign investment to the area.The area’s high concentration of investment firms may also explain the region’s large number of IPOs, for which the region was ranked fifth nationally.

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