Mapping the Future of Foreign Direct Investment in New Hampshire

Foreign direct investment (FDI) strengthens international relations and expands economic ties with trade partner countries and global supply chains. Foreign direct investment in New Hampshire is an important driver of the state’s development. Foreign firms bring contributions to many industries and connect our state to the global economy. Foreign direct investment has extraordinary potential to contribute to future growth of the state’s economic output and to add ultimate value to local buyers and consumers.

Foreign firms have a presence across New Hampshire’s counties and many industries. Extant research revealed that foreign firms tend to agglomerate around a region in order to share the pool of resources and to strengthen their bargaining power[i]. Our study shows the locations and industries where the presence of foreign subsidiaries is more prevalent. The distribution pattern reveals a notable geographic cluster of foreign firms in the Nashua-Manchester-Portsmouth economic delta along the New Hampshire-Massachusetts border (which is within the economic metropolitan area centered on Boston) and agglomeration spillover towards the inner center of the state. The policy implication highlights coordinating FDI promotion policy across counties to increase the overall pool of FDI in the state, rather than encouraging local competition over a largely fixed pool of aggregate FDI.[ii]

The report also infers the areas where more efforts can be placed in order to attract more direct investment based on the FDI Origin Index, the FDI Employment Impact Index, and the FDI GSP Index.[iii] The predominant regions of origin for FDI are Canada, Europe, and East Asia. The international relations between New Hampshire and Europe (and Canada) will continue to be strong, as reflected by the large volume of trade and direct investment in the recent years. In East Asia, Japan and Korea are important sources of FDI and employers of New Hampshire workers. China is currently not among top contributors of FDI, but given the significant growth of Chinese economy and the upgrade of Chinese economic structure from manufacturing to service and high-tech industries, the demand for overseas expansion by Chinese multinationals is growing. Australia and Middle East are also prospective growing point for FDI in New Hampshire.

Potential of FDI Based on Indices of Origin, Employment Impact and Gross State Product Impact

Country of Origin FDI Origin Index Country of Origin FDI Employment Index Country of Origin FDI GSP Impact Index
Germany 674.9 Germany 32149 Germany 9150
Canada 276.4 France 21478.7 Canada 8011.2
Switzerland 256.4 Canada 21355.9 France 5292.8
France 231.5 Japan 14555.1 Japan 4889.6
Italy 200 United Kingdom 12229.7 United Kingdom 2889.1
Netherlands 173.7 Switzerland 11856.8 Spain 2604
Sweden 169.4 Spain 8016.1 Switzerland 2540.7
Norway 133.3 Sweden 6901.8 Sweden 1747.5
Japan 121.8 Ireland 4194.2 Netherlands 1592.4
Ireland 114.1 Israel 3611.2 Korea, Republic of 1275.9
Jersey 100 Belgium 2461.1 Ireland 1230.6
United Kingdom 71.5 Netherlands 2419.5 Bermuda 751.2
Israel 52.5 Korea, Republic of 1455.1 Belgium 714.9
Austria 41.2 Netherlands Antilles 891.6 Israel 501.8
China 41 Bermuda 591.6 Italy 141
Netherlands Antilles 40 Norway 550 Netherlands Antilles 104.5
Korea, Republic of 16.7 Italy 470 Norway 104
Bermuda 13.3 Jersey 450 Austria 93.8
Belgium 9.3 Austria 441.4 Denmark 88.7
Australia 7.4 China 225.6 Finland 55.4
Spain 7 Denmark 219.5 Jersey 34.9
Denmark 3.2 Finland 159.1 China 16.4
Finland 2 Australia 70.9 Luxembourg 5.3
Luxembourg 0.2 Luxembourg 18.3 Australia 4

While foreign firms are concentrated in Hillsborough and Rockingham counties, they are operating in all counties. Some firms are among the largest employers in their respective counties and many add to the small business and entrepreneurial tapestry. It is interesting to notice that even the least FDI-represented counties, such as Coos and Sullivan, attract FDI from a variety of countries of origin including non-dominating countries. Therefore, an opportunity may consist in increasing foreign firms’ presence in counties in central and northern New Hampshire.

