President Barack Obama is seeking to counter competition for investment from emerging economies by putting the federal government at the center of a coordinated campaign to bring new capital to the U.S.
At a Commerce Department investment summit in Washington today, Obama outlined what the White House is calling an “all hands on deck effort” to attract investments and jobs from foreign companies, a job traditionally carried out by governors and mayors.
“I want to make sure we can doing everything we can” to encourage companies “to set up shop” in the U.S., Obama said at the first SelectUSA investment summit, kicking off a government-wide initiative to showcase the benefits of investing in the U.S. economy.
The initiative is intended to help build a stronger and sustained rate of growth that would help reduce the 7.2 percent unemployment rate. The U.S. economy has grown at a 2.2 percent annualized pace on average since the current expansion began in June 2009, compared with about 3 percent in the five years leading up to the recession, according to Commerce Department figures.
The two-day SelectUSA summit attracted about 1,200 participants, including about 630 foreign companies, from almost 60 countries as well as economic development officials from the states, the White House said in a statement.
The U.S. is the world’s most popular destination for capital, attracting a record $321 billion in foreign investments in 2000.
The danger for the U.S. is that emerging economies such as China and Brazil are gaining ground. While the U.S. lured $166 billion in foreign investments in 2012, that’s down 28 percent from the previous year. Investments sank to $150 billion in 2009, reflecting the global recession chilling global capital flows, according to the Commerce Department.
“We’re not getting as big a piece of the pie,” said Nancy McLernon, president and chief executive of the Organization for International Investment, a Washington-based group representing major foreign investors in the U.S.
In the 1990s, the U.S. captured about 37 percent of all foreign direct investment compared with about 17 percent in the most recent decade, she said.
McLernon cited reasons including faster growth in emerging nations, uncertainty about the U.S. economy and its tax policy, and a “not very robust trade agenda” until recently. She also cited “all of the political theatrics” in Washington.
“It’s sucking all the oxygen out of the room to focus on big macro issues that could actually help our economy,” she said in a telephone interview.
In 2012, net U.S. assets of foreign affiliates totaled $3.9 trillion, Commerce Department figures show.
Under the SelectUSA program, foreign investment will become a priority of the State and Commerce Departments, alongside export promotion.
Investment teams led by U.S. ambassadors will make investment overtures in 32 priority markets, and there will be single points of contacts for businesses seeking to invest in the U.S, the White House said in a statement.
Commerce Secretary Penny Pritzker has said the U.S. is attractive for foreign investment because of abundant, low-cost energy, an increase of 9 percent in productivity since the recession, intellectual property protections and first-rate universities.
A pickup in foreign investment in the U.S. can boost stock prices and raise employment in the manufacturing sector, a cornerstone of economic recovery.
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