August 2008 Edition
THE LAST WORD
Charles J. Skuba Chief of Staff Market Access and Compliance International Trade Administration U.S. Department of Commerce
Foreigners Aren’t Buying-up America, They’re Investing in Our Future
Foreign direct investment – FDI – is a critical component of
the economy and the U.S. welcomes FDI, and foreign investment in all forms.
Foreign capital is a key driver of economic growth and
creates jobs for American workers. Also, we know that in order for U.S. capital
to be welcome overseas, we must ensure that international capital is welcome in
the U.S.
We continue to be a leading recipient of FDI, and in 2007,
foreign investment reached $204 billion. By comparison, the United Kingdom
attracted $171 billion and China – including Hong Kong – received $121 billion.
Investors seek a good return. Over the long run, the
countries with the highest FDI tend to be those with the highest rate of growth.
This correlation is no accident: FDI contributes directly to the economic
wellbeing of a nation’s citizens and economy.
FDI benefits to the U.S. include more than five million
Americans working for companies headquartered overseas. These companies had U.S.
payrolls of $335 billion in 2005, with wages and salaries paying on average 25
percent higher than the domestic U.S. private sector average. Almost a third of
these jobs are in the manufacturing sector, despite that sector representing
less than 10 percent of the overall American workforce.
These companies aren’t just taking their earnings back home.
U.S. affiliates of foreign firms reinvested $80 billion into the U.S. economy in
2006 and spent $31 billion on research and development – that’s 15 percent of
total annual U.S. industrial R&D expenditures. They also account for 20 percent
of U.S. exports and source 75 percent of their inputs from U.S. businesses,
supporting millions of additional jobs and economic growth.
FDI in the U.S. tools, dies, and industrial molds – TDM –
industry primarily serves foreign-transplant customers. The automotive industry
is a primary customer base for the TDM industry, and as foreign automotive
companies from Japan, Germany, Canada, and elsewhere relocate to the United
States, their suppliers – Japanese, German, and Canadian TDM producers, molders,
and stampers – follow them.
Better Competitive Advantage
Our culture of innovation and entrepreneurship not only will
help homegrown companies to compete, but also help to attract inward investment
furthering U.S. economic growth.
We can’t take America’s leadership position for granted.
Competition for international investment is increasing and many countries are
improving their attractiveness for inward investment. Traditionally, FDI in the
U.S. has been sought and promoted at the state level. However, if we do not play
a more active role nationally, we risk having international perceptions of our
investment climate shaped only by the occasional difficulty.
Recognizing that there is a role for the federal government
to play in both attracting investment and creating a more attractive climate for
foreign investors, the U.S. Department of Commerce launched Invest in America
in 2007. The program supports U.S. state-level investment promotion efforts and
provides a single point of contact at the federal level to help foreign
investors work through difficulties they encounter with federal bureaucratic or
regulatory matters.
A Bad Example Shouldn’t Spoil the Idea
Given the sizeable amount of FDI in the U.S., occasionally
there will be a controversial case, but we must remind our investment partners
that the overwhelming majority of investment activity in the U.S. takes place on
a normal commercial basis.
Our response to domestic critics of foreign investment must
be thoughtful and we must remind all participants of the success driven by
foreign investment.
In sum, the U.S. benefits from being an economy open to
products, ideas, and investment. FDI is a sign of strength, a strength that
leaves both the investor and those in whom the investment was made, better off.
The more we can encourage foreign participation in our economy the better off
both America and the foreign investor will be.
Charles Skuba serves as chief of staff for Market Access and
Compliance in the Commerce Department’s International Trade Administration,
which is charged with improving the environment for U.S. firms to trade, invest,
and compete in international markets
What do you think?
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