Local economic leaders across the US are optimistic that the impact of President Joe Biden’s investment policies will outlast his time in office. However, his FDI legacy is tainted by his protectionist policy-making. 

As his time in the White House comes to an end, attention is turning to the fact that record US greenfield FDI pledges during his tenure — spurred by his subsidies-driven approach to attracting investment — have only partially translated into an equal uptick in real capital inflows. 

But those on the ground argue nationwide figures shouldn’t overshadow individual success stories across the country, where Biden-era programmes are already sparking investment and jobs, and laying the groundwork for future FDI.

“I can understand how the macro level FDI picture might look … But when there’s discussion about projects not coming to fruition, I’d argue come to Arizona and see the mass amounts of construction,” says Chris Camacho, president and CEO of the Greater Phoenix Economic Council. 

Phoenix is a poster child of the CHIPS and Science Act (CSA), having attracted $65bn-worth of investment pledges by TSMC to build three fabs, supported by $6.6bn in CSA funding. The first fab is due to start operating in the second quarter of this year.

TSMC’s projects have anchored investments from around 40 companies — the majority from Asia and western Europe — to address gaps in the local semiconductor supply chain, says Mr Camacho. One example is a $600m gas facility by the UK’s Linde to supply TSMC’s fabs.

TSMC-style megaprojects have been a staple during the Biden years, although not all of them have progressed at the same pace. Beyond the headlines of such multi-billion dollar endeavours, smaller investment projects have also proliferated. Overall, the White House claims private investors announced about one trillion dollars in projects over the past four years. 

Economic development leaders beyond Arizona have felt their impact. 

“South-western Pennsylvania has benefited significantly from federal investments that have capitalised on our greatest strengths, thereby attracting companies in clean energy and manufacturing,” says Stefani Pashman, CEO of the Allegheny Conference on Community Development. She points to the $63m in funding for Pittsburgh’s robotics cluster, which has helped attract the likes of European software firm Spyrosoft which in 2023 chose the city as its US headquarters. 

Meanwhile the CSA’s Tech Hubs programme is helping put overlooked innovation centres on the investment map. Missy Hughes, secretary and CEO of the Wisconsin Economic Development Corporation, says the Wisconsin Biohealth Tech Hub’s designation and funding as a Tech Hub has helped draw investment and “sharpen its global competitive edge”.

Hype and reality

If investment pledges have fuelled the hype around the Biden administration’s industrial policies, at times the execution of these projects has struggled to live up to expectations. 

Projects during the Biden era that have gone awry include Swiss group Meyer Burger’s scrapped expansion of a solar cell manufacturing facility in Colorado, and Ford halving headcount and cutting production by 40% at its electric vehicle battery facility under construction in Michigan. Enel’s $1bn solar panel project in Oklahoma is also on hold, according to Financial Times investigations. 

Early figures confirm the widening gulf between hype and reality. The level of planned capital expenditure by foreign investors in manufacturing fell to its weakest level in a decade in 2023, according to figures from the US Bureau of Economic Analysis. 

Site selectors are divided over the gravity of the issue. Tracey Hyatt Bosman, managing director of BLS & Co, has observed first-hand the time lag between the huge number of project announcements and operations commencing. But she notes that “even if everything goes to plan, it’s still too early” for all of these projects to have come online.

Didi Caldwell, CEO of Global Location Strategies, believes that gap could be smaller if green subsidies were focused less on novel technologies and more on “green[ing] up existing legacy manufacturing” where there is a clearer path to a return on investment. “That was a missed opportunity,” she says.  

Further reading on Biden-era investment policymaking:

• Five charts to understand Joe Biden's FDI legacy
• Foreign firms caught by US outbound FDI restrictions
• US FDI community slams $14.9bn Nippon Steel block

Regulatory zeal 

The administration’s efforts to stir investment have been stymied, however, by the use of federal regulations during Mr Biden’s term. In December, more than 100 US manufacturer associations wrote an open letter criticising the “regulatory onslaught [which] reached a fever pitch during the Biden administration”, claiming it costs the industry $350bn a year. 

The president’s decision to block Nippon Steel’s $14.9bn acquisition of US Steel in January on questionable national security grounds reveals that some “policies pursued by the Biden administration have worked to the detriment of foreign investors”, says the Council on Foreign Relations’ Matthew Goodman.

Heightened scrutiny of inbound and outbound Chinese projects has also helped fuel the anti-China sentiment plaguing some projects. A “sad legacy” for the outgoing president is “turning our back on Chinese investment”, says Ms Caldwell. “I represent a lot of Chinese companies that want to produce in the US … we’ve definitely kind of given them the cold shoulder.”

Mr Goodman agrees that “a more restrictive approach to foreign investment is … part of [Biden’s] legacy”.

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