Why It's Still A Good Idea to Invest in America
According to President Bush, "The U.S. has a key stake in promoting an open investment regime."
Geraldine Gambale, Editor, Area Development Magazine (Jun/Jul 07)
As editor of Area Development, I recently had the opportunity to discuss the Commerce Department's new "Invest in America" initiative with David Bohigian, Assistant Secretary of Commerce for Market Access and Compliance. Bohigian provided an overview of the initiative and its aims.
The initiative represents the first time in a generation that the federal government has been involved in attracting foreign investment into the United States. A generation ago it was seen as politically difficult to be encouraging foreign investment, especially from places like Japan. Now, in the wake of the thwarting of Dubai Ports World's attempt to invest in the United States, the Commerce Department felt it was important to make a case for "why America is still the best place in the world in which to invest," said Bohigian. Perceptions in some parts of the world that the United States is not as welcoming to foreign investment as it should be needed to be corrected, and thus the Invest in America initiative was launched, Bohigian explained, to help the United States "strike the right balance between national security and economic prosperity."
There has been progress in the last several months. Those who argued most vociferously against Dubai Ports World's investment are now more supportive. "Americans are starting to realize the importance of working with the world," Bohigian said.
Foreign companies already employ more than five million Americans directly and nearly another five million indirectly. Last year saw a 67 percent increase in FDI in the United States. However, the federal government is looking to expand those numbers. In fact, on May 10, President Bush launched a campaign for more foreign investment in the United States.
"As both the world's largest investor and the world's largest recipient of investment, the United States has a key stake in promoting an open investment regime," Bush said. "My administration is committed to ensuring that the United States continues to be the most attractive place in the world to invest."
Goals of the Initiative
To that end, the Invest in America initiative is intended to do three things:
1. Communicate to foreign countries and companies the message that America is the best place to invest in the world. U.S. workers are among the most qualified in the world; the U.S. has a $13 trillion market; there is protection for intellectual property; labor laws are flexible, etc.
2. Engage as ombudsman if a company has question about federal laws; e.g., if a company has questions about environmental regulations, the federal government can put them in touch with people at the EPA. It can also help address other general areas of concern, e.g., answer visa questions. In other words, "The federal government wants to be a one-stop shop," said Bohigian. The federal government is better equipped than state governments to put investors in touch with federal regulatory agencies like the EPA, FTC, FCC, etc.
3. Support state and local economic development efforts, which have been successful for quite a while. This does not mean helping a potential investor choose one state over another. Rather, the federal government will "provide the background music for the states," said Bohigian, thereby helping to move potential investors in the right direction.
People Who Can Help
Thus far the Invest in America initiative has been promoted in about a dozen countries, including several in Europe and the Middle East, as well as in China, India, and Japan. The Foreign Commercial Service (FCS) serves as the "Frontline" of this initiative, Bohigian explained. With 1,500 people in more than 80 countries throughout the world, the resources of the FCS are unmatched by any individual state. The FCS can provide potential foreign investors with the appropriate contacts for all 50 states, thereby creating a level playing field for the states. Additionally, more than a dozen industry officers in the department's Manufacturing and Services division can provide foreign investors with answers to industry-specific questions.
The Commerce Department has developed the Invest in America initiative with the help of the states. It has been working with the National Governors Association, National Association of State Development Offices, several individual governors, as well as congressional delegations and other groups to advance the initiative's aims. Bohigian said the Commerce Department is also looking for feedback from the states and to learn about "best practices" of other nations, e.g., Canada, the Netherlands, the UK, Bahrain, Japan, and others.
The Other Side of the Coin
Another important aspect of the Commerce Department's work involves outward investment. It's important for U.S. firms to be able to invest overseas. Countries such as China, Russia, and Mexico are grappling with how open their investment environments should be. Market Access and Compliance is dedicated to knocking down trade barriers and to making sure the business environment overseas is level for Americans.
Bohigian concluded by saying that the Invest in America initiative is important from a trade as well as investment standpoint. "Too often the face of trade is negative," Bohigian said. The perception of many Americans of U.S. jobs being exported needs to change. Americans need to acknowledge the great number of jobs being created at home by FDI; in fact, those five million jobs created by foreign direct investment paid 32 percent more than the national average in 2005. Foreign companies also invested $59 billion of profits into the U.S. economy in 2005 and spent $29.9 billion on R&D. Americans must realize that becoming more fully engaged in the global economy will lead to a higher standard of living for all.