From East to Mid-West: Boosting Chicago’s Economy through Foreign Investment

The Chicago metro area has consistently ranked among the world’s leading economic centers, but new data indicate that the Windy City is beginning to fall behind its global peers. A new study sponsored by the Chicago Council on Global Affairs, titled “Foreign Direct Investment: Globalizing Chicago’s Economic Development Plans,” argues that Chicago must focus on attracting foreign direct investment (FDI) to stay competitive in the global marketplace.

The study asserts that the city and surrounding suburbs can become a more attractive target for investment by relying on Chicago’s main economic strengths and creating a more welcoming, streamlined process for foreign investors. Drawing lessons from FDI success stories like Bogotá, Colombia; Frankfurt, Germany; and Toronto, Canada, the authors,  Michael H. Moskow and William A. Osborn, offer recommendations for city leaders.

Chicago has developed the largest finance and business services sectors in the Midwest and boasts one of the nation’s major commercial and transportation hubs. The study urges the city to develop these sectors, along with health care, manufacturing, and IT, to attract new investment. Building clusters of targeted sectors will pave a surer path to success than simply casting a wide, comprehensive net for industry development.

Nevertheless, the city faces substantial barriers to development. The study notes that Illinois’ dismal fiscal situation and uncertain tax environment leave potential investors weary of making significant investments, and the region’s complicated bureaucratic relationships between city and county agencies make it exceedingly difficult for companies to start new businesses.

Additionally, Chicago’s international reputation continues to hurt its ability to lure new FDI. The study shows that Chicago’s lack of coordination in international business outreach has left foreign CEOs unclear about what the area has to offer. Many still connect the city with corruption, crime, and Al Capone.

In spearheading future FDI efforts, the study emphasizes the importance of World Business Chicago, the non-profit economic development organization created and chaired by Chicago’s mayor, Rahm Emanuel. Directed by a coalition of Chicago’s most prominent corporate leaders, World Business Chicago seeks to streamline processes for new businesses, build strong ties with international corporations that have American investments, reach out to the global business community, and develop clusters of high-growth sectors.

Increased competition for FDI among urban metros will leave Chicago lagging behind if the city’s leadership fails to organize. The authors of the study assert that the city can no longer rely on the Midwest to achieve economic growth. Chicago must focus on attracting new international corporations to remain a major player on the global stage.

Feature Photo: cc/kevin dooley