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The United States: A Globally Competitive Business Location

With its innovative and stable market and open investment policy, the United States continues to attract foreign direct investment.

Location USA / April 2013
Despite the fiscal challenges faced by major global economies in recent years, foreign direct investment in the United States has continued to flourish for two key reasons. First, firms worldwide continue to recognize the United States as an innovative and stable market, and the world’s largest economy. With globally recognized educational institutions, growing industry clusters, first-class research and development centers, access to global markets, and a predictable regulatory climate, the United States offers an unmatched opportunity for success. Second, the United States upholds its open investment policy, recognizing that the free movement of capital across international borders, along with global trade, is at the heart of today’s global economy.

Business investment in the United States by both domestic and foreign firms is a major engine of economic growth, job creation, and job retention. Nearly $228 billion in FDI flowed into the United States in 2011. While 2012 may reflect a worldwide decline in FDI flows, the United States continues to capture a winning share. Overall, the $2.5 trillion stock of FDI in the United States is equivalent to nearly 16 percent of U.S. GDP. The United States remains the largest recipient of FDI in the world.

A Pro-Business Climate
Investors choose to conduct their valuable, proprietary activities in the United States to fully utilize a business climate that offers skilled and creative workers, innovative industry clusters, strong protections for intellectual property, and a predictable governance framework. According to the Battelle Memorial Institute, nearly one-third of all global research and development takes place in the United States, with almost half of the developed world’s researchers working in the United States. According to research by the National Science Foundation, the U.S. Census Bureau, and the U.S. Bureau of Economic Analysis, foreign firms have a growing share of research and development investment in the United States. These firms recognize the hospitable climate the U.S. provides for their product development, innovation, and commercialization efforts. Nearly 38 percent of U.S. workers employed by subsidiaries of foreign-owned firms are in manufacturing, including machinery, computers, and electronic products; transportation equipment, ranging from aerospace to automobiles; food; and chemicals. The United States provides a world-class framework for safeguarding and growing such investments.

In addition, global companies invest in the United States to access a global marketplace. Besides introducing new capital, creating new jobs, and strengthening U.S. competitiveness, U.S. subsidiaries of foreign-owned firms accounted for almost one-fifth of total U.S. exports in 2010. According to the Office of the U.S. Trade Representative, the United States more than doubles its market access through strategic trade agreements that connect its businesses with nearly 695 million consumers worldwide. With the recent entry into force of free-trade agreements with Colombia, Panama, and South Korea, the global access afforded to a company with U.S. operations is unprecedented. In recent years, the steady rise in the proportion of U.S. exports originating from these firms is evidence that multinational companies locate in the United States not only to service the U.S. market, but also to maximize the opportunities presented by its export platform.

Open-Market Principles
The United States has been a leader in upholding open-market principles. Global companies investing in the United States enjoy the same treatment as their domestic counterparts, are treated fairly and equitably, and contribute substantially to the U.S. economy. Subsidiaries of foreign-owned firms directly employed 5.3 million U.S. workers in 2010, paying $408 billion in annual salaries and wages. Multinational firms value a trained and highly educated work force, and are willing to pay a premium for U.S. talent: nearly 38 percent of U.S. jobs created through FDI are in manufacturing, and U.S. employees of foreign-owned firms earn higher wages than the average U.S. private-sector worker.

Cross-border investment is a pivotal component of U.S. economic competitiveness. SelectUSA works to promote and facilitate business investment in the United States. It is a part of the U.S. Department of Commerce and housed in the U.S. and Foreign Commercial Service, which operates in over 70 markets worldwide. With SelectUSA, the federal government is a partner to U.S. states, regions, and cities in welcoming business investment to the United States.

SelectUSA can assist firms and economic development organizations that are engaged in business investment in the U.S. market. To learn more, visit www.SelectUSA.gov.

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