The US state of Massachusetts saw a sharp increase in FDI in 2019 with a 60% rise in project numbers from the previous year. According to fDi Intelligence’s 2020 fDi Report, the state had 91 greenfield FDI projects in 2019, ranking sixth place among the states with the highest level of inward investment by project number. The steep increase of FDI in Massachusetts compares with an overall increase of FDI projects into North America of 14% in the same year.
FDI in Massachusetts’s strong biotech ecosystem in and around the cities of Boston and Cambridge provides a vital source of economic growth to the sector. Despite the short-term disruption caused by the Covid-19 crisis, the global biotechnology sector is estimated to grow by 7.8% in 2020, according to market research company Technavio. Data collected by the company estimates the biotechnology market has the potential to grow by $37.87bn during 2020–24.
Massachusetts’s biotech strength brings in FDI
Massachusetts has 31 biotech and life sciences incubators and more than 430 biotech companies based in the state. The sector has the backing of state government through an agency called the Massachusetts Life Sciences Centre, which has invested or committed about $650m to date, beginning with a pledge in 2008 to invest $1bn over ten years. The state government’s commitment was renewed in June 2018 when it announced it will pursue the programme for another five years with up to $500m funding.
Massachusetts’s biotech sector emerged about 40 years ago, partly driven by a decision in the late 1970s by Cambridge City Council to allow DNA experimentation. The state was well placed to capitalise on the ruling with its 122 higher education institutions including Harvard, MIT, Massachusetts General Hospital, Dana-Farber Cancer Institute and Brigham and Women’s Hospital. The state has the US’s top National Institutes of Health (NIH)-funded hospitals, which is significant as the NIH is the largest global public funding source for biomedical research.
According to data from investment promotion agency Select USA, last updated in November 2019, the industry sectors attracting the highest levels of FDI in Massachusetts are software and IT services and biotech. The UK and France are the leading source countries in terms of inward investment with Germany a close third.