Foreign firms have a strong presence in financial services across New Hampshire’s counties, a sector identified as one of our region’s strongest job-generating, growth-producing industries. In more than half of the industry sectors, foreign subsidiaries are present with at least two of the main value chain activities of producer, distributor or service provider. This indicates good potential for other foreign firms to find partners and for the development of or integration in international supply chains. The presence of foreign firms at various stages of supply chains strengthens interconnectivity and may encourage other companies to invest in our state.

Foreign firms have a presence in many industries, meaning that there are opportunities for new foreign firms to find home-based or international partners in most New Hampshire’s industries and sectors. This aspect is a good leverage for promoting our state to international businesses. The top 3 industries where New Hampshire foreign firms operate are: finance and insurance; retail trade; and manufacturing. These industries fueled recent economic output growth. This supports the idea that foreign subsidiaries are participating and contributing to current and future economic development.

Foreign investment in manufacturing already has meaningful contributions to New Hampshire and it could play an important part in moving forward the competitiveness of this productive sector in our state. As the largest recipient of FDI in the US, manufacturing holds promise for New Hampshire. In terms of foreign firms’ numbers, manufacturing ranks third as the industry of choice in the state. The presence of foreign manufacturers in many industries brings opportunities for further investments, new partnerships and new businesses. As manufacturing jobs are starting to increase, skilled labor and R&D investments should attract new companies. Foreign investors get many benefits by operating in the United States.[iv] Among the motives for investing in US manufacturing are skilled workforce availability and proximity to markets or customers. Business climate, infrastructure and government support are also reasons for investments. These aspects are those that impact New Hampshire’s attractiveness as a location of manufacturing foreign investment.

According to a recent study by Bloomberg, New Hampshire is the 12th most innovative state in the country.[v] This is likely a good aspect for the promotion of the state as an attractive FDI location. Our state benefits from strong intellectual property protections and a robust regulatory system. In addition to these merits, a highly educated workforce and the development of research centers are also meaningful aspects for the expansion of manufacturing.

Foreign establishments are making a difference in advanced industries. New Hampshire foreign subsidiaries play a role in employing in and increasing demand for STEM occupations. Foreign subsidiaries in high-tech industries not only support high-wage jobs but also make contributions through innovations and R&D spending. The attractiveness of our state as a location of choice for foreign firms is tied to the growth of viable high-tech industries.

Investment by foreign companies has been gaining in value in recent years and is an important job generator. US employment tied to FDI fared better in the aftermath of the recession than did employment in general. This demonstrates the power that long-term foreign investment can bring to New Hampshire’s economy.[vi] The important presence of small foreign firms means that small local businesses and new firms may find it easy to connect with them. Small firms partner as equals and share some of the same risks and challenges.

A state and county’s attractiveness to expanding businesses, both foreign and domestic, is fundamental to its economic growth[vii]. Among the elements that draw business activity are quality of workforce, transportation infrastructure, supply chain considerations, the business and regulatory environment, the availability of suitable real estate, and quality of life. Promoting these aspects is an effective way to attract new firms to our state.

We end by placing the New Hampshire Foreign Direct Investment Report inside the context of expanding FDI contributions to our state. Bloomberg’s discussion of the most innovative states in the US illustrates that universities and strong research are key to the innovativeness of local economies, which in turn attracts investments[viii]. Schools and local universities play a role in bolstering a highly-educated and skilled workforce, in providing technical assistance to foreign firms and, not in the least, in supporting FDI-related planning and research.



[i] Rogers, C. and C. Wu. 2012. Employment by foreign firms in the U.S.: Do state incentives matter? Regional Science and Urban Economics, 42(4), 664-680.

[ii] Wu, C. and G. Burge. 2017. Competing for Foreign Direct Investment: The Case of Local Governments in China. Article first published online (March 2017) at Public Finance Review.

[iii] Details on the construction and interpretation of these FDI indices are discussed in the chapter titled Origin Analysis: Europe, Canada and East Asia Drive the Foreign Direct Investment in New Hampshire.

[iv] SelectUSA, FDI in Manufacturing, Advancing U.S. Competitiveness in a Global Economy, 2017.

[v] Jamrisko, M. and Lu, W., Here Are the Most Innovative States in America- Massachusetts, California take the top spots in Bloomberg’s index, ‎January‎ ‎07‎, ‎2016‎.

[vi] Buckley, P. et al, Deloitte Insights, The Geography of Jobs, Part 3: Mapping the Effects of International Investment Flows, January 26, 2015.

[vii] Idem iv.

[viii] Idem iii.