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GLOBALOUTLOOK TIER 2 CITIES OF THE FUTURE 2020/21


Tier 2 Cities of the Future 2020/21 Winners


SAN FRANCISCO IS fDi’S INAUGURAL TIER 2 CITY OF THE FUTURE FOR 2020/21, FOLLOWED BY MONTREAL AND HOUSTON IN SECOND AND THIRD PLACE. NAOMI DAVIES REPORTS


country capitals and megacities hav- ing traditionally dominated the FDI landscape. The new fDi Tier 2 Cities of the Future 2020/21ranking aims to takeacloser look at the non-capital cit- ies capturing investors’ attention. Since there is no standard definition, the rankingdefines secondary cities as non-capitals that attractnomorethan 20% of their country’s total FDI pro- jects, and no less than 1%, with a total population of under eight million. San Francisco takes the crown


T


overall among Tier 2 cities, as well as scoopingthetopprizeintheEconomic Potential category. According to data from greenfield investment monitor fDi Markets, San Francisco-based com- panies created more than 900 FDI pro- jects between May 2015 and April 2020, the highest number out of all


1:NUMBER OFOUTWARD FDI PROJECTSOUTOF SAN FRANCISCO, 2015-2019


100 150 200 250 300


50 0 Source: fDi Markets 24


he growing potential of second- ary cities offers much food for thought for investors, with


locations analysed. The city saw a 65.8%increase inoutwardFDI projects between 2015 and 2019, with compa- nies such as Prologis, Uber Technologies and CloudFlare contrib- uting to a record 257 outward FDI pro- jects last year (see chart 1). In addition, San Francisco boasts


the highest gross domestic product (GDP) out of all locations analysed(esti- matedatapproximately$550bnatpur- chase power parity based on data from the US Bureau of Economic Analysis). The city also reinforces its status as a premier hub for innovation with around70,000 patents registeredthere between 2003 and 2019, according to theUSPatent andTrademark Office. Montreal comes in second in the


overall ranking, as well as both the Economic Potential and Human Capital and Lifestyle categories. Researchanddevelopment(R&D)isthe leading business activity, representing overathird of totalinwardFDIprojects in the five years to April 2020, when Montreal attracted 73 R&D projects and over $5.6bn in R&D capital invest- ment, the highest out of all the cities included in the study (see chart 2). US-based Zesty.ai, which develops


an artificial intelligence enabled building analytics platform for the property insurance industry, announced the opening of its lab in Montreal in February 2020. Its reason was that the city “is well positioned to attract local talent in computer vision and data science, which is both plentiful and of high quality”. Houston comes third in the over-


all ranking. The Texan city is a repu- table talent hub and, according to the 2019 Academic Ranking ofWorld Universities, is home to five of the global top 500 universities, as well as over 30 international baccalaureate schools. This contributed to its achieving third place in the Human Capital and Lifestyle category. Houston also placed sixth in the


Business Friendliness category. The city’s welcoming business environ- ment is clearly a hit withinvestors, as it recorded 53 expansion or co-loca- tion projects between May 2015 and April 2020, representing more than a quarter of its total inward FDI and the second highest out of all loca- tions analysed.


2: TOP FIVE INWARD FDI BUSINESS ACTIVITIES IN MONTREAL,MAY 2015 – APRIL 2020


34% Research&development 27% Sales, marketing&support 21% Business services 5% Manufacturing 4% Headquarters 4% Logistics&transportation 5% Other


www.fDiIntelligence.com August/September 2020


2015 2016 2017 2018 2019


Source: fDi Markets


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