Foreign-Direct-Investment

International Trade News: The Undervalued Value of Foreign Direct Investment

From the DOC: Promoting Best Practices in Exports and Foreign Direct Investment to Spur Economic and Job Growth. When President Obama first announced the National Export Initiative (NEI) two years ago—with its goal of doubling U.S. exports by the end of 2014—there may have been some who wondered what this had to do with domestic economic development. But the answer is simple: a lot. From the worker in an auto plant owned by a foreign firm, to the many service businesses across the country selling to overseas visitors, to the U.S. companies from every sector selling their products and services to foreign buyers, America’s economic vitality is very much tied to the world market. And the benefits are many: more jobs, higher wages, and the overall prosperity that comes when we are selling to billions of consumers worldwide.

One often-overlooked element of international trade is foreign direct investment (FDI). The United States is the largest recipient of FDI in the world. Foreign-owned companies operating in the United States support more than 5.3 million U.S. jobs, and U.S. subsidiaries of foreign-owned firms account for 21 percent of U.S. exports. The total stock of FDI in the United States—$2.3 trillion—is equivalent to nearly 18 percent of the U.S. gross domestic product.

But there is room for such investment to grow. The U.S. share of world FDI has been declining since the 1990s, as other economies aggressively compete to attract such investment. One impediment to FDI growth in the United States has been the lack of concrete tools and strategies available to local economic development practitioners that could help them more effectively leverage their communities’ competitive strengths to expand exports and attract FDI.

In an effort to help fill this gap, EDA recently partnered with the Georgia Tech Research Corporation to establish the FDI Best Practices project. This collaborative effort will eventually make available the kinds of information that local communities will need to attract overseas investment and the jobs that can come with it.

The project has already undertaken a number of steps to create a comprehensive knowledge base on FDI: reviewing relevant literature to better identify lessons learned from communities and practitioners; surveying the practices of various economic development organizations; and conducting interviews and focus groups to determine successful FDI strategies. The end result of this effort will be a user-friendly guide, along with a web-based toolkit that will outline steps that practitioners can take to attract investment to their communities.

The results of the Georgia Tech project are expected to be available later this year. For more information, visit www.fdibestpractice.org.

3 Responses to “International Trade News: The Undervalued Value of Foreign Direct Investment”

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