At a time when there is renewed public interest in whether or how much the United States should engage with the global economy, it’s worth noting an element outside of the current dialogue on the trade of goods across borders.  Foreign direct investment (FDI) is when companies headquartered in other countries invest in the United States, set up a business here and hire U.S workers.  When these firms become local companies, it challenges how we should view “national champions.”

These new U.S. companies bring much more than capital when they make a deliberate decision to invest in the United States.  They provide expertise and resources that benefit the U.S. workforce and local communities around the country.  And, it turns out that American employees connected to these global companies actually earn higher compensation than the economy-wide average.  This wage differential is a prime reason why policymakers should embrace global connections.

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The sheer scale of the numbers shows how important foreign direct investment is to the U.S. economy.  A brand new study released by the Organization for International Investment reveals that 24.3 million U.S. jobs are tied to global investment – that’s one in seven private-sector jobs.  U.S. workers at foreign firms earn $80,000 in wages and benefits annually – that is more than 30 percent higher than the economy-wide average.  Foreign direct investment supports four million U.S. jobs in the manufacturing industry alone, paying $87,700 in annual compensation to the American employees of foreign-based companies. 

Examples provide extraordinary details on the bigger story of foreign direct investment in the United States. German-based Mercedes-Benz broke ground in North Charleston, South Carolina this July on its $500 million expansion of its Sprinter plant for the North American market, which is expected to create 1,300 new jobs. In Kentucky, Japan’s Sumitomo Electric Wiring Systems has just announced a nearly $10.5 million investment to establish a new production facility in Franklin, Kentucky. This facility will be the company’s fifth plant in the Bluegrass State.

Foreign direct investment is part of the American success story on innovation leadership. American scientists and engineers at these new U.S. companies are fueling America’s innovation advantage.  They are working on diverse research and development (R&D) projects here in the United States.  These firms spend $57 billion annually on U.S. R&D activities.  That equates to more than 16 percent of all R&D performed by U.S. companies.  America’s research-intensive manufacturing sector attracts the lion’s share of R&D spending from foreign companies, totaling more than $38 billion annually, or 72 percent of all global investment R&D.

For some, it may be counterintuitive to think that foreign-based companies support creative workforce development programs for U.S workers, but that is exactly what is happening in towns and cities across the United States.  In Chicago, Zurich Insurance North America has partnered with a local community college to pioneer a unique white collar apprenticeship program that exposes new recruits to every aspect of the industry.

Toyota Motors North America partnered with the Bluegrass Community and Technical College in Kentucky to develop a world-class advanced manufacturing program that has grown into a network supported by more than a dozen community colleges across nine states.  The program provides students with three days of paid, hands-on training in a manufacturing facility and two days spent in the classroom.

When setting up a business in the United States, foreign companies pack along some compelling cultural traditions, including a rich heritage of being deeply supportive of their communities. In a study that looked at a decade’s worth of data, OFII found that foreign-based companies in the United States increased their charitable contributions by 125 percent, while the economy-wide average grew by 14 percent.

Michelin launched a program in 2009 – based on one developed in France – to help small businesses in Upstate South Carolina grow by providing affordable loans and offering its own accountants, marketing experts and others as informal advisors to these fledgling businesses.   In this one part of South Carolina alone, Michelin has made more than 60 loans totaling nearly $3 million and helped create more than 560 jobs.

Wipro – an India-based internet technology company – is driven by a belief that education is a key enable of social change and a better society.  That led them to team up with Arthur Eisenkraft, a distinguished professor of science education at the University of Massachusetts-Boston, to create a fellowship program for STEM educators in five school districts in each of three states: Massachusetts, New Jersey, and New York.  Through this program, teachers from every grade level learn the most effective ways to engage students.  They also take these lessons and share it with other educators in their respective school districts. 

Finally, American workers at these new U.S. firms export goods and services produced in the United States to customers around the world. In fact, U.S employees at these companies produce more than one-quarter of all U.S. exports, which amounts to $425 billion in American goods and services annually.

Both at the state and federal level, government officials should recognize global companies as important players in the U.S. business community and pursue policies that encourage inward investment.  Stopping anti-global rhetoric and promoting further international engagement will ensure that more U.S. workers are exposed to the opportunities of a 21st century world economy and the high-paying jobs that come with it.

Nancy McLernon is President and CEO of the Organization for International Investment (OFII)


The views expressed by authors are their own and not the views of The Hill.