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Participation in the Global Economy Keeps U.S. Economy Growing

A study recently released by The Business Roundtable and the United States Council for International Business comes to the conclusion that the success of U.S. companies in the global economy directly relates to economic growth and job creation here at home.

Area Development Online Research Desk (December 2012)
Authored by Matthew Slaughter, Ph.D., of the Tuck School of Business at Dartmouth, “American Companies and Global Supply Networks: Driving U.S. Economic Growth and Jobs by Connecting with the World,” shows how globally engaged U.S. companies, their international operations, and supply networks are linked to U.S. economic growth and employment.

“Despite ongoing economic uncertainties, this study underscores the fact that millions of good American jobs are created when companies engage in growing global markets via international trade and investment,” Slaughter says. “The benefits of global engagement impact all levels of our economy, not just those companies engaged in international commerce.”

The study, which profiled Dow Chemical Co., Coca-Cola Co., ExxonMobil, FedEx Corp., IBM, Procter & Gamble, and Siemens, comes to the following conclusions: (1) globally engaged U.S. companies are the driving force in U.S. capital investment, R&D, and international trade, which in turn foster U.S. economic growth and the creation of well-paying jobs; (2) in order to access new customers and innovative ideas and continue to grow, these companies must participate in the global economy; and (3) global growth supports further hiring, investment, and R&D at these companies’ U.S. facilities, while also creating jobs at other U.S. companies, often small- and medium-sized, within their global supply chains.

“The success of globally engaged U.S. companies has a direct and very positive impact on Main Street USA,” says John Engler, president of Business Roundtable. “To encourage and enable our companies to seek new markets and succeed anywhere in the world, we need tax, trade, and investment policies that reflect today’s competitive global economy. The benefits at home are enormous.”

The study also noted that growth in demand abroad continues to surpass growth in demand at home. U.S. companies of all sizes are participating in the global economy and pursuing new customers worldwide. In fact, in 2010, globally engaged U.S. companies employed 28.1 million Americans, performed $253.8 billion in R&D, made $587.3 billion in capital investments in the United States and bought more than $8 trillion in goods and services from U.S. suppliers. Interestingly, the international operations of U.S.-based companies primarily exist to serve foreign markets, with more than 90 percent of the foreign production by American companies sold to foreign customers — not imported back to the United States — proving that market access is a critical location factor.
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