Foreign investment in America is the boost our economy needs
© Noam Galai/Wire Image

Much of the recent national dialogue has concentrated on a nationalist or an isolationist approach. Yet, we are competing for business in a truly global economy.

As a nation, we should be creating fair and free trade policies that will reposition the United States to become the economic juggernaut that it is. Neglecting to do so will further insulate us from regaining growth in the base industries that propelled our America to becoming a global leader.

ADVERTISEMENT

As a country, we watched metropolitan regions struggle to rebound after the Great Recession. Now, regions and states are looking to quickly develop and implement strategies around high-wage job growth, which an attractive economic development approach.

A dependence on single industry concentration or consumption-based industries shed light on those markets that need to shift their focus and add support for the transition of innovation in key legacy industries. The global market potential is exponential.

New forward-thinking economic development strategies at the regional and state level are targeting increases in foreign direct investment and exports.

Leading metropolitan areas such as Chicago, Los Angeles and Phoenix have been working on creating regional plans around foreign direct investment and export strategies as a way to further drive economic growth. Phoenix Mayor Greg Stanton went so far as to call for plans to double exports in the city in the next 10 years.

Small businesses, or those with fewer than 500 employees, make up nearly the entirety of employers in the United States. While nearly 98 percent of exports in the U.S. were small or mid-size companies, they only represented 33 percent of goods exported in 2014. With that in mind, regional plans have begun implementing programs to streamline the delivery of export education and assistance programs for small and medium sized enterprises.

This approach to supplementing traditional economic efforts has resulted in a boost to local economies, thanks to increased revenue and jobs. For decades, metropolitan regions have been building strategies on business attraction, rooted in competition against other U.S. markets. However, research shows that foreign direct investment (FDI) plays an important role in supporting high-wage jobs, and exports propels job creation.

Foreign firms operating in the U.S. pay an average of $17,000 more than that of their U.S. counterparts, according to a report by the Brookings Institute. In 2013, the U.S. International Trade Administration estimated that metropolitan regions exported more than $1.4 trillion of goods and services, which directly and indirectly supported an estimated 11.3 million U.S. jobs.

Programs at the federal level, such as the U.S. Department of Commerce-run SelectUSA, serve to generate the attraction of foreign-owned business investment into the United States. Serving as a liaison between international companies and economic development organizations, SelectUSA has helped attract more than $23 billion in investment to our country.

The investment from foreign based companies does more than add jobs to the U.S. market. International companies making investments in the United States are investing heavily in research and development, spending $53 billion, and the manufacturing industry—arguably one of the most buzzed about industries suffering decline in the nation—has benefited greatly from FDI flow into the United States.

While America is leading in the attraction of foreign direct investment, other countries such as Vietnam, Ireland and India, for example, have had programs to target inward investment in place as early as the late 1940s.

With IDA Ireland, a program that began as the industrial development authority for Ireland, their focus is now solely directed at attracting FDI into Ireland. The Singapore Economic Development Board has also built a brand around inward investment as the country saw businesses leave the country during their recent recession.

The U.S. is clearly not alone in its strategies, with growing competition in emerging global markets. Particularly as the middle class continues to grow in international markets, and recent projections estimate a majority of the world’s population could be middle class in five years.

Considering 95 percent of the world’s consumers live outside the United States, the intensity of planning and supporting strategies for inward investment is an important factor that cannot be ignored.

Chris Camacho is president and chief executive officer of the Greater Phoenix Economic Council. He serves on the International Economic Development Council and the U.S. Investment Advisory Council.


The views of Contributors are their own and are not the views of The Hill.