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North America / Illinois

The state of play: FDI in Illinois

Illinois is one of the largest US states by population and economic output, making it a major draw for foreign investors.

fdi-chicago-illinois
Chicago is the biggest city by population in Illinois and the third largest in the US. It is the reason for much of the state’s appeal to foreign investors. (Photo by Scott Olson/Getty Images)

Illinois is a mid-western US state with eight foreign trade zones (Rockford, Savanna, Chicago, Quad Cities, Peoria, Decatur, Granite City and Lawrenceville) and a number of investment incentives. These include an enterprise zone programme that provides companies with a 0.5% credit against state income tax for investments in property within certain enterprise zones. The trade zones also offer qualifying businesses sales tax exemption, equipment sales tax deduction, utility tax exemption and various property tax incentives. Similarly, the ‘Angel tax credit’ promotes investment in innovative early-stage companies.

Illinois also has strong transportation links with 12 airports that run more than 1,600 departures daily. The state has also moved to up its accessibility with an injection of $40m to develop an inland river port in Cairo in Alexander County. According to the Illinois Department of Commerce and Economic Opportunity, it is the largest exporting state in the Midwest and the fifth largest in the US overall.

In the Business Facilities 2020 state rankings published on 29 July, Illinois ranked seventh for foreign direct investment (FDI) and fifth for FDI projects. 2019 had seen positive numbers for the state regarding FDI, with $3.2bn recorded in new investment, according to the US Bureau for Economic Analysis (BEA).

Notably, it also ranked in the top ten for wind power capacity (MW), digital infrastructure, manufacturing employment, automotive manufacturing strength and tech jobs.

Indeed, manufacturing and technology are key sectors for Illinois when it comes to attracting FDI. Manufacturing goods exports reached $56.17bn in 2019 accounting for 93.74% of total goods exports, according to the National Association of Manufacturers (NAM).

According to the US Bureau of Labor Statistics, Illinois’s unemployment rates have been rising steadily. In September 2020 Illinois ranked 47th for unemployment with 10.2%, this is 2.3% higher than the national average and 6.5% up year on year for the state.

On 27 October, in a bid to address a shortage of skilled workers and strengthen their advanced manufacturing industry, Governor Pritzker announced a $15m investment. This capital injection will be used to build new manufacturing trainee academies within downstate communities. Furthermore, NAM reports that 9.58% of total employment in Illinois was attributed to the manufacturing industry.

In IBM’s 2019 Global Location Trends report, Illinois was ranked as the third leading destination state for foreign investment in the US during 2018. The report cites the city of Chicago and its ICT and business services sectors as key reasons for this high ranking.

The main FDI source markets for Illinois include the UK, Germany, Japan, Canada and France.