Boosting Job-Creating Foreign Investment in the U.S.
In 2014, 6.4 million Americans were employed by U.S. subsidiaries of foreign firms.
The U.S. is seen as one of the safest places in the world to invest. And these investments turn into jobs. The Bureau of Economic Analysis reports that in 2014, 6.4 million Americans were employed by U.S. subsidiaries of foreign firms.
As of 2015, foreign firms had invested more than $3.1 trillion in the United States, with a record-high of $348 billion that year alone. However, the country’s overall share of global foreign investments declined when compared to the pre-recession period of 1999-2008. So, how can this trend be reversed? One key strategy has been to enlist the federal government as both a promoter and a one-stop shop for foreign investors.
Historically, economic development had been left to states and cities to compete among themselves for investments in their local economies. While this model may have worked in earlier years—before the unprecedented increases in investments by foreign companies in the global economy—competitor countries have now developed national strategies to attract foreign investments on a scale that states and localities could not.
In 2007, the George W. Bush Administration launched the Invest in America Initiative —the first U.S. government-wide program promoting and facilitating job-creating business investment in the U.S. Building on the success of Invest in America, President Obama established SelectUSA in 2011 by executive order. Housed within the International Trade Administration in the Department of Commerce, SelectUSA focuses on attracting high-impact investment that drives jobs, research and development spending, and exports.
The executive order also created an Interagency Investment Working Group that includes more than 20 member federal agencies that coordinate activities to promote investments, helping “to make the United States a welcoming and supportive environment for businesses to open or expand,” according to SelectUSA’s website. In fact, there are even investment teams at posts led by ambassadors around the world. SelectUSA “uses the convening power of the U.S. government to showcase investment opportunities and bring investors and U.S. locations together.” It held its first annual investment summit in 2013 where Obama announced expansions, including:
- A clear system within the federal government to advocate for high-priority, job-creating investments, led by senior Administration officials;
- A single point of contact for foreign investors looking to bring jobs and production to the U.S.; and
- Engaging in “unprecedented coordinated support” for states and localities to help them attract investment.
In 2014, the initiative was designated as one of 15 Cross-Agency Priority Goals for government. CAP Goals require quarterly progress reviews by top officials, with public status reports.
The Job Creating Investment CAP Goal is the focus of a smaller subset of agencies represented in the working group, and they have more a more defined set of goals than the broader group. The key players include the Commerce, Agriculture, State and Homeland Security departments, as well as the Small Business Administration and the Export-Import Bank.
The CAP goal, “Job-Creating Investment,” facilitates foreign direct investment in the U.S. by improving federal investment tools and by increasing interagency coordination. It is jointly led by the U.S. Departments of Commerce and State, and the National Economic Council. The overarching intent is to create a whole-of-government, one-stop shop approach to assisting foreign investors. It is comprised of three sub-goals:
- Promote and market the U.S. as a premier investment destination for foreign investors;
- Improve federal services, tools, and resources that facilitate investment by foreign companies; and
- Improve and execute federal business processes that assist potential investors and state-local economic development organizations.
There are three designated co-leaders, one each from Commerce, State and the National Economic Council. Staff from these three agencies meet monthly to assess progress. The team also works with the broader Interagency Investment Working Group, which helps facilitate transaction-level work, helping individual potential investors navigate the intricacies of the federal government and resolve sticking points, especially between agencies.
SelectUSA is largely responsible for leading day-to-day operations. The program is housed within the International Trade Administration at Commerce.
Progress to Date
CAP goal team staff say that the more defined goals and smaller subset of agencies helps create greater focus and allows analyses of different types of investment transactions. Being designated a CAP goal helped create additional visibility for SelectUSA, which in turn helped foster increased collaboration efforts within a smaller nucleus of agencies. More specifically, it led to improved relationships with, and a better understanding by, the State Department’s foreign service officers and chiefs of mission as to the value of encouraging foreign direct investments. This has led to greater mutual support of each others’ missions. For example, at the 2015 SelectUSA Investment Summit, 54 U.S. chiefs of mission stationed in countries around the world led delegations and came together on improving foreign investment attraction efforts.
The broader SelectUSA program has blossomed, in part because of the increased visibility. This has encouraged collaboration and improved accountability for achieving common goals. The team relies on “agile” management approaches to its work, including the use of rapid testing, piloting, and learning in a meaningful way.
The year-end progress report outlines several accomplishments:
- To date, SelectUSA has assisted in facilitating over $23.1 billion in client-verified investment, supporting tens of thousands of U.S. jobs. For example, Switzerland’s Kudelski Group, a leading cybersecurity advisor and innovator, announced in June 2016 that it would be opening a second global headquarters in Phoenix, Arizona. The Kudelski Group expects to create a significant number of high wage jobs over the next three years. The team at the U.S. Embassy in Switzerland and SelectUSA assisted the company with customized research reports and facilitated access to federal, state and local level services
- In 2016, SelectUSA and Commerce assisted a record 6,072 unique investment clients, more than tripling its comparable 2015 performance. For example, SATA Group, a manufacturer headquartered in Valperga, Italy, announced on May 5, 2016, that it will invest $114 million to build a machining operation in Brownsville, Texas, that will create 300 jobs over the next decade.
- About 70 percent of attendees at the 2016 Investment Summit participated in “matchmaking” meetings. For example, the Italian tissue paper maker Sofidel participated in both the 2013 and 2015 SelectUSA Investment Summits, and has made multiple investments across the United States. The company has committed to investing over $300 million in the U.S. through 2017, and creating over 600 jobs by 2018.
The 2017 SelectUSA Investment Summit is set for June 18-20 in Washington.
Note: This is the 14th in a series about the progress of the 15 Cross-Agency Priority Goals announced in 2014.