High-Tech Industry Employment Concentration, High-Tech Employment/All Employment, by Metro Area, 2015. Source: U.S. Census Bureau, 2015 County Business Patterns.
By Maureen Book, Research Analyst, SelectUSA
SelectUSA recently released its second industry-focused report: “High-Tech Industries: The Role of FDI in Driving Innovation and Growth.”
This report provides an in-depth look at high-tech clusters in the United States and gives the first-ever analysis of the role of foreign direct investment (FDI) in high-tech industries. The report’s biggest takeaway is that FDI plays a significant role in these industries.
Where Are High-Tech Clusters?
High-tech industries are defined as employing more than twice the concentration of science, technology, engineering and mathematics (STEM) workers compared to the national average. After analyzing the U.S. high-tech industry and considering participation of both foreign and domestic firms, SelectUSA explored the geography of high-tech companies in the United States by state, to identify large groups, or clusters, of employment. The top employers of high-tech workers were California, Texas and New York, while the District of Columbia, Virginia and Washington boast the highest employment per capita of high-tech jobs.
High-Tech Clusters by Metro Area
Looking at metro areas with the highest concentration of high-tech employment, SelectUSA found that San Jose, Calif., tops the list with more than 34 percent of local employment in high-tech industries. It was followed closely by Elkhart, Ind., with nearly 33 percent, and Huntsville, Ala., with over 31 percent.
While the concentration in San Jose might not be surprising because it is the largest city in the Silicon Valley, Elkhart and Huntsville both have industry concentrations nearby to make them important locations for high-tech companies. Elkhart’s economy is heavily concentrated in the transportation equipment manufacturing industry and centers around recreational and commercial vehicle manufacturing. While Huntsville is home to many military technology firms and aerospace and defense contractors.
The Role of Foreign Direct Investment (FDI)
Using our definition of high-tech industries and data published by the Bureau of Economic Analysis, SelectUSA looked at the role that FDI plays in high-tech industries. FDI generally involves not only monetary investment, but the management of a company by a foreign enterprise. To be considered FDI, the investment must usually be linked with the real output of the country in which it operates.
Our data found that FDI stock in high-tech industries reached over $1.6 trillion in 2016 and supported 2.1 million jobs in the United States. In fact, the high-tech component of FDI is quite robust – nearly 44 percent of all FDI in the United States is invested in high-tech industries.
Compensation, R&D, Exports and Value-Added Activities
Beyond employment, FDI in high-tech sectors has other significant contributions to the U.S. economy.
The U.S. affiliates of foreign-owned firms typically offer higher wages compared to domestic firms. In addition, companies engaged in FDI in high-tech industries offer higher average pay compared to FDI companies in other industries – more than $101,000 per worker.
U.S. affiliates of foreign-owned firms in the high-tech sector also spend nearly $42 billion on research and development (R&D). In 2015, they also contributed $154 billion towards U.S. goods exports and more than $373 billion towards value-added activities.
Source Markets Supporting High-Tech
We also find that Germany, the United Kingdom, France, and Japan are among the largest source markets for R&D spending, exports and value-added activities in high-tech industries. Beyond that, they are also the US’s traditional trading partners. Collaborating with them on FDI reinforces our trade relationships and strengthens the US’s bilateral ties with these partners.
MBDA National Director David Hinson, along with a 27-member delegation of U.S. corporate executives and minority-owned businesses, recently completed a China Business Opportunity Trade Mission to Beijing, Tianjin and Shanghai. The goal of the trade mission was to meet with potential corporate, government and university partners and attend the Minority Supplier Development (MSD) China Summit and Business Opportunity Fair.
The trip was organized by the National Minority Supplier Diversity Council (NMSDC) to foster business relations between American corporate and minority-owned businesses, corporate members of MSD China, and Chinese ethnic minority businesses that are not a part of the Han Chinese majority in China and Taiwan.
Director Hinson was a keynote speaker at the MSD China Summit and Business Opportunity Fair, held Sept. 1-2 at the Tasly International Conference Center in Tianjin. In his remarks, he encouraged participants to join in helping minority suppliers gain more business opportunities within the global economy.
The annual event brought together 80 corporate executives, minority supplier development professionals and purchasing executives, along with a host of Chinese and U.S. government officials, and about 100 minority business owners from China and the U.S. The Summit also included several delegations from ethnic minority regions within China.
“Among those core values that citizens of the United States and China share is the belief that we owe our success to the ingenuity, intellect and creativity of our people,” Hinson said.
Over the course of the two days, the Summit provided a forum for an exchange of ideas and included workshops onBusiness Opportunities with Multinational Corporations; Starting a Business in China: Practical Advice from Experts; How Traditional Chinese Medicine Goes International; and The Development of Chinese Ethnic Minorities and Chinese Minority Business Enterprises.
MSD China is the country’s first, national non-profit membership organization dedicated to enhancing the development of the 56 non-majority Chinese ethnic groups in business by connecting minority suppliers to corporations for procurement opportunities on a mutually beneficial basis.
The U.S. delegation attending the event included representatives from Dell, IBM, United Technologies Corporation, The Boeing Company, Hewlett-Packard Company, Marriott International, Inc., Merck, PepsiCo, and several minority businesses and leaders from the NMSDC. The China trade mission ran from Aug. 29 through Sept. 5.
Director Hinson’s time in China also included meetings in Beijing to discuss MBDA’s globalization program and objectives, investment opportunities in China, and current merger and acquisition trends. In addition, he met with the School of Continuing Education at Tsinghua University for an overview of its globalization program and to discuss minority business enterprise matching and the possibility of a joint program between Tsinghua and U.S. universities.
The Business Opportunity Trade Mission is a part of MBDA’s ongoing efforts to create access for minority businesses and broaden domestic and global opportunities through strategic partnerships.
On August 24, 2017, President Donald J. Trump met with General Zulkifeli bin Muhammad Zin, Director General of the Malaysian National Security Council, accompanied by Malaysia’s Ambassador to the United States, Zulhasnan Rafique, and expressed the gratitude of the United States for the Malaysian Coast Guard, Royal Malaysian Navy, and Royal Malaysian Air Force’s help in recovering the fallen United States sailors of the USS John S. McCain. The President also told General Zulkifeli that he looks forward to welcoming Malaysian Prime Minister Najib Abdul Razak to the White House on September 12. General Zulkifeli was in Washington, D.C., to meet with Assistant to the President for National Security Affairs LTG H.R. McMaster. Noting the 60th anniversary of United States-Malaysia relations, LTG McMaster and General Zulkifeli discussed ways to strengthen bilateral ties, particularly in trade and investment, as well as defense and security cooperation. A stronger partnership in these areas will help the two countries address shared challenges and promote regional peace and stability, including the fight to defeat ISIS and other extremist networks.