Foreign Direct Investment in the United States

The U.S. economy has long benefited from foreign direct investment, with much of it going straight into the pockets of U.S. workers, says Steve Forbes, president and chief executive officer of Forbes Inc., and editor-in-chief of Forbes Magazine.

For example:

American affiliates of foreign companies spend more than $350 billion annually on salaries, working out to an average salary that is $7,000 more per year than the average paid by U.S. companies.

Research and development is also obviously critical to the US’ future, and foreign companies spent over $31 billion on research and development in the United States in 2005; that's 13 per cent of all the R&D outlays in the United States.

Further, foreigners investing in the United States also are more likely to reinvest here, furthering innovation and economic growth:

The Congressional Research Service reports that foreign firms reinvested $48.6 billion (45 per cent of their income) back into the U.S. economy in 2004.

Last year alone saw capital inflows of over $183 billion; the overall value of direct foreign investment in the United States totals around $2 trillion.

Yet despite these huge benefits to the economy and to millions of American workers, various special interests are threatening to hobble or halt the inflow of this job-creating money in the name of protection and national security, says Forbes. United States security should never be put at risk for the sake of pro-growth foreign investments. But America hurts itself by not putting out a welcome mat along with the "Beware of Dog" sign. Throughout the US’ history, foreign investment has fuelled economic growth and supported a strong standard of living for millions of Americans.

Source: Steve Forbes, Let's Stay Open for Business, Wall Street Journal, December 13, 2007.

For text: http://online.wsj.com/article/SB119751166102825577.html

For more on Economic Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=17

FMF Policy Bulletin/ 18 December 2007