Miami is an international city. It’s nicknamed the business capital of Latin America.
So why is the Miami/Fort Lauderdale metropolitan region just middle of the pack in a new Brookings Institution/JP Morgan Chase study on foreign direct investment in the nation's 100 largest metropolitan areas?
The study, which was released Friday, ranks the Miami-Fort Lauderdale-Pompano Beach area 52nd when it comes to the share of private jobs generated by foreign-owned establishments. Surpassing South Florida were Worcester, Mass; Toledo, Ohio, and Knoxville, Tenn.
And less than 5 percent of the 2011 regional workforce had jobs attributed to foreign direct investment, according to the study. In contrast, the Bridgeport-Stamford-Norwalk, CT area topped the list with 13.6 percent of its private workforce employed by majority-owned U.S. affiliates of foreign companies. Foreign ownership of firms in the financial industry help push up the Connecticut bedroom communities’ ranking.
Never miss a local story.
The Miami metro area fares substantially better, ranking 11th, if one just looks at the number of jobs — 91,694 — attributed to foreign investment. By that measure, the smaller Bridgeport area with 50,684 jobs ranks 19th.
Still, what gives? In many South Florida neighborhoods you can scarcely walk around the block without turning up at least one business owned by an immigrant or foreign national.
But those mom-and-pop operations, and sometimes substantially larger enterprises, don’t necessarily show up in a ranking that measures jobs attributed to foreign direct investment.
“This is really a snapshot of the multinational sector,’’ said Kenan Fikri, a policy analyst at Brookings and co-author of the study, FDI in U.S. Metro Areas.
To be considered a direct foreign investment, a business must be 50 percent or more owned by a foreign-based entity. But a typical pattern in South Florida is for an immigrant to start an entirely new business here that is counted as a Florida company and has no ownership by a firm in the homeland. “Recent immigrant owners are not considered foreign owners,’’ said Fikri.
Sometimes large international businesses such as Cisneros, the global media, entertainment and real estate company, begin abroad and then move their headquarters to South Florida.
The Cisneros Group, which had its roots in Venezuela in the 1920s, is now based in a Coral Gables office tower and as such doesn’t count in the FDI ranking.
The study found that Coral Gables-based Mercantil Commercebank, owned by Mercantil Servicios Financieros of Venezuela, is the largest Venezuela investment locally in terms of the jobs it creates.
In recent years, international buyers’ investments in South Florida real estate have helped the battered housing industry recover. But unless a foreign-based company is the majority owner in a real estate investment here, it doesn’t count as FDI.
Most local real estate investments — even bulk deals by individual foreign buyers — are captured as assets, not FDI, said Fikri.
The study does give a nod to metro Miami’s internationalism, however.
“In Miami, the metro area houses a cluster bound by networks and shared language,’’ the study said. “Living up to its nickname as the ‘capital of Latin America,’ Miami hosts nearly 300 direct investments from 28 different Latin American countries and 50 different Latin American city-regions together employing over 10,500 workers — plus another 75 investments from Spain and Portugal employing almost 5,000 more.”
And the metro area is even more international than that. It has attracted foreign investment from 71 different countries and 179 city-regions around the globe, according to the study. That ranks it third behind Los Angeles and New York in the number of investment partners.
“One third of these jobs can be found in foreign-owned establishments in the information, finance, real estate and professional services industries,’’ the study said. It cites Brazilian banks Itau and Banco do Brasil and Mexican telecom provider Telmex as examples.
“Miami is punching way above its weight in terms of the reach of its investment network,” said Fikri. The average large U.S. metropolitan area has FDI from 33 countries and 77 city-regions, according to the study.
Communities with foreign-owned companies that are labor-intensive such as manufacturing plants, grocery chains and banking companies with lots of local branches tend to rank higher in the study, said Fikri.
Both Aldi and Trader Joe’s, which are owned by Germany’s Albrecht Family, have begun to make inroads in the South Florida market. But the Brookings study only covers through 2011 and much of the grocery chains’ local expansion has come in the past couple years.
“Internationalism is pervasive in Miami, but not in the way of an auto plant that employs half a city,” Fikri said.
Even though he acknowledged there are lots of caveats for Miami, Fikri said the study can still be useful for the community to establish an FDI baseline.
As the United States moves past the recession, “it looks like we’re entering an era of renewed competitiveness’’ that could result in a surge in FDI, he said.
To take advantage of foreign investment’s job-creating potential, communities need a good investment environment. Fikri said that includes access to customers and markets, quality logistics systems, deep pools of highly skilled workers, and innovation assets.