President Barack Obama is mounting a big push to bolster foreign investment in the US – amid evidence that America is falling behind other countries in the race for global capital.
The aggressive move by Mr Obama to pitch America as open for business reflects a growing realisation in Washington that the case for investing in the world’s biggest economy is no longer self-evident.
In 2000, the US held 37 per cent of the worldwide inward stock of foreign investment. By 2012, that had dwindled to 17 per cent. The US attracted $166bn in foreign direct investment in 2012, a 28 per cent fall on 2011, and this year’s performance could be weaker. In the first six months of 2013, the US brought in $66bn in foreign investment, well behind the $84bn of the first half of 2012.
The FDI push comes after this month’s fiscal crisis – involving a 16-day government shutdown and a brush with debt default – that has raised eyebrows about the ability of the US to manage its economy.
Mr Obama and senior figures in his administration will ask foreign investors to shrug off the country’s political paralysis this week when they speak at a two-day conference in Washington, the first of its kind by the commerce department, uniting foreign investors with US economic development agencies and state and local officials.
“It’s time for folks to . . . focus on doing everything we can to spur growth and create new high-quality jobs,” the White House said on Friday.
The US federal government has generally shied away from any big initiatives to promote foreign investment. But that has changed, with the growth of emerging markets such as China, India and Brazil, which has heightened competition.
“The administration is focusing on FDI as an economic priority because the US has been losing ground,” said Nancy McLernon, president of the Organisation for International Investment.
The argument for investing in the US has traditionally been that it enjoys a huge and wealthy consumer market and a predictable legal system.
But otherwise, its competitiveness appears to have taken steps backwards. Its corporate tax system remains a morass, infrastructure is in need of retooling and there are growing fears about the education system’s capacity to develop a well-trained workforce. Moreover, political dysfunction in Washington has damaged the case for investment.
“The way that the US has handled things – on fiscal policy and, frankly, monetary policy – has not exactly been confidence-inspiring,” said Clay Lowery, vice-president at Rock Creek Global Advisers and a senior US Treasury official under George W Bush.