The USA Commerce Department put on a big show for foreign investors at the Gaylord National hotel, just outside Washington, DC. President Barack Obama showed up for a lunchtime keynote, followed the next day by Secretary of State John Kerry; the luminaries beamed out from a Jumbotron to a cavernous ballroom filled with delegations all over the world.
Their message: The United States is an island of safety in a sea of uncertainty, and you should park your money here. But, wait, isn’t that obvious? Why does America all of a sudden feel like it needs to advertise that it’s a good place to invest?
Well, it’s not clear that the United States has proven it’s as good a place to invest as all the other countries now competing for increasingly mobile capital. Over the past couple of decades, the US share of total foreign direct investment (FDI) has actually declined, as countries like China have become increasingly attractive:
Since then, the White House and business organisations have consciously been trying to boost America’s appeal. For a long time, federal agencies focused mostly on promoting exports started to focus on soliciting foreign investors, who might start factories or finance real estate projects or simply buy existing businesses. The Department of Commerce first put on its “SelectUSA” conference in 2013, and says it was such a big success that they decided to do another one this year.
This conference saw the launch of another group specifically focused on getting communities all over the country to think about how global business interests could help them out: The FDI Frontlines coalition aims to educate regional and local economic development organizations on how to lure investors from overseas.
“The level of sophistication varies greatly, and we’re trying to give them some perspective that they might not beware of when they’re beating the bushes on the front lines bringing investment to their area,” says Nancy
McLernon, president and CEO of the multinational corporation-backed Organisation for International Investment, which started the new group. (Improving investment conditions in the United States makes doing business easier for their members, as well.)
Local economic development officials might not know, for example, that even though most foreign investment comes from Europe, Asia and the Middle East are often better places to look for investment dollars. And sometimes they might try to retain foreign-headquartered companies with tax incentives, while also supporting “Buy America” provisions that cut them off from government procurement dollars. McLernon recalls this happening in New Jersey, which regularly gives foreign companies generous tax breaks to stick around.
“So on the one hand, the economic development office is paying the company an incentive, and on the other hand, the legislature is going to hurt that company’s ability to succeed in that market by not being able to buy any of its products,” McLernon says